Counter offers – good business strategy to retain talent?

Counter offers – good business strategy to retain talent?

The UK recruitment marketplace is highly active, with the Office for National Statistics recently reporting record levels of job vacancies in excess of 1.2 million. The phrase ‘Great Resignation’ has been trending on social media. Many employers are facing the prospect of losing talented individuals, who are seeking to move on to new opportunities within other organisations.

“Businesses are having to decide their best options to manage this situation. Extending a counter offer to try and retain employees, can be a useful strategy.” said Taryn Wilkinson of executive and management recruiters, Walmsley Wilkinson.

The Society for Human Resource Management reported that on average it costs a company 6-9 months of an employee’s salary to replace them.

“Compelling financial data such as this, supports the commercial decision to offer more money to an individual who resigns. Increasing someone’s salary to encourage them to remain within the company, is generally more cost effective than replacing them.

“It is often the case that loyal employees, with long tenure are penalised for their stability. Their salaries can lag below market rates and those of former colleagues who have moved companies more frequently. A resignation can be a ‘wake-up call’ to some businesses to make positive changes in this area.

“However, exit interviews regularly show that employees leave for better opportunities, or other issues within their current environment such as morale, their manager or commercial uncertainty. A salary increase or improved benefits is generally not their motivator – if a person wants to leave, then a counter offer probably won’t change their mind, regardless of its monetary value.

“Within the recruitment space, there are varying percentage stats’ available, relating to how many employees leave a business within 6 to 12 months of accepting a counter offer. Despite this, counter offers can and do work successfully on lots of occasions; sometimes fulfilling the needs of both employer and employee. Even with the strong possibility that the retained employee will leave down the line, counter offering them, can still be a good option for the organisation. It may allow the time to build an effective talent pipeline or contingency plan, in effect, a stalling tactic.

“Regardless of an individual’s defined intentions or a manager’s expertise in handling such matters, a resignation can be an emotional experience for both parties. Professional coaching on how to successfully navigate this process can be useful. Some organisations even deploy specialists to manage resignation and counter offer procedures and many employees are well prepared by recruiters to deal with counter offer tactics.

“In summary, counter offers can be a valid business strategy to retain talent, with the caveat, that if successful, it may end up just being a short term fix. It will certainly be more effective when its underpinned with strong organisational resource planning, employee engagement, active listening and a genuine desire to create a win-win situation for employer and employee.”

Walmsley Wilkinson, owned by two partners, Linda Walmsley and Taryn Wilkinson, offer professional solutions for executive and management recruitment needs. They support a variety of organisations, including large corporations, family-owned entities, private equity and the third sector to identify and secure the best leadership talent, across the UK and internationally.

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