Research carried out as part of the Robert Half 2023 Salary Guide found that the high rates of inflation and the growing cost of living crisis are impacting employees and employers alike, leading to a stretched hiring landscape.
We found that 70% of employers recognise their workforce is struggling to manage increasing costs, with most businesses agreeing that this will push employees to seek higher salaries elsewhere. The competition and demand for talent remain fierce, with 54% of business leaders anticipating a challenging hiring landscape next year.
As such, the pressure is on for businesses to retain their top talent. But what can you do if one of your most valued employees decides to leave? You may choose to give a counter-offer. Counter-offers can take many forms: an increase in salary, additional company benefits, a sought-after promotion or new job title, additional responsibility, a change in role, more involvement in projects that interest you - or any combination of these. However, counter-offers are often mismanaged and ineffective. In fact, after all that work done at short notice, around 80% of candidates who accept a counter-offer from their current employer will end up leaving within six months.
However, as the competitive hiring market continues to bite, counter-offers are becoming more commonplace, with over a third of hiring companies noticing an increase in prospective hires receiving a counter-offer from their current employer.
So, how can businesses successfully navigate the counter-offer process and get the most from their employees? Here are the top tips from the talent solutions team at Robert Half for dealing with a counter-offer.
Benchmark your performance
One of the most effective retention strategies is to compare your salary bands, benefits packages, and corporate values with those of your competitors. Doing so will let you rank how attractive your company is as an employer, and identify any areas which need improvement. By making these changes, you might be able to stop many issues at the source and reduce the number of flighty employees looking to move on.
Start your salary benchmarking with the Robert Half 2023 Salary Guide.
Reward loyal employees
Generally speaking, loyal employees who have stayed with the business for several years are penalised for their loyalty. Their annual salaries can often slip below both the going market rate and those of colleagues who have jumped between companies more regularly. On average, it can cost a company six to nine months of an employee’s salary to replace them due to recruitment and training costs. This means that, in many cases, it is more cost-effective to pay your long-standing employees what they’re worth from the outset and continue monitoring the market rates.
Foster a supportive, healthy working environment
Although financial concerns are a key motivator for people to seek a change in employer, they are not the leading cause. In fact, employees often leave due to issues with their current work environment, such as office morale or an issue with their manager. As such, an increase in salary or an improved benefits package will likely have no impact or, at most, provide a short-term fix. If businesses want to retain their staff, they should place greater emphasis on nurturing a rewarding work environment. This can be done in numerous different ways, but the most effective are:
- Encourage collaboration and communication across teams
- Conduct regular check-ins with employees
- Facilitate opportunities for learning, regardless of seniority
- Recognise the hard work of individuals and teams
- Promote a healthy work-life balance
Ensure demands are met
When making a counter-offer, you must listen carefully to your employee and ensure that you address all of their concerns if you seriously want to retain them for the long run. For example, if your employee wants more clarification on their long-term career progression, you should offer to produce a detailed personal development plan.
Successfully navigating a counter-offer can be a tricky and time-consuming process for managers and should be carefully considered – and followed through if they accept to stay. With an effective counter-offer process, you can come to an agreement that satisfies your business needs, along with those of your important employees.
View our latest Salary Guide 2023 to view the market salaries and essential benefits for a host of industries and job roles.