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Sunday, 3 August 2014

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Counter-offers not a good idea

Disruptions can sneak up on you or any other company at unexpected times. Companies must be prepared for change that can impact its operations negatively.

You thought your week was going smoothly, but one of your key employees walks into your office and says that he's resigning.

If you're like many managers, you panic and start thinking about what you can offer to get him to stay. This is quite natural in an environment where talent is rare and the training cycle is long.

However, be aware that making a counter-offer to stop an employee from taking another job is rarely a good idea and there are many reasons why it is not.

While more money is always a motivator, there are other factors too that drive people to look for another job. Personality fit, organisation fit, boredom with the work, conflicts with bosses and co-workers, pressure for delivery of results or any other general dissatisfaction - all reasons that will rear back, once the glow from that raise wears off and you will retain a dissatisfied employee with unresolved problems.

Salary

You should strive to pay competitive salaries and benefits to all your employees, not only to those who think about leaving. Your salaries need to be set according to objective market data.

It shouldn't be a reaction to someone who is about to leave soon.

This practice is not sustainable and you are only setting a bad precedent which will upset stable employees.

If word gets around that all it takes to get a big raise is to threaten to leave, you can be sure that you'll have other employees in your office resigning too.

You don't want people to start thinking that they need to have one foot out of the door to get a raise.

If you successfully counter-offer and persuade him or her to stay, what happens next? At many workplaces, that employee will no longer be quite as trusted as he or she used to be, no longer a part of the inner circle.

That's not a good thing for either of you.

And on his side, you're now the company that he had threatened to leave, to get what he wanted, which also isn't good for either of you.

There's a valid reason for the rule of thumb among recruiters that 70 to 80 percent of people who accept counter-offers either leave or are allowed to go within a year of accepting the offer.

You may want to recall your past experience to know your own number. Once an employee makes up his or her mind to leave, it becomes an easy task the next time there is a good offer.

Are there times where making a counter-offer makes sense and works out well? May be sometimes. But they tend to be the exception, not the rule. At a minimum, be cautious before making a counter-offer and think through the downsides.

Merits

There are several risks associated with making a counter-offer. A top performer who has resigned has probably already weighed the pros and cons of leaving.

You should be selective about who to give counter-offers to and let some of them go without a fight, since counter-offers could be used by some employees as a strategy to ask for a salary increase.

Even if you decide to make a counter-offer be aware that your employee may not accept it.

The best policy is to identify and prevent possible problems before your valuable employees resign.

Make sure that your senior employees are mentoring other employees, so your company won't be crippled if someone leaves.

Finally, a good company will support and wish its employees well, especially if they know that these employees will be leaving for better opportunities. Don't hesitate to give your recommendations and referrals if the employee deserves it.

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