The counteroffer. It’s a term to send a shudder down the spine of anyone working in recruitment at the moment. We’ve always had it, but in today’s tight talent pool, where retention is king, it has never been more widespread. Not least in my area of financial services and banking.
All is going swimmingly. A candidate has been matched with what seems like a perfect client, offering an ideal role. Interviews have been concluded and an offer is on the table. And then … there’s a pause. The candidate is reflecting. Nothing wrong with that – this is an important step and we all want it to work out.
And then the bombshell. The candidate is staying put. A counteroffer has been made.
If only that were the end of the tale. In 90% of cases it isn’t. The candidate will have parted ways with the employer within a year. Often it will have been a wasted year careerwise. In 8 out of 10 cases the employee will be gone within just 6 months.
The prevalence of counteroffers can hardly be a surprise when you consider that it can cost an employer as much as 200% of annual salary to replace a senior executive. At present 50% of employees in the UK who resign are presented with a counteroffer by their employer. Here, too, counteroffers are to be expected and often a proposed salary will build this in.
Any recruiter will tell you – counteroffers just don’t work. I try to preempt them from the start by delving into the candidate’s reasons for leaving at the earliest stage possible. It is typically not about the money. It’s often more about where you see yourself in 5 or 10 years’ time. And having the candidate realise this will lessen the danger of an ultimately fruitless counteroffer being accepted.
That said, counteroffers are enticing, and 57% of candidates accept them. Typically, the counteroffer will be a combination of financial inducement and new responsibility. More often than not, the latter fails to materialise as hoped and things drift into “same old same old”. That’s what happens when an employer ‘constructs’ a role just to retain a staff member. And while it can be difficult for candidates to say no to an offer from someone they know well and who clearly wants to keep them, the truth is that accepting a counteroffer changes the dynamic within the workplace thereafter. At some level a perceived lack of loyalty has been exposed. Some see the candidate as having forced an employer into a corner. Maybe the thoughts of leaving have germinated and it’s hard to put them back in a box. Whatever the reason, the working environment after a counteroffer is often never the same again.
It’s nice to be wanted. And often it’s tempting to stay put where you know the people around you. But when that counteroffer lands, think back to why you looked for that new job in the first place. And go with that little voice telling you to take on the new challenge and fulfill your long-term aspirations.
Patrick Leamy is Senior Recruitment Consultant at Eden Recruitment