Cafe Classic: A Cautionary Tale – Counter Offers

Editor’s Note: Enjoy Chuck’s excellent examination of the counter offer – and be sure to bookmark it for review and reflection (and sharing) the next time one of your organization’s best hands in her/his notice.

Bob has just turned in his resignation, handing you a paper with a single line of text; he is leaving in two weeks.  Cripes!  Bob is one of your best team leads, and his departure will leave a hole in your organization that will be hard to fill, especially in the short term.

Is there anything you can do?

_________________________

At this point the question of a counter offer will pop into every manager’s mind who has ever faced this dilemma.  Give Bob what he wants and he’ll stay – right?  Find out what’s been offered and promise the same.  Problem solved?

Not by a long shot.  It’s not that simple.

Bob may or may not decide to stay, but meantime other other discontented employees will note your response, the relationship with Bob has already been damaged by his resignation, and any new “arrangement” might create internal equity troubles.  Productivity and morale could be impacted, no matter what happens to Bob.

Your solution might even cause more problems for yourself.

What to do?  Let’s look at the omplications of a counter offer from both sides.

The Employee Perspective

If an employee has made the decision to leave, and subsequent actions have progressed to the point where an offer has been received, then mentally they have already left.  Any internal debate they might have had over making a change has already been resolved, and they’re comfortable with their decision.  They may even be anxious to leave, as the new employer offers a fresh start, with new challenges, new faces, increased responsibilities and of course more money.

They may be enticed to stay by increasing their rewards package, but you can’t be  certain.  Their true motivation may remain an unknown, leaving you to deal with only what they are willing to disclose.

If the catalyst for resignation is not rewards (i.e., friction with the boss, perceived dead-end job, dated technology, long commute, too much travel, etc.) a counter offer focused on more rewards will miss the mark.

The Employer Perspective

If you extend a counter offer, it will become known and discussed.  Employees may get the idea that such is the way to get a better deal from the company – by threatening to quit.

Those who accept counter offers often leave within six months anyway – that’s all the time you’ve bought yourself, as other unresolved issues would remain sources of continued dissatisfaction.  More money will not solve those problems, and typically counter offers address only the quick fix money issue.

Once an employee has resigned, even if later rescinded, their relationship with the company is forever altered.  It’s unlikely that management will retain positive thoughts about the individual, even if the immediate boss still loves them.  Career prospects will have taken a body blow.

If you do extend a counter offer and it is rejected, the same internal damage will be felt as if it had been accepted – so you better be careful befor extending yourself.  In any case, the employee is no longer considered loyal, and thus can’t be trusted to remain longer term.  They’re considered “for sale.”

Could This Work For You?

If an employee tells you they are thinking of leaving, vs. actually having an offer in hand, then you have more room to manuver.  But the company should examine how they deal with threats – because other employees will be watching.

However, if your world will end if Bob leaves, or you need to buy time until a replacement can be put in place or a project completed, you may wish to consider negotiations.

Caution: Line managers may advocate a counter offer more because their own lives are made difficult by an employee’s departure, rather than the business impact of the separation.

Doing It Anyway

If you are planning to make a counter offer, prepare yourself in advance by:

  •  Learning the nature of the offer you’re competing against
  • Ensuring your period of vulnerability is minimized
  • Developing a backup employee as soon as possible
  • Deflecting employee criticisms over favored treatment, dangerous precedents, etc.  Word will get out, so you should have a story ready that rationalizes your decision.  You don’t want to face a host of “what about me?” calls.

For those companies who may have a policy that allows managers to consider counter offers, the approval process should be visible enough to ensure that the broader issues of business justification are discussed.  Personally affected line managers should not make the call.

A final caution: Like a fine aged whiskey you should only sip at this practice and savor the mutual gain, not gulp it down and feel the burn.

Chuck Csizmar CCP is founder and Principal of CMC Compensation Group, providing global compensation consulting services to a wide variety of industries and non-profit organizations.  He is also associated with several HR Consulting firms as a contributing consultant.  Chuck is a broad based subject matter expert with a specialty in international and expatriate compensation.  He lives in Central Florida (near The Mouse) and enjoys growing fruit and managing (?) a clowder of cats.

This post originally appeared on Compensation Cafe
Author: Ann Bares