Why Counteroffers Fail and What Employers Should Do Instead

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Employers naturally want to do whatever they can to hang on to productive, valuable employees. When one such employee decides to resign, it’s all too tempting for employers to tempt employees to stay by throwing raises and perks at the employee before they walk out the door. You do not want to lose a valuable worker or suffer the inevitable hit to employee morale, so it’s understandable.

But experts are finding counteroffers may not be the ideal play in this situation.

A study by Robert Half found that, on average, employees who accept counteroffers from their current employer stay only an additional 1.7 years. That counts more as a temporary patch to the problem than a long-term solution. If you made a counteroffer to save time, money, and effort on hiring and training a new employee, notice in those 1.7 years you likely could have located a candidate who might have stayed with your business for much longer. Over a year and half is more than enough time to train a new employee, too. In short, it’s a bad bet.

Related Reading: What Employees Really Want from Work

Why Counteroffers Fail

The Robert Half study offers several insights into why an employee might be tempted away from their current workplace. The study found that 94% of employees would immediately accept an offer to a dream job, 31% would take a pay cut for a dream job, and 23% would prefer a title promotion over a raise. These numbers point to the fact that many employees leave for reasons besides money, so there might be little your counteroffer can achieve if an employee is vying for a more desirable position.

Even if an employee does accept your counteroffer, there are many issues to consider besides the likelihood that they will leave in a year and a half. If an employee wants to leave a job for reasons other than money, such as a toxic work environment or difficult schedule, these problems are going to remain present even if a counteroffer is signed. This is not a situation that is likely to keep your employee happy, and their unhappiness could spillover onto their coworkers, decreasing morale and productivity. If word gets out about a counteroffer giving an employee a substantial raise, coworkers can become jealous and resentful. Supervisors might also see an employee who signs a counteroffer as disloyal, disrupting mutual trust.

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What Employers Should Do Instead

Instead of penning a counteroffer, it might be best to let an employee go. However, there are several ways you can still learn from the situation and prevent it from happening frequently.

  • Note How Employees Resign. If employees tend to resign amicably, providing notice well in advance and expressing appreciation for their time there, then your organization might be a healthy place of work that is simply going through routine changes. However, if several employees quit suddenly, express frustration, or even “ghost” you, then there could be several problems you need to resolve. Pay attention especially if these unamicable resignations happen within a specific part of your organization, as you’ll want to focus there first.
  • Know the Limits of Exit Interviews. While exit interviews can offer useful insights on occasion, be aware that they usually don’t offer the full picture. Many employees mitigate criticism in exit interviews because they do not wish to leave on bad terms. Jaded employees often feel that leaving criticism is time-consuming and pointless since they lack the faith that the workplace will change.

Why Exit Interviews are Worth it

  • Talk with Coworkers. A departing employee’s coworkers sometimes are willing to talk about the employee’s reasons for departure even when that employee wants to stay quiet. Talking with the employee’s coworkers also gives them an outlet to discuss thoughts and opinions about the departure, allowing them to better cope with the departure and providing you with possible suggestions for the future. Some coworkers might feel tense or disloyal for discussing the matter, though, so make sure to acknowledge any attention and assure coworkers that talking with you is entirely voluntary. Perhaps remind them that you are only trying to make the workplace better for them.
  • Conduct Stay Interviews. On a regular basis, identify your employees who have worked for a while at your organization. Sit down with them and ask them about their reasons for staying. Follow this up with questions about what improvements they think your organization should make. Since these will be some of your most reliable, trustworthy employees, listen closely. They will help you identify what your organization is doing well, but also what might make another employee—or them—want to leave in the future.
  • Keep Track of Where Departing Employees Land. Even if you can’t hold on to them, departing employees can tell you a lot about your organization by where they go. If employees frequently leave to pursue graduate degrees, for instance, perhaps your organization should consider offering more tuition reimbursement. If employees are leaving to spend more time with family, there might be a problem with work-life balance within your organization. Departures for a rival company might likewise suggest that your organization needs to reevaluate its culture.

Related Reading: How to Minimize the Impact When an Employee Quits Without  Notice

Lacey Conner

Written by Lacey Conner