No employer wants to find themselves desperately trying to retain a superstar who is being lured away by the competition. It's the worse kind of negotiation to enter into, because the employee has the upper hand. And even if you do convince your superstar to stick around, the chances of them staying on board for the long term are slim: In one survey of Australian workers, 80 percent of employees who accepted a counteroffer from their current employer left the business within 12 months, with 42 percent of those employees leaving in just three months.
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So, does this mean you shouldn't ever make a counteroffer to convince a great employee to stay? Of course not. Many employees who are open to hearing counteroffers don't actually want to leave their employers. For them, the negotiation is a kind of cry for help, a way to get unresponsive employers to improve working conditions.
Mind you, not all counteroffer cases are this straightforward. Other employees may be more determined to leave, and they will need a lot more convincing if you're going to get them to stick around.
But, if you do want to make a counteroffer, you need to do it the right way if you are to maximize your chances of convincing your superstar to stay and remain loyal for the long haul.
No Knee-Jerk Reactions
Avoid the knee-jerk response of simply matching/exceeding the competitor's offer. While this grandstanding response might grab your superstar's attention and woo them back onto your side, it might not address the underlying problems that led them to contemplate leaving in the first place.
When the dust settles in a few months, the excitement of the new salary has gone, and the underlying issues haven't been addressed, there's a good chance the employee is just going to leave anyway.
Find Out What's Pushing Your Employee Away
That's why the starting point of any counteroffer needs to be a frank and thorough assessment of the push and pull factors behind the employee's decision to leave.
Let start with the push factors. Find out what is making the employee feel discontented. Is something missing from their job? Do they feel their work lacks meaning, flexibility, a sense of progress, and/or a sense of competence? These are the four key non-financial motivators, and if your employee doesn't have them, that could be the reason they're restless.
Discover What's Pulling Your Star Elsewhere
Once you've identified the push factors, you need to identify the pull factors. What draws the employee to the new role elsewhere? What can they get from that role which they aren't getting from you?
A few questions you may want to consider:
- Is the new position more aligned with the employee's values and career objectives?
- Does the competitor have a more appealing company culture?
- Does the competitor work with more attractive technologies?
- Is the competitor's office in a more attractive location?
- Does the competitor offer more career opportunities and/or more exciting work?
Make an Offer That Works in the Long Run
If you want to make a compelling counteroffer that not only grabs your employee's attention now, but also gets them to lay down their roots for the future, you'll need to address as many of the key push and pull factors as possible.
For example, lets say the employee wants more money and a sense of progression. If you only raise their salary and fail to offer a sense of progression, you'll find that the employee will grow discontented once again just a few months down the line.
It's vital that you take a more holistic approach and address all the employee's financial and non-financial motivators if you are to create a compelling offer that re-engages your employee in the business for the long term.
Finally, it's important to note that it's not always necessary to make a counteroffer. There can be benefits to letting someone go. It can be an opportunity for you to inject some new blood into the team or do some poaching of your own.
Another perk of letting someone go rather than making a counteroffer is that it creates an opportunity for career progression and personal growth for another team member who may want to step into the newly vacated role. Career progression and personal growth are powerful factors in employee retention. You can't retain everyone, but you can leverage the leavings of some employees to solidify the status of others in your organization.