How can you make a convincing counter offer to retain your employee for the long-term?
When your LinkedIn connections started calling 2021 ‘The Great Resignation’ it probably seemed like a joke. But once one of your all-star employees hands you their resignation, it gets real.
And when you discover that graduate recruitment alone is up 197% from last year, panic sets in. Joining the 13,000+ job vacancies sounds like a nightmare for a small business owner. So what do you do?
Do you make a counter offer?
We know that you’ll do anything to retain your employee, so a counter offer is probably on the cards.
What is a counter offer?
A counter offer is usually a crisis response employers make when a team member hands in their letter of resignation. The offer is intended to make them happy and convince them to stay.
Typical counter offers are all about giving the person a substantial raise to make them sweet again.
Lots of resigning employees accept counter offers. Fear of the unknown and a sense of loyalty can prompt them to stay, but not for long.
That’s why counter offers have a bad rap: 58% of senior managers use them to hold on to employees, but they typically only stay for 1.7 years before getting cold feet again and finally moving on for good. Other studies have found even worse statistics – that 80% of employees who accept counter offers end up leaving within 6 months.
So while they’re commonly used to keep employees happy, this happiness doesn’t last for long. Your employees will need a long-term solution that suits their goals and needs, or they’ll leave before 2 years is up.
How to make a counter offer to retain your employee
There is no guarantee that your employee will accept your counter offer, but there are things that you can do to sweeten the deal.
1 – Salary
The most obvious place to look first is at salary. Are you paying your employee a salary that reflects their skills? Do you conduct yearly salary reviews or do your team members have to approach you for a raise?
Salaries tend to grow every year to reflect your employee’s growing contribution to the company. They also reflect a growing skillset: as your team members become more integral to your company, they become more attractive to your competitors.
I’d recommend researching the average salary that your employees can expect for their role type and starting there.
2 – Their concerns
I’m willing to bet that a low salary isn’t the driving force behind your employee leaving. In fact, they probably have a few concerns that need to be addressed.
That’s why I recommend talking to your resigning employee about why they’re leaving. Whether they had a disagreement with their manager, a new personal commitment to honour or career goals to chase, you need to know. Because retention efforts shouldn’t start after resignation – they should be on your mind all the time!
Anything that you can learn from your employee to help improve your team’s experience is crucial.
You can also use this information to form the other parts of your offer.
3 – Benefits
Benefits aren’t just powerful tools for hiring. A revamped benefits list can make a counter offer much more attractive while helping you manage the cost of a higher salary.
Here are some benefits to consider that will make a substantial difference to your employee’s work:
- The option to work from home – whether it’s a few days a week or permenantly, cutting the commute is hard to say no to.
- The option to work in the office – remote-only employees can struggle with lonliness. It’s hard to feel like you’re part of the team when you only speak on Slack! Renting a co-working space is a great way to reduce feelings of isolation.
- Flexible hours – for your employees with other commitments outside work, some flexibility with their hours would be greatly appreciated. Lots of companies offer flexibility but have ‘core hours’, for example 10-2, where team meetings take place and every person must be logged on. But beyond those hours they’re free to fit work around their life, not the other way around.
4 – Long-term plans
Do you have clear progression opportunities for your team members? Or are they stuck in stagnant roles until they leave?
Lots of companies have generous training budgets to help their employees gain the skills they need to get promoted. This recognition and career development is essential for retention and should be a major element of your counter offer.
No employee will stay with your company forever, but when you find yourself in a tight spot and feeling the urge to make a knee-jerk counter offer, it’s important to make one that’s focused on the long-term.
There is no point in making a generous counter offer only to see your employee resign again in a few months.
Will they accept my counter offer?
Only around 57% of counter offers are accepted so it’s important to make yours a compelling one if you’re committed to keeping your employee.
If they don’t accept your counter offer, all is not lost.
Re-hiring is seen as a costly, time-consuming chore but it doesn’t have to be. You can outsource all of the recruiting dirty work like screening CVs, arranging interviews and advertising to the experts at DigitalGrads. Better yet, we already have thousands of candidates waiting to apply for your vacancy in our database. Search our candidates today to find your ideal hire!