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.
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.
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.
Relying on counteroffers to retain employees often addresses symptoms rather than root causes. While a salary increase or added perks might temporarily dissuade a resignation, they seldom resolve underlying issues like limited growth opportunities, lack of recognition, or misalignment with company culture. To foster genuine loyalty and reduce turnover, employers should focus on creating an environment where employees feel valued, challenged, and aligned with the organization's mission. This involves regular feedback, clear career pathways, and a culture that prioritizes employee well-being.
Looking to enhance your employee retention strategies beyond counteroffers? Axcet HR Solutions provides expert guidance to help you build a resilient and committed workforce. Visit axcethr.com to learn how we can support your organization's growth and employee satisfaction.
.png){kind=logo}
Let us know what you think...