With the ‘war for talent’ continuing to rage in the UK, it is becoming ever more frequent that employees are frequently moving jobs, which is frustrating to say the least when as a business owner or leader you had been thinking you have the perfect team and people on board. So the burning question is, should you make a counter offer?
As a small business owner or manager, navigating the counter offer landscape from employees can be challenging. You want to retain your staff, but you also need to consider the broader implications of meeting their demands. It requires a strategic approach to decide whether to match or exceed the offer made by another employer, negotiate alternative solutions, or let the employee go, while ensuring that the decision aligns with the business’s long-term goals and values. Here are five tips to help you respond to these situations effectively and empathetically.
1. Understand the Root Cause
Before responding to a counter offer, it's important to understand why the employee is considering leaving. Is it due to salary, career growth opportunities, work-life balance, co-worker issues, or other factors? Take time to have a one-on-one, open-minded conversation and be empathetic to address the underlying issues if possible.
Example: If an employee is seeking a higher salary because they feel undervalued, it might indicate a need for a broader review of your pay and benefits strategy.
2. Evaluate the Impact on Team Dynamics
Matching or exceeding a counter offer can have a ripple effect on your team. Consider how this decision might influence other employees' perceptions and morale. Will it set a precedent that could lead to similar demands from others? Ensure that fairness and consistency are observed before making such decisions to maintain a positive workplace culture.
Example: If you offer a significant jump in salary increase to one employee, other team members might expect similar increases, potentially leading to budget constraints and dissatisfaction.
3. Aligning with Company Policy and Equal Pay legislation
Your response should align with your company's policies and long-term goals. If your policy is to not negotiate counter offers, making an exception could undermine your credibility. Conversely, if flexibility is part of your Company’s values, demonstrating this through negotiation can reinforce your commitment to employee satisfaction.
It's particularly challenging to let go of employees with rare skills who are trustworthy and have been with the company for a long time. Consider having a separate policy for such cases, as it might be a worthwhile investment.
Example: A company with a strict no-counter-offer policy might need to revisit this stance if it's leading to high turnover rates and difficulty attracting new talent.
Note: In making any decision on increasing pay, you also need to ensure that you are not creating any difficulties for the business in terms of breaching the Equal Pay legislation. Remember, this requires that both men and women get equal pay for doing “equal work”.
4. Consider Alternative Solutions
Matching the counter offer isn't the only option. Consider alternative solutions that might satisfy the employee's needs while aligning with your business's capabilities. This could include offering additional benefits, flexible working arrangements, or opportunities for professional development.
Example: Instead of a salary increase, you might offer the employee more flexible working hours or funding for further education, which can enhance their loyalty and engagement.
5. Make a Decision
At the end of the day, a decision should be made. You should arrive at a decision considering both the immediate needs and long-term goals of your business. Weigh up the pros and cons of retaining the employee against the potential challenges and costs. Sometimes, letting the employee go might be the best option for both parties, especially if you know that they have already “mentally checked out” of your business.
Example: If an employee's demands exceed what your business can sustainably offer, it might be more beneficial to part ways amicably and focus on attracting potential employees that fits your budget and culture.
Responding to counter offers from employees requires a thoughtful, strategic approach. By understanding the reasons behind their desire to leave, considering the broader implications, and aligning your decision with your company policy, you can handle this complex situation effectively. Remember, the goal is to ensure your decision supports the long-term health and success of your business.
We hope this has been helpful in developing strategies that will work for your business context. For more in-depth guidance on effective and efficient management, visit our website dakotablueconsulting.com or call us at +44 (0)1233 627 275 for HR consulting services.