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Hiring & Firing, HR, Retail & Inventory

Should You Counteroffer an Employee Who is Quitting?

counter offer employee quit

According to a recent study from LinkedIn, up to 80 percent of the workforce are considering their career options and actively or passively job searching. Workers are leaving for higher compensation and benefits, greater opportunities for advancement, better work/life balance and even higher quality senior leadership within the new firm. This reality creates a challenge for managers and business owners, who may be confronted with resignation letters from their most valued staff. When a star performer is leaving, should you counteroffer?

Don’t Act Out of Haste

The news that an employee is leaving can strike a blow – personally and professionally. It’s easy to wonder where their loyalty wandered and question what is driving the need for change. Rather than reacting in a moment of panic, acknowledge the news and ask questions. Use the preliminary conversation to do as much data gathering as possible, without committing to a specific path forward. Work to understand what’s behind the change. Why are they leaving? Where are they going? Are there conditions under which they’d consider staying, if you were open to exploring it? Take some time to consider your options and determine if a counteroffer is the right strategy for you moving forward.

Is Compensation Really the Issue?

Understanding what’s really influencing your employee to quit is key. The reasons can be diverse and compensation is often one piece of a larger, more complex puzzle. Start by asking what’s driving the change. Is there a deeper, underlying dissatisfaction that would need to be addressed? Do they need something in their career or work environment to succeed that you’re not willing or able to provide? Or is it purely a matter of economics that could be addressed with a raise? Distinguishing between employees who are moving simply because of compensation and could be successfully lured back with a counteroffer and those who are seeking new opportunities for other reasons can help you map out your response strategy.

Determine Your Own Motivations for Making an Offer

A counteroffer can be a kneejerk reaction to the notification that a staff member is quitting. It’s important to think about whether that’s the right option for your business. How essential is this person, their work, contacts and internal/external relationships to the success of your business? Can you afford to pay them more or offer them more flexibility? If their performance is stellar and you’re willing to fight to retain them, a counteroffer may make sense. But if you’re thinking of countering simply out of a sense of inertia or the belief that it’s easier than recruiting and training a replacement, think again. Could this be an opportunity to attract new talent to your firm? Finally, if you make a counteroffer and they accept, will you have hard feelings or doubts about their commitment?

Think About Internal Equity

Some employees are tight-lipped about their job search; but others confide to work friends and team members that they’ve got a new opportunity on the horizon. It’s important to assume that the details of your counteroffer may go public. If other members of your staff know that you’ve made a counter offer to someone who has left, that may raise questions about their own compensation. Counteroffers may come with a big raise, a more flexible work arrangement or other benefits that aren’t mainstream in your office. Ensure that any counteroffers you make are consistent with your company’s compensation policies and won’t disrupt the internal equity balance.

Consider the Relationship’s Longevity

While there’s some confusion about the origin of the statistic, many recruiters suggest that a high percentage of workers who accept counteroffers don’t remain in those jobs for long. To a certain extent, recruiters have an ulterior motive; once they’ve invested and gotten a candidate to the offer stage, the last thing that they want is for them to back out and stay in their old position. However, it’s a valid point to consider. If there are underlying issues that are driving your employee to seek new opportunities, a raise will only be a Band-Aid measure. Soon, the problem – and the desire to find a solution – will assert itself again. That’s why it’s absolutely essential to understand the candidate’s motivations for leaving and your own reactions toward them should they choose to stay before moving forward with a counteroffer.

There’s no one right answer when you’re faced with an employee who is quitting. It’s important to take the time to understand what’s behind their desire to leave and really assess the potential impact on your business. From there, you’ll be in a position to determine whether a counteroffer is right for specific situations.

Have you faced the situation where a valued employee has given notice and you’ve had to decide whether or not to make a counteroffer? Let us know about your experiences in the comments below.