Ask Ian: “Are counter-offers impacting staff morale?”

“I work on the HR team for a large retailer, and I’ve noticed a worrying trend that I think I should flag. Since the start of 2022, we’ve had several people resign and move on – more than usual. The last two happened within a week of one another, which was a blow given they are highly valued staff members. However, instead of letting these people go, the business put up a fight and counter-offered, which worked to retain them. 

“While it’s great these skills are still in the company, I’ve heard rumblings that we’ll be doing this more often should certain employees attempt to resign. The problem is that people talk, and I’ve been approached by workers demanding to know why person X told them they were leaving and are now staying all of a sudden. It doesn’t take a genius to work out these people have been offered more money, and those at the same level are clearly irritated that their salaries remain the same. I’m worried it’ll lead to more people wanting to leave in the long run, and surely it’s not sustainable?! I’m mid-level and don’t know whether it’s my place to step in and say something. Am I right? What do you think I should do?” 

Anon

You’re 100% right to be concerned. From a recruitment perspective, little frustrates me more than companies relying on counter-offers to retain employees. There are many reasons why it’s foolish – some of which are highlighted in your email. 

First of all, counter-offering isn’t always a terrible idea. Occasionally, a valued staff member may approach you with a letter of resignation and raise issues with the role that are completely solvable. Perhaps they’ve taken on more responsibility without your knowledge, and they do, in fact, deserve a promotion. In that case, and if the company is in a position to, there’s no reason why you shouldn’t go for it and make them an offer. However, after the fact, you might want to implement regular check-ins with staff to make sure they’re happy and have the support they need. 

The problem I have is when counter-offers are used as a retention tool, or worse, to determine who gets a pay rise. Unfortunately, in today’s candidate-driven, talent-poor market, we’re seeing more counter-offers being made in a bid to secure skills. Here’s what my time in recruitment has taught me about them: 

• The majority of people who accept counter-offers end up leaving anyway, sometimes within six months of receiving the offer
• Line managers despise them and believe they set a bad precedent 
• They erode employee trust and negatively impact morale. 

To be clear, counter-offers don’t work as a retention tool and only make employees miserable. It’s a short-term, short-sighted approach, and you can expect more resignations once people get wind of it.

Of those businesses that stand by the practice of counter-offering, most are underpaying staff and can, therefore, afford to bump up salaries should they be pushed. 

To summarise, you’re absolutely right and have identified that your employer is headed down a slippery slope. Onto your next question about whether you should raise concerns to senior staff; I’d recommend you do so and bring your valuable insights to the table. You’ve spoken with employees who know exactly what’s going on and feel short-changed and undervalued for simply remaining loyal. 

Without naming names, let senior staff know these conversations are taking place. If they’re detached from the day-to-day, they may view the counter-offers as a huge success, which explains why they’re happy to repeat it should someone else attempt to resign. Highlight the reality of the situation and the potential knock-on effect this could have long-term.

Give them a solution, too. Should the business be speaking to and supporting employees more? Are the company’s career development plans robust? Should further investments be made in training? And, crucially, are people getting paid enough across the business? It sounds like a 360 review of the company’s recruitment and retention strategy is needed. It’s time for them to stop papering over the cracks and start investing time in solving the issue for good.

Got a question for Ian? 

If you’ve got an issue or work-related question you’d like to put to recruitment guru Ian McMullin, email enquiries@mccarthyrecruitment.com with the subject line “Ask Ian”. We can’t answer every question, but we will try our best to point you in the right direction. All emails are treated with the utmost confidentiality.