You’re a manager and a valued employee walks into your office with a piece of paper in hand, asking for a moment to chat. As you’re handed a resignation letter, your heart sinks. Afterwards, you immediately meet with HR to share the news and start an all-too-common conversation: should the company extend a counteroffer?
A lot of factors must be considered when determining whether you want to fight to keep an employee from leaving. Counteroffers can be the carrot that gets great talent to stay, but offering one can set a dangerous precedent. Before making an offer, it’s important to take an in-depth look at what the employee brings to the company.
Questions to ask before making a counteroffer
- Is the employee in good standing?
- What value does the employee bring to the table?
- Does the employee have potential and leadership ability?
- Does the employee fit the company culture?
- Would the employee’s job be difficult to fill?
Why is the employee leaving?
Once you’ve established whether or not this is an employee you’d like to keep you must then consider the resigning employee’s perspective, why are they leaving? If the job isn’t a good match or if there is a lack of career-advancement opportunities, consider whether the company would be willing to move the employee to a new department, pay for training or provide a promotion. If they’re leaving to move across the country to be closer to family, you’d be hard-pressed to keep them (unless you can provide a transfer or make the role remote).
If pay is the reason for the move, you may be able to influence them to stay with additional compensation and benefits. In doing so, you could retain talent and maintain productivity. This eliminates the cost of finding and training a new hire, or worse, experiencing a bad hire, which can cost three times the salary paid.
Is a counteroffer really worth it?
A financial counteroffer may not be enough to increase employee satisfaction, especially if this is not the reason they’re leaving. Around 50% of people who accept counteroffers leave for a new job in just 12 months, because although the offer may seem like a good deal, the company isn’t necessarily solving the issues.
Think about the reasons they’re leaving, and see what can be done internally to improve these issues, rather than just offering a financial counteroffer. Where possible try to understand if the issue is unique to the employee or indicative of a broader issue that could lead to other valuable employees resigning.
In the more extreme cases, if you believe the employee is disgruntled or has been unhappy for quite some time, it may be best to let them go. Even if you do decide to make a counteroffer they can’t refuse, it may only serve as a band-aid on the bigger issue. In the end, you just might be delaying the inevitable.
Ultimately, if your big-picture vision doesn’t align with the employee’s vision, it might be time to say goodbye.
What’s the best solution? Keep employees satisfied so they don’t resign and you don’t have to think about counteroffers at all. To do so, maintain open lines of communication to ensure employees are happy. Use performance reviews to identify areas of growth and offer options. When you keep your ears tuned and your eyes open, it’s pretty easy to notice when good employees are starting to feel dissatisfied.
Article Source: Adzuna
