Employers ramp up counter-offers to retain staff
Employers are turning to generous counter-offers in a bid to retain staff as skills shortages continue, according to new research.
According to the Chartered Institute of Personnel and Development (CIPD), 51% of employers who make counter-offers to keep employees have offered a higher number over the last 12 months. A quarter of employers who have made competing offers also think they’ll need to offer more in the next year, with only 8% planning to offer less.
The CIPD survey of 2,000 UK employers, taken between 9th June and the 5th of July 2023, also found that 38% of counter-offers matched the salary of the new job offer, and 40% offered even higher sums.
However, 29% of employers believe counter-offers are ineffective at retaining staff. According to the CIPD, this suggests it ‘may only be valuable as a short-term option and employees will move if the wider package does not meet their expectations’.
Jon Boys, senior labour market economist at the CIPD, said: ‘While pay is often the most typical focus of a counteroffer, there are other things employers should consider in making roles more attractive, such as flexible working, additional paid holiday, opportunities for career development, or better pension contributions.’
In our experience, a counteroffer can be successful, but should be carefully considered on a case by case basis. They usually just paper over cracks that are rarely fully repaired, and can become hideously expensive.
A counteroffer though may be helpful to buy some time if you think the business will be too adversely affected by the loss of a key member of your team. Even a few more months may help you reduce your reliance on one individual, but realistically, once a member of staff has started to look around and has got to the point of resigning, getting them to settle again successfully for a long period is really hard!
Our recommendation would always be to have a detailed and ideally open and transparent conversation with them to find out exactly why they were looking for another role, what appealed to them about the new one, and what they hope will be different if they stay.
Then, speak to your HR advisor and gain their perspective too. You may well have found that, as above, it’s not just the financial element that prompted a move, and some cultural or developmental work may increase your chances of retention, not just with this individual but others too.
Check too that your salary or pay scales are in line with market for the skills of your team. You cannot hope to retain people in the long term if you’re paying well below what the market is dictating. Similarly, there may be retention issues that are really hard to solve within a smaller business.
Historically, we had to take the view that our trainee accountants would probably leave us once they’d completed their training. Despite having a million pound turnover business, we couldn’t compete with the larger firms in London, who were very happy to pay our newly qualified a much higher salary. The job role they moved to though, was often much narrower, and they quickly become disillusioned. As a small business you cannot prove that to people and just have to ensure you cover your costs and build appropriately, with newer trainees coming through the ranks behind those that are due to qualify. We simply had to calculate our fees to allow for regular recruitment fees and inductions, and that may be something you need to do.
Losing a member of your team can be a shock but can be the making of other team members or the business as a whole, once you get beyond the initial shock and have a clear plan to move forward.
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