Should I Make a Counter Offer?
Dear Evil HR Lady,
My operations manager just came to me and said she has a new job offer--at a 10 percent increase in salary. I cannot afford to lose this person right now, as we're stretched pretty thin. It will take me at least six months to find, hire, and train a new person in this job.
How do I make a counter offer that will entice her to stay?
--Stretched Thin Boss
Dear Stretched Thin,
Well, maybe you can, but it's awfully risky and most likely will end 12 months later with this employee leaving anyway and your other employees feeling a bit disgruntled. Because here's the reality: When your employee starts looking for a new job, you've already lost her, and it's (usually) not about the money.
It's a rare situation where a person is perfectly happy in her job and a new position falls out of the sky. Most people who change jobs have been looking for months, if not years. While salary is always a consideration, usually it's issues other than salary that prompt people to start looking. The number one people leave their jobs? They don't like their managers.
Most likely, then, it's not about the money, it's about you. Sorry! Painful, I know. And it may well be money related, because she found out that others value her more than you do. And, like it or not, that's a huge blow to the level of respect she has for you. Because, if she was so valuable to her, why weren't you paying her more?
Think about that for a minute. If you knew that costs of losing her would be high, why weren't you making every effort to see that she's being paid at market value, even if that is a considerable raise from where she is now?
Often times, people just assume that as long as no one is complaining, everyone is happy as a clam. Problem is, some people are not complainers. They just quietly go about their jobs and even more quietly go about job searches. You don't know anything until they come in and resign or ask for a counter offer.
As you've just learned, this can be a very expensive and potentially devastating lesson to learn. But, even if you go ahead and make a counter offer and convince her to stay with you, chances are she'll be gone soon anyway. Some people claim that there's an 85 to 90 percent chance of a person who accepts a counter offer being gone within 12 months.
I wrote "being gone" instead of leaving because it isn't always a voluntary departure. Many managers begin to resent their former star employee for exploiting the business and using their position to pull in a huge, undeserved raise. Bitterness begins to build and suddenly nothing she does is right any more.
End result? Everyone is miserable and somebody is going to make a move to change the situation--either her by searching out another job or you by firing her. This is unpleasant.
So, here is what you say when your star employee comes to you and asks for a counter offer: "Congratulations on your new job? [Other company] will be so fortunate to get you. I wish you all the best. Maybe we'll end up working together again in the future and I sincerely hope we do, but that's a big increase and I can't match it right now."
If at that point the person says, "Well, I'd rather stay here, but I'd sure like a bigger raise," the response is, "Wouldn't we all? I can't offer or promise anything, but if you decide to stay, your salary will be evaluated on the standard cycle. Let me know what your decision is by [date]. I'm really sad to see you go, but I'd hate to stand in the way of your career."
Now, it's possible that your employee will decide to turn down the job offer at this point and stay. Good for you! But, most likely she'll leave. Ask her help for a transition plan and even ask if she has any recommendations to replace her.
But don't counter offer. Instead, make sure you look at your remaining employees and make sure you're paying them a good, solid, market rate (and if possible a bit higher). That way, you lower the chances of this happening again.
Have a problem employee or a people management question? Send your questions to EvilHRLady@gmail.com.
PRINT THIS ARTICLE