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Why you should reconsider counteroffers

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In business employees come and go, but is there ever a good time to offer an employee a counteroffer? It may seem like a good idea to encourage an employee to stay by offering a salary increase but most employees that accept a counteroffer still leave.

In fact, 90% of employees who accept a counteroffer leave within 12 months. The reasons are simple, in most of cases none of the things that cause a person to leave in the first-place change after they accept a counteroffer.

Why do most employees leave?

The most common reason for people leaving a company has nothing to do with salary and are more in line with poor relationships or a poor cultural fit. The main reasons for leaving include;

  • A poor relationship with their manager or colleagues

  • Lack of career progression or opportunities to use their skills and abilities

  • The organisations financial stability

  • Company culture

  • Lack of recognition

None of these can be improved by a salary increase, and so a counter offer should only ever be considered once you're sure the employee has no issues with the above.

The problem with counteroffers

If you offer a salary increase to retain one employee, issues can arise with your other staff. If word gets out, other employees may demand a salary raise and it may create an imbalance in the salary scales within the team. This can damage relationships with other employees who were previously content in their roles.

When to ask your employee to stay

The most important thing is to understand why your employee wants to leave. Whether it is a cultural issue or a lack of new opportunities, determine whether their complaints can be addressed without the person leaving.
If both parties would prefer for a solution to be achieved, then you can start to examine the problem and come up with a fix together. However, if you can't commit to improvements, you're best to let your employee leave now, rather than later.

Focus on prevention

To retain employees and prevent the need for counteroffers, build a good work environment that people enjoy working in. Acknowledge the work they do, offer them the opportunity to grow in the business, allow them flexibility and utilise their skills and abilities. This will make them feel valued and recognised by the company and less likely to leave.

Whether your employee has handed in their notice or if you suspect they might soon consider whether you think they'll be content in their job going forward, or if a counteroffer will just prolong their leaving.