A solid employee -- an above-average performer, but not a superstar -- gave me his two-week notice. (We'll call him Mark.) I mentioned it to my boss later that day.

"Is it a money thing?" he asked.

"I'm sure money is a factor," I said, "but he'll also have a much shorter drive to work. And he won't have to work as many weekends."

"Tell you what," he said. "Offer Mark a 10 percent raise and see if he will stay." 

I started to walk away, then stopped. "Would you have given him a raise six months ago?" 

"Of course not," he said, shaking his head. "But six months ago he wasn't leaving." 

So I did. And Mark stayed. 

For about a year.

Employee retention is a concern for most companies. The thought of losing above-average performers, much less superstars, can feel like a catastrophe -- and cause you to make a counteroffer in a last-ditch offer to keep them onboard.


The Employee Loses

While your intentions may be good, you may actually do the employee a disservice.

According to a survey of more than 100 human resource executives in regards to employees who accept a counteroffer to stay with their current employer:

  • Between 60 and 80 percent of senior leaders say the employee experiences diminished trust and compromised reputation within the company
  • Nearly 80 percent suffer from a lack of trust and reputation among senior leaders within the company (if you're a small-business owner, think you)
  • Even though they stayed, nearly two-thirds are seen as less loyal

In short, you -- and others in your company -- may forgive an employee for wanting to leave, but you won't forget.

You'll almost surely see the employee through the lens of the counteroffer you felt (in hindsight) forced to make -- and, no matter how hard you try not to, treat the employee a little differently in the future.

And even if you do rise above, other employees may not.

Because people usually know what other people make -- and they almost always resent the person who was given more money to stay.

Your Business Loses

According to the same survey, few employees who stay because of a counteroffer stay for long. One respondent said, "In my experience, counteroffers don't work 95 percent of the time. And when they do work it's usually only for the short term -- someone who wanted to leave is eventually going to leave anyway."  

Another said, "My gut feeling and my observations tell me that people who accept are going to be gone, whether it's in a year or two years."

Why? While statistics vary, at least one recent survey shows that over half of respondents quit a job because of their boss, and an additional one-third have considered quitting because of their boss.

So, yeah: People who quit jobs often actually quit their manager. More money won't fix, over the long term, a poor professional relationship.

Or, in the case of my employee Mark, his desire for a shorter commute and a lot more weekends off.

Other times, employees leave in hopes of greater developmental opportunities. Or in hopes of better chances for advancement. Or to gain new skills. Those things you may be able to fix.

As long as you address those issues before the employee starts looking for another job. 

Just as your employees won't care about your business until your business shows it cares about them, the employees you want to keep want to be loyal -- but you have to be loyal to them first. 

So be a great boss: positive, encouraging, hard-working, and constantly seeking to improve the skills and careers of your employees. That's the best way to keep great employees, even those who occasionally wonder if the grass is greener elsewhere. 

Constantly look for informal opportunities to allow employees to expand their skills and continue to shine. Ask about their long-range goals and create opportunities that will help them reach their goals. If they eventually want to own their own businesses, your response is simple: Get them involved in everything.

If they're smart -- and clearly they are, or you wouldn't want to keep them -- they'll recognize the value of those experiences.

The key is to provide that value before an employee wants to leave.

If you do, and the employee still wants to leave? Wish them well.

While you might be disappointed, you will at least know you already did everything you could.