Are Counteroffers Hurting Your Business?

Is your small business is working hard to hold onto talented employees? If so, you may not be happy to hear about a recent survey, in which 20 percent of executives report the number of counteroffers their companies have made to employees who get job offers has risen in the past six months. Why the trend? Nearly 40 percent of those surveyed make counteroffers in order to retain employees with skills that are hard to find, while 27 percent say it’s to keep long-term employees (and their valuable institutional knowledge) on the team. What do counteroffers mean for your business? The good: When your employees feel like they have more job options, they become more confident, which often makes them more energetic and willing to take on new challenges. This can be beneficial for your business if you take advantage of employees’ increased desire to expand their skills. Talk to your team about where they see themselves in one, three or even five years, and develop plans to make that happen internally so they don’t need to look outside the company for opportunity. The bad: Unless you’re willing to make counteroffers, you may risk losing valuable employees to the competition. Before making a counteroffer, however, consider whether you’re willing to make a counteroffer to every employee who leaves. After all, if Employee A gets a counteroffer and stays with you because of it, word will get out. If Employee B doesn’t get a counteroffer, that news will spread, too—and lead to accusations of favoritism and poor morale. The ugly: If you start making counteroffers because you truly want to keep a valued employee, less scrupulous employees may start using outside job offers as a way to get counteroffers and jack up their salaries. Plus, there’s always the chance that the employee will use your counteroffer as leverage to get a higher salary offer from the competitor, then leave anyway. Do you really want to take that risk? If counteroffers are common in your industry, you may have to make them. If so, develop a counteroffer policy that specifies things such as maximum percentage of wages a counteroffer can be, in what situations you would and wouldn’t make a counteroffer, and any other factors you need to consider. If you don’t want to counteroffer, don’t. You’ll have lots of company: Nearly 40 percent of the companies surveyed make it a policy not to.