“Employers know all too well that the cost to replace an exiting employee is very high, particularly in this very tight job market,” says Kristen Denning, an account executive with Fort Lauderdale-based recruiting firm, Spherion Corp. “So it behooves the employer to find out why the employee is leaving and bring a counteroffer to the table that is appropriate to what the employee would like.”
Smart Business spoke with Denning about ways business owners and managers can head off potential problems in the workplace that could cause employees to leave; and how to make a counteroffer that an employee will consider.
What is happening in the job market that makes the subject of counteroffers so timely?
The job market is extremely tight across the board but it is particularly acute in the accounting, finance and information technology fields. Counteroffers are becoming more commonplace because of the tight job market and because it costs less to keep a current worker even if there is the added expense of a counteroffer. Because of this current scenario, employers have to not only approach the employee with a counteroffer, but they have to be more creative in attracting and keeping their good employees.
How are businesses becoming more creative in retaining their employees?
We are seeing companies finding more creative ways to increase morale among their employees, such as office raffles, giveaways, half-days off, department outings and work-from-home days.
All these techniques can work well to keep employees happy. However, employers need to also pay more attention to their work force to see if there is dissatisfaction brewing and catch it early. Before you have the situation where an employee leaves because of dissatisfaction, you need to put in place strategies to make sure that dissatisfaction among workers is addressed … because if you have one unhappy worker, chances are you have others.
How can a counteroffer keep an employee who has already decided to leave?
Bidding wars happen because employees are looking for higher compensation. Monetary counteroffers don’t usually happen if an employee is looking for a better schedule, a change in locale, a better work environment or more responsibility. Many employees understand the demand for workers is high and will test waters to see what they are worth. What they really want, in that case, is fair pay.
If employees are happy at their job, chances are they aren’t looking for a new job, just better pay and a counteroffer from their current employer is probably what they are seeking. However, if intangibles are not satisfactory such as work-life balance, opportunity for growth and advancement in the company, more responsibilities, or less responsibility (if they are feeling overworked), then chances are a monetary counteroffer will not keep the employee.
Can an employer then counteroffer with perks other than money?
Yes, but it is important to have an honest discussion with the employee to find out what they are looking for. Is it a better schedule? Flexible work hours? Less workload? More responsibility? More money? More vacation time? It is difficult to make an appropriate counteroffer unless you know what is motivating the worker to leave.
Is there reluctance among companies to make counteroffers?
Yes, there is. One of the reasons is that if word of a counteroffer gets out, other employees might get the same idea. A business owner or manager needs to understand that he or she would be setting a precedent for other workers. Ask yourself: Should the perk be given to all employees or be based on seniority or work performance? Get to the root of the issue by finding out if the problem (such as being overworked) is true for other employees as well. By doing this, you will head off not only one employee leaving but perhaps many more.
Employers must communicate with workers because if employers can address problems in the early stages, employees won’t start looking for another job.
Is a counteroffer ever inappropriate?
When an employee wants to move to another part of the country to be closer to family members, there is really nothing an employer can do to change this situation and keep the employee.
Companies also should be able to back up the counteroffer particularly if they are promising intangibles, such as a better work-life balance, or a change in reporting structure or growth opportunities. If employers promise it, they need to deliver it, or they will end up with the same problem down the road.
KRISTEN DENNING is an account executive for Spherion Corp. based in Fort Lauderdale. Reach her at (813) 864-1111 or email@example.com.