Today’s talent market is such that it’s not a question of if other companies are looking to poach away your highly-skilled workforce; the answer is they probably are already. This is especially true in sectors where competition for talent is particularly tight – such as the 3% unemployment rate we see in Legal, Management, Architecture and Engineering; and the 1.5% rate found in Tech and Healthcare.
The hiring boom is not expected to end anytime soon, so organizations should be ready for more employee departures. Fortunately, hiring managers and HR professionals are rediscovering that counteroffers can be powerful tool for keeping needed talent from bolting to new frontiers. Let’s examine some strategic ways to get the most out of the counteroffer in employee retention.
Address the Underlying Reasons Why Employees are Leaving
In many cases, high-value employee departures are completely avoidable, provided your organization has the right visibility into the current work environment. The more clarity you can achieve around working conditions, morale and sentiments among your employees, both on-site and remotely, the more you can identify and mitigate factors that may be tempting them to the exits.
People tend to have predictable reasons for leaving a job, including a desire for a better work-life balance now that many have gotten a taste of work-from-home options during COVID-19. Over the past year, 44% of the workforce started working five or more days a week in remote locations. Now, almost two thirds (65%) want to be doing so full time.
Your organization needs to allow for these enhanced expectations for remote work. Similarly, flexibility on schedules is something to consider wherever possible. The caveat here is that such perks should not be arbitrary across the organization. Grant them in a way that’s consistent with transparent guidelines for when and how this flexibility is permitted in the company.
Meanwhile, visibility into your management culture will also uncover any friction your high-value employees might be having with supervisors that may cause them to leave. This is far from a hypothetical, as disagreements with management are behind some 57% of employees’ reasons for quitting.
What’s less clear is how to distinguish the difference between a normal clash of personal styles vs. a truly toxic management situation. Because of this, avoid making on-the-spot promises about changes, but listen for grains of truth and explore your leadership culture. Make sure throughout that you’re providing any needed leadership support and easy access for management training on communication and social skills.
Sharpening the Money Picture
There are a lot of working conditions you can proactively address to keep employees from leaving, and concessions around remote work or more flexible scheduling may even be on-the-spot options for strengthening a counteroffer. Ultimately, however, the counteroffer is most effective when the reason for departure comes down to money. Mastering the monetary counteroffer requires an effective strategy to ensure salaries are competitive and that your compensation models fairly reward both new and existing employees.
Make sure to accelerate the cadence for market-rate salary analysis on the type of jobs your incumbent employees have to at least a several times a year, as opposed to only during annual budget reviews. This helps identify more frequently any gaps between what you and competitors are offering – so you can better gauge the financial counteroffer you put in front of that high-value employee with resignation letter in hand; and you'll be able to proactively fill any salary gaps to cut down on chances they’ll draft up that resignation letter to begin with.
In doing such market reviews, try and steer clear of resources like free or crowdsourced online options; or a slow and complicated analysis from a vendor whose report is out of date as soon as it’s presented. Your goal should be to draw together insights from respected data and analysis sources and add some level of customization for how these salary insights apply to your organization.
Meanwhile, reward current employees with performance bonuses or non-compensation perks, and consider hiring bonuses and other ways to compensate new hires – all to ensure newly on-boarded employees don’t get paid more than veteran employees with similar skills. In making the case for these financial investments, remind C-suite colleagues that replacing a skilled employee can amount to six to eight months of their salary in recruitment and training costs.
Understanding quickly what’s at the root of the employee’s motivations and feelings about their role is essential. Ask direct and honest questions about what they want out of their role; avoid multiple rounds of negotiation, since excessive haggling over employment terms is a sign you’re not really aligned on the underlying motivations. Anytime someone has handed me their resignation over the years, as a manger I’ve typically known right away whether I’m motivated to keep them or OK with seeing them go. That’s the same level of clarity you should try to get up front from the employee about how they really feel about their job and the prospect of staying. I always ask this question first. “If all things are equal, which company culture do you want to be a part of?” You really do not want to keep talent, no matter how valued, if they want to be somewhere else. People do not owe loyalty to a company, and it’s not selfish to want to follow personal and professional goals.
Delivering Convincing Counteroffers
With a razor thin talent pool expected to remain the norm for a year or more, the counteroffer will continue to be a powerful tool for retention. With more organizational clarity and proactive strategy to inform your employee retention and engagement plans, you can ensure your company is ideally positioned to deliver convincing counteroffers to your most valued employees.
Latest posts by Claudia Zachara (see all)
- The Wisdom of the Counteroffer for Keeping High-Value Employees from Exiting - December 15, 2021
