As inflation impacts both employers and employees, how can you navigate the counter-offer process to retain talent?
CREDIT: This is an edited version of an article that originally appeared on Robert Half
Research carried out as part of the Robert Half 2023 Salary Guide found that the high rates of inflation and the growing cost of living crisis are impacting employees and employers alike, leading to a stretched hiring landscape.
The research found that 70% of employers recognise that their workforce is struggling to manage increasing costs, with most businesses agreeing that this will push employees to seek higher salaries elsewhere. The competition and demand for talent remains fierce, with 54% of business leaders anticipating a challenging hiring landscape next year.
As such, the pressure is on for businesses to retain their top talent – but what can you do if one of your most valued employees decides to leave? The counter-offer is one card you might play.
Counter-offers
You may choose to make a counter-offer. Counter-offers can take many forms – an increase in salary, additional company benefits, a sought-after promotion or new job title, additional responsibility, a change in role, more involvement in projects that interest the employee – or any combination of these.
However, counteroffers are often mismanaged and ineffective; in fact, after all that work done at short notice, around 80% of candidates who accept a counter-offer from their current employer will still end up leaving within six months.
Nevertheless, as the competitive hiring market continues to bite, counter-offers are becoming more commonplace, with over a third of hiring companies noticing an increase in prospective hires receiving a counter-offer from their current employer.
Is it really possible for businesses to successfully navigate the counter-offer process and get the most from their employees, or is it just a waste of time and effort?
Benchmark your performance
One of the most effective retention strategies is to compare your salary bands, benefits packages, and corporate values with those of your competitors; doing this will let you rank how attractive your company is as an employer, and identify any areas which need improvement. By making these changes, you might be able to stop many issues at source and reduce the number of flighty employees looking to move on.
Reward loyal employees
Generally speaking, loyal employees who have stayed with the business for several years tend to be penalised for their loyalty. Their annual salaries can often slip below both the going market rate and those of colleagues who have jumped between companies more regularly. On average, it can cost a company six-to-nine months of an employee’s salary to replace them due to recruitment and training costs. This means that, in many cases, it is more cost-effective to pay your long-standing employees what they’re worth from the outset and continue to monitor market rates to make sure you remain at the cutting edge.
Foster a supportive, healthy working environment
Although financial concerns are a key motivator for people to seek a change in employer, they are not the leading cause; in fact, employees often leave due to issues with their current work environment, such as office morale or an issue with their manager. If this is their reason for looking elsewhere an increase in salary or an improved benefits package will probably have no impact or, at most, provide a short-term fix. If businesses want to retain their staff they should place greater emphasis on nurturing a rewarding work environment. This can be done in many different ways, but the most effective are:
Encourage collaboration and communication across teams.
Conduct regular check-ins with employees.
Facilitate opportunities for learning, regardless of seniority.
Recognise the hard work of individuals and teams.
Promote a healthy work-life balance.
Ensure demands are met
When making a counter-offer you must listen carefully to your employee and ensure that you address all of their concerns if you seriously want to retain them in the long run. For example, if your employee wants more clarification on their long-term career progression, you should offer to produce a detailed personal development plan.
Successfully navigating a counter-offer can be a tricky and time-consuming process for managers and should be carefully considered – and followed through if they agree to stay; if you don’t keep your counter-offer promises that employee will soon walk away.
Using an effective counter-offer process, you can come to an agreement that satisfies your business needs, along with those of your important employees.
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