6 reasons why making a counter offer could prove disastrous

You recruit the perfect candidate for the role, someone with a great future promise who then becomes an integral part of your company. Then you invest in their training and nurture their talent. You watch them as they grow in their career and bring value to your business. And then they hit you with a bombshell: their resignation.  

Should you make a counter offer?  

Unexpected resignations hit businesses hard: recruiting just one new employee costs an average of €37,500. And their departure doesn’t just hit the coffers – when an employee leaves, they take their knowledge and skills with them, along with the relationship you have built up.  

But before you promise higher pay and greater responsibilities, make sure you’re aware of what you’re working against. With January the most popular month for resignations, now is a good time to make sure you’re ready.  

1. The statistics are against it.  

 Even if your once loyal employee accepts your counter offer, chances are they are just biding their time until a more attractive offer comes along. The National Employment Association reported that 80% of those who accept a counteroffer leave within 6 months: by 12 months, 90% have left. And the statistics go on to show that even though 57% of employees accept a counter offer, 50% of them are active with recruiters just two months later. 

 2. Where is the money coming from? 

 Does the company actually have spare money, or will making a counter offer mean cut backs in other areas? Will it mean other employees get a lower pay rise, or there will be less budget for training?   

 3. Are the reasons for resignation easy to address in the short-term? 

 Consider your employee’s reasons for considering moving on. Is it realistic that the situation that caused this will change in the short-term future? Money isn’t the only reason for resignation – career opportunities, company culture and training also play a significant role. Can you realistically give your departing employee the opportunities or training they want in the short-term future? If not, you are likely to find yourself in the same situation a few months later.   

 4. Colleagues talk.  

 If word gets out that an employee has successfully negotiated a pay rise by threatening to leave, it may encourage others to do the same. At the very least, expect to have several requests for pay rises to contend with. Or simmering resentment within the team. 

 5. Stagnation makes employees more likely to leave. 

 A desire for career progression is natural, and most employees want to climb the career ladder to avoid stagnation. A study found that for every 10 extra months an employee remains in a role, they are 1% more likely to leave the company when they move to their next job. As an employer, this puts you in an awkward position. Do you really want to promote an employee at risk of leaving, entrusting them with greater responsibility?  

 6. Is the department due a reshuffle?  

 Could it benefit from fresh talent with varied backgrounds and experience? Sometimes shuffling teams and roles can foster greater productivity and creativity. And, as we have discussed earlier on the MasterSearch blog, openness to recruiting candidates from different backgrounds encourages innovation and can help propel growth.  

 Arming yourself with the facts and figures will make it easier the next time a valued employee resigns. Decide whether it is worth your time convincing them to stay – or if your money and time are better spent elsewhere. 

Are you looking for a world-class Automotive / Industrial recruitment agency that can help make your job easier and support you across the entire business? Get in touch on +44 207 101 9623 or email rmasterson@mastersearch.co.uk. 

MasterSearch specialises in placing candidates in the European Industrial Automation and Automotive market. Our candidates and clients are never just a number: we use our honesty and openness to build strong, long-lasting relationships. Specialising in this industry means we are uniquely placed to continually adapt to changes in this fast-paced and innovative market.