Countering counter-offers

It is not wise to fall into the counter-offer trap. Companies should rather address the causes of staff turnover.
Read time 3min 30sec

Management has a judgment call to make when an employee resigns with another job offer as to whether to make a counter-offer or not. This is more pertinent if the employee is in a strategic role, or has hard to find technical expertise that may be critical to meeting business objectives.

Skilled previously disadvantaged candidates and candidates with sought-after skills such as Java, C# and .Net are often headhunted and become easy targets. This is especially true for those whose salaries are not market-related, and who work in companies where their working conditions are not conducive to happy employees. Both the latter are common in many South African organisations.

I`ve heard managers blame resignations on headhunters, disloyal employees and affirmative action candidates that are chasing money. There may be a smattering of truth here, but blaming everyone except yourself and your company`s ability to manage staff effectively is far too easy an option for incompetent managers.

Companies should rather ask: "What has our company and our management team done to encourage loyalty, motivation and continuous learning? Are our salaries competitive or even market-related?"

Firms that address these questions effectively will seldom find themselves in a position where they have to respond to a counter-offer in order to retain a staff member. I understand the pressure companies face in keeping their salary bills manageable, but those that regularly lose staff are costing themselves money in terms of recruiting replacements, training and developing them, and then losing them all over again. An ongoing cycle such as this is extremely expensive. It seems short-sighted not to learn why staff members are leaving, and then take corrective steps - rather than blaming outside influences.

In short, counter-offers rarely work out for either party and are not recommended.

Mark Fraser-Grant, head, The People Business Recruitment

However, in the event a company is faced with a counter-offer situation, where it is keen to keep a staff member who has been offered another position, how should it handle this situation? Often the employee in question is perceived as having been disloyal and gets no further increases until he is back in line with the majority. In effect, this brings us full circle to the root cause of the problem, as it leads to employees becoming demotivated and regretting having stayed on. Also, giving an employee a counter-offer creates dissension among other members of staff, who may demand similar salary increases.

In short, counter-offers rarely work out for either party and are not recommended.

There is no quick-fix or short-cut approach to this solution and that is exactly the point. Much deeper issues are at play here, such as mature management, strong internal communication, open door policies, growth or stretch-oriented working environments, market-related salaries and career opportunities for talented people. If all these things are in place, it will minimise staff churn.

Companies will always lose good employees but it is the minimisation and recognition of "why?" that is most important. Major corporations lose millions of rands in recruitment, training and development of new employees, yet few take complete ownership of the reasons behind high staff turnover.

So the lesson is companies must be brave enough to hear the truth from the asset they invest so much in - their employees. Achieving this means putting real open door policies in place, staying in touch with market-related salaries, having real trust between management and staff, and working toward real and tangible goals with rewards. This will reduce counter-offers and, more importantly, encourage a more productive workforce that keeps its managers informed and therefore one step ahead of the competition.

* The People Business sponsors ITWeb`s Career Moves industry portal. Today`s business success stories are companies with innovative, adaptable teams that stay focused under pressure and constantly identify new growth opportunities. This portal covers how to find these people and then retain them.

Mark Fraser-Grant
Head of The People Business

Mark Fraser-Grant is an experienced human resource practitioner and specialised recruiter, and has been involved in career management and recruitment for over 11 years. He studied for the Institute of Training and Development Diploma at Thames Valley University UK while working in a human resource role for an electronics distribution company, having previously worked at a senior management level in retail. He returned to SA in 1996. Recruited by a client into a business development role, he had a three-year sabbatical from recruitment selling top-end IT solutions and helping the KwaZulu-Natal division realise an R11 million turnover. He later relocated to Johannesburg to launch his recruitment career. Fraser-Grant joined The People Business group in October 2003 to head up the recruitment company, The People Business - Recruitment.

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