There are certain instances in which extending and accepting a counter-offer can be a win-win situation for both company and candidate. Although these instances are not plentiful, they do occur, and being able to recognize them will set you apart from your competition.
Let’s get a couple of things out of the way. First, there are no hard and fast rules to making counter-offers work. There are too many variables involved, both on the company side and the candidate side. Second, let’s briefly discuss when extending a counter-offer is counter-productive and ultimately, futile.
If the employee was actively looking for a position and receives an offer from another company, then a counter-offer is not in your best interests. In short, you should let the employee leave. They were looking for one of two reasons, and maybe for both of them:
Money—If this was the case, then a counter-offer might persuade them to stay . . . for now. But the same scenario will play itself out in 12 to 18 months, and the rest of your team might play the same game. This kind of escalating situation could wreak havoc with your budget, not to mention team chemistry and company culture.
Something other than money—If this was the reason, then obviously money isn’t going to remedy the situation. The reason the employee wants to leave could be tied to any number of things—perceived lack of mobility, no passion for their work, a desire to change career paths, etc.
It may seem as though counter-offers are a no-win situation, but as I mentioned previously, that’s not always the case. For example, if an employee was recruited or the opportunity somehow fell into their lap (as opposed to them actively looking for one), then a counter-offer just might be appropriate and more importantly, effective. Remember, motivation is crucial. If they’re not motivated to leave, then they just might not.
In such a case, the opportunity exists for you to make certain adjustments or boost a salary without negatively affecting the entire system. Do some investigating and find out what led to the interview and how happy the employee was before the interview. It’s possible that they don’t have their heart set on leaving.
It’s important to remember that counter-offers should be made only if a win-win situation is achievable. If only you’re “winning” or only they’re “winning,” then there won’t be a happy ending for anybody.
Now, the best way to avoid this situation altogether is to construct a cohesive, highly structured, and effective retention program, one that starts the very moment they accept your offer of employment. By fully engaging your employees with such a program, you dramatically reduce the chances that you’ll have to eventually extend a counter-offer.
In short, keep your people challenged, make them feel appreciated, and compensate them in a competitive fashion. By doing so, you’ll create the best win-win situation possible—one in which you never have to deal with counter-offers in the first place.
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