Employee retention: Skipping the counter offer

Most of the time, when a resignation letter lands on your desk, it’s a surprise. You’ve worked hard to focus on employee retention and weren’t expecting one of your better employees  to quit (who you thought was happy and satisfied). Your mind starts to spin, and lots of questions start filling your head.

employee retention strategy

Questions like: “How long had they been planning to leave?” or “ What aren’t they getting from this workplace that made them want to look for something else?” They all start swirling and building on each other, and all you can think is, “How can I fix it?” Counter offer! Counter offer! Abort quit sequence!

Employee retention is always a point of stress for business owners. And we recently talked about how it’s not surprising when Millennial employees don’t stay in one position for very long, but every time any employee quits, it still has an element of shock (and a dash of panic, now that you’ve got to replace and re-train a new person.)

But before you start thinking about what things have to be taken care of and have little sweat beads coming off your head like a Kathy cartoon, it’s important to know the realities of the situation. As of June 2014, the quits rate from the Bureau of Labor Statistics held strong at 1.8 percent in April—with over 4.5 million separations total. And that’s just in the month of April! Remember: you’re not alone in this.

employee retention strategySo, what do you do when one of your valuable team members quits?

And when it comes to employee retention strategies for this situation, what advice is out there?

Let’s look at the reality of the situation. Your initial reaction might be knee-jerk: counter offer with more money, flexibility, whatever it takes—and offer it NOW. Making a counter offer seems like a good idea in the midst of the busy season when you really don’t have the time or resources to invest into training someone new. But when you think about it, making a counter offer actually might not be the best employee retention strategy.

Here’s why:

1. You’ve exposed how much you’re underpaying

When your first reaction is to offer a sizable pay increase, it communicates that you could’ve been paying that employee more the whole time they worked for you—but you didn’t. Even if the employee does accept your counter offer, there might be underlying resentment that only prolongs an already damaged relationship. It’s better just to let the employee move on.

2. There’s probably more than one reason they’re leaving

When people make the decision to quit, there’s usually not just one reason behind the decision. If that were the case, there’d be far more positives to the job that would outweigh the one negative, and the employee would stick it out. Instead, there are often several reasons behind the choice to leave—and the employee has thought long and hard about them.

A recent LinkedIn survey showed that the top three reasons for leaving a job were 1) Advancement opportunities, 2) Better leadership, and 3) More money. But for many who take the time to write a resignation letter, it’s probably a combination of all three. A counter offer is not a consolation prize to someone who’s already mentally checked out–and for you, it’s not a good employee retention strategy. Don’t fight for the ones who are already gone.

3. You might already have someone on staff who’s a good replacement

When one person leaves, it creates an opportunity for you to re-evaluate your current team and see who might be due for advancement or a new challenge. Before looking externally for a replacement, look internally and see if there’s someone who already knows the core of your organization that might be a good fit—loosing one person might actually be the best thing that ever happened to one of your other employees!

4. They need something different—somewhere else

The old breakup scenario of “It’s not you, it’s me” applies here. When an employee musters up the courage to tell their boss “I quit,” it’s not because they want a raise, different responsibilities, or greater flexibility with your company—they want it from somewhere else. If they really wanted to stay but needed something from you, don’t you think they’d ask for it before starting over from scratch? If you love them, set them free!

5. Counter offer compromises can build resentment with existing staff

Word travels quickly when someone says they’re quitting. But if other employees hear that now the quitter is staying (due to your employee retention strategy which includes a nice raise, work-from-home days, etc.) those other employees are going to want the same. So where you think you’ve solved one problem, you’ve actually created many more. Office culture and team morale is a huge part of the day-to-day working environment, and while it sounds petty, counteroffers can have a huge impact on your whole team.

The next time one of your team members calls it quits, don’t jump in with the compromise. Grit your teeth, don’t burn bridges, and wish them a successful career. Forgo the counter offer, and focus on employee retention with your team members who want to be there. Know that there are more fish in the sea—and this might actually be a fantastic opportunity for changes and growth. You’ll get through it.

Your turn: Have you ever had an experience where a counter offer that kept an employee on board was a bad decision? Have you seen the negative effects of when someone stays in a job they truly want to leave?

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Photo Credit: Seattle Municipal Archives, Twisted Sifter

Kaleigh Moore

Kaleigh Moore is no stranger to small business. She's the Founder of Lumen -- a business that offers copywriting, social media services, and graphic design. When she's not contributing to the EnMast blog, you'll find her running or at the movies (because the running helps manage the movie snack consumption.) Connect with Kaleigh on Twitter, LinkedIn, or read her blog.

Comments

  1. Great points. In my opinion, even though there seems to be ever increasing tendencies for employees to consider switching, it still takes something significant for an employee to be so dissatisfied that they start looking for greener pastures. If the relationship was already so strained or awkward that they couldn’t express their dissatisfaction (without fear of negative coseqences) it’s probably too late for rehabilitation.

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