counter offer, leaver

Counter offers. Are they worth making?

Counter offers - are they worth making?

January typically is a peak month for resignations. Employees use the Christmas break to re-evaluate their lives and given we spend a large percentage of our lives at work, this factors majorly in the mix. With a peak of leavers being concentrated at what is often the beginning of the financial year, this leaves managers with a difficult decision to make. Do they let employees leave or should they try and make them stay? So is it ever worth making a counter offer?

Why do companies make counter offers?

Quite simply it is cheaper to retain an employee than to hire a new one. Our article on the impact of bad hires prices am average hire at over £30k. Giving a leaver £10k to stay therefore seems a cheaper option. Existing employees also have a great deal of knowledge that is useful to the organisation. It can take 6 months for a new employee to get up to speed so it is understandable why counter offers are made. 

Are Counter offers successful?

Surveys show that between 50% and 90% of employees leave within 12 months of the counter offer being made. That’s fine if you just need a short term fix but if you expect them to stay for the long term, you may be sadly disappoints. Can you keep leavers for longer when their heads have been turned? How can you improve your chances of retaining them for longer?

Understand the reason for leaving

You can dramatically improve the chances of a counter offer succeeding by understanding why the employee is leaving. Is it because of:

  • money?
  • career development?
  • commuting time?
  • poor management?

Once you’ve got the root cause, you can assess how realistic it is that you can turn this situation around. Be honest with yourselves. A token increase or a small extra responsibility is unlikely to convert a leaver into a content long term employee. 

If money is the only motivator, a reasonable increase may tempt them to stay for a while. If you need the employee to remain whilst a specific project is completed then incentivising the completion of that task may prove more effective than loading base salary. That way you can keep employees motivated to deliver what you need without building unnecessary cost in the organisation.

If career development is the issue, can you actually meet their needs? Be realistic here. If you can’t, there’s little point trying as you will only be delaying the inevitable. People will see through you if you promise things that you can’t deliver.

If it is commuting or some other personal reason that is causing the issue, you could try implementing a flexible working arrangement. This may buy you some time to get a successor ready to take over. Again, some forward planning will help the counter offer to be more successful.

Finally if it is poor management that has caused the rift, take time to evaluate whether you’ve got the right people in the right positions or whether they need coaching support. Poor management is often the major reason why people leave organisations.

Is it always a bad thing to have leavers?

All the above assumes that it is the right thing to retain all employees who wish to leave. Clearly that isn’t the case. Some attrition is healthy; new hires bring new ideas into the organisation. Some people aren’t right for your organisation and a parting of ways is sometimes the best thing for both parties. So don’t always think resignations are a bad thing, like with most things, in moderation it can be good for you.

Who are Cornerstone Resources?

Based in South Manchester, Cornerstone Resources offer a complete HR service to businesses, charities and churches. With over 40 years combined experience in HR, we can offer you an enviable combination of professional expertise and a service based on integrity and honesty. Best of all, we can save you time and money. 

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