Employee Resignations: Counter Offer or say Goodbye?

You’re a manager and a valued employee walks into your office with a piece of paper in hand, asking for a moment to chat. As you’re handed a resignation letter, your heart sinks. Afterward, you immediately meet with HR to share the news and start an all-too common conversation: Should the company extend a counteroffer?
A lot of factors must be considered when determining whether you want to fight to keep an employee from leaving. Counteroffers can be the carrot that gets great talent to stay, but offering one can set a dangerous precedent, too. Before making an offer, it’s important to take an in-depth look at what the employee brings to the company.
[bctt tweet=”What are your thoughts on counteroffers? Do they really work?”]
Some questions to start with:

  • Is the employee in good standing?
  • What value does the employee bring to the table?
  • Does the employee have potential and leadership ability?
  • Does the employee fit the company culture?
  • Would the employee’s job be difficult to fill?

Then consider the resigning employee’s perspective, why are they leaving? If the job isn’t a good match or if there is a lack of career-advancement opportunities, consider whether the company would be willing to move the employee to a new department, pay for training or provide a promotion. If she is leaving to move across the country to be closer to family, you’d be hard-pressed to keep her (unless you can provide a transfer or allow telecommuting).
If pay is the reason for the move, you may be able to influence her to stay with additional compensation and benefits. In doing so, you could retain talent and maintain productivity. This eliminates the cost of finding and training a new hire, or worse, experiencing a bad hire, which can cost up to five times that person’s annual salary, according to a study by the Society for Human Resources Management (SHRM).
Though keep in mind, a financial counteroffer in itself may not be enough to maintain employee satisfaction. More than 50 percent of employees who accept counteroffers change companies within 24 months anyway, according to a Pittsburgh staffing firm survey.
In the more extreme cases, if you believe the employee is disgruntled or has been unhappy for quite sometime, it may be best to let them go. Even if you do decide to make a counteroffer she can’t refuse, it may only serve as a band-aid on the bigger issue. In the end, you just might be delaying the inevitable. Do seek to understand if the issue is unique to the employee or indicative of a broader issue that could lead other valuable employees to resign as well.
[bctt tweet=”Is a counteroffer the best solution to retain an employee?”]
Ultimately, if your big-picture vision doesn’t align with the employee’s vision, it might be time to say goodbye.
What’s the best solution? Keep employees satisfied so they don’t resign and you don’t have to think about counteroffers at all. To do so, maintain open lines of communication to ensure employees are happy. Use some kind of performance review to identify areas of growth and offer options. When you keep your ears tuned and your eyes open, it’s pretty easy to notice when good employees are starting to feel dissatisfied.

This article first appeared on LinkedIn Pulse on March 8th 2016.

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