The Increasing Trend of Counter Offers
Great News!! After weeks of preparation, you’ve landed your dream job! This is such an exciting time for you as a candidate and from a recruiter’s perspective, passing on the positive news is such a rewarding part of our job. So what are the next steps?? Promoting it across ‘Social’, celebrating with family and friends…..handing in your notice! This is where you go from the most exhilarating phase of finding a new job to perhaps the most daunting. This should be the period in employment where you are finishing one chapter and moving on to the next. More recently however, there seems to be a growing trend of employers fighting hard to retain staff by counter offering! Here’s a little look at this emerging trend; why do counter offers happen and should you accept?
What is a counter offer?
Pretty much as it says on the tin! It’s when you go to hand in your notice and your current employer proposes an improvement in your current package in response to an offer from another company. In short, they offer you a pay rise! This sounds like a great position to be in but in reality you’re faced with a dilemma, stay at a company where you know you’re not 100% happy or move to a new company where the role sounds great?? It’s easy to become fixated on an increase in salary but is staying with your current employer purely for financial gain the right long term decision?
Counter offers rarely come as a surprise and more often than not they happen for the following reasons:
- Being underpaid/ undervalued – simple, you weren’t being paid enough which is why you started looking. Your boss realises this and then offers an increase to try and keep you.
- Skills shortage – especially in technical digital skills, employers realise that you’re not so easy to replace and that your skills are invaluable to the team.
- Cost of replacement – Your employer would rather increase your salary to keep you than look to recruit a replacement. Especially if there’s a skill shortage.
- Team dynamics – whilst you may not be valued for your technical skills, it may be that your boss tries to keep you as you’re the glue that holds the rest of the team together.
After 30 seconds of ‘counter offer’ googling, these are the stats you’re likely to stumble across:
- 50% of candidates who resign will receive a counter offer
- 80% of candidates who accept a counter offer end up leaving within the following 6 months
- Employer cost of replacing a highly skilled member of staff can be as much as 200% of that positions annual salary
What do the stats mean? To accept or decline
Accepting a job offer and starting a new role with a new company can be a life changing decision and it’s rarely an easy one to make. The curve ball of a counter offer from your current employer makes this even more difficult however, the stats rarely lie, and if you accept a counter offer then you’ll most likely be looking again within the next 6 months. The smart decision is to work for the company who value your skillset and who offer you long term career progression.
What if you’re an employer?
Don’t let it get to the point where members of your team are handing in their resignation. Try and understand their key drivers and put a plan in place to cater for these. Upskill your team, keep them engaged and pay them accordingly.
As recruiters, we’re faced with candidates receiving counter offers all the time and my question to candidates always remains the same. Does it solve the problem that made you open to new things in the first place? If it’s career progression, should you need to resign for this to happen? How are you going to get your next promotion if this is what you had to do this time? If it’s the role content or an issue with a direct report, does this solve that problem? It’s a great feeling to feel valued enough to get a pay rise but always think longer term in these scenarios and ask yourself if it truly takes away your reasons for looking around in the first place.