When our clients name their top employee management challenges, hiring is inevitably on the list. Usually, right at the top. So, when a current employee – one who is trained and at least marginally effective in their position – turns in their resignation, the gut-reaction of managers is often some variation of the “Is there anything I can do to make you stay?”, otherwise known as The Counter Offer.
But is it in a manager’s best interest to compete for an employee who already has one foot out the door?
Why Employees Resign
Odds are high this new opportunity didn’t just fall in your employee’s lap. They actively searched for it, interviewed for it, provided references and samples of their work, and negotiated salary. No one embarks on this time-consuming journey unless they are properly motivated to make a change.
The most common motivators for initiating a job search are:
- Lack of appreciation for a job well done
- A belief they are underpaid
- Boredom, lacking challenge and/or growth potential
- A long commute
- Lack of communication from management
Why Counter Offers Don’t Work
Two things need to happen in order for a counter offer to work in any lasting and meaningful way.
- The employee needs to communicate with complete honesty about each element of the position, pay, and company culture that aren’t working for them
- The employer needs to be willing and able to change each of those dissatisfaction points for the employee
Only then can a counter offer can truly repair and reenergize the relationship. Meeting these criteria, however, is simply not realistic. Employees are rarely completely forthcoming about their reasons, and every company has limits on what it can address.
More broadly, the most common reasons counter offers fail are because:
Money is a short-term fix (and a slippery slope). Increasing compensation is usually the first stop on the counter offer express, however studies have shown that salary increases and bonuses provide only short-term motivation for employees, not long-term solutions. The initial boost from feeling flattered and appreciated soon wears off for the first employee, and now the rest of your staff are out interviewing so they can get salary increases as well.
You may be the problem. Because most people avoid conflict, odds are high that the resigning employee is not disclosing all their reasons for leaving. Specifically, they’re not mentioning the ones that reflect badly on you as their supervisor. This makes it a challenge to completely address their reasons for leaving, even if you are highly motivated to do so.
Loyalty is now in question. It’s almost impossible to put the resignation genie back in the bottle. An employee you rely on and trust almost left for another job. You managed to salvage the relationship, but…how long will they stay? How likely are you to delegate as you had before? Or trust them with proprietary information? In truth, they will likely never be as helpful or essential to you as they were before the resignation.
A lot of work for very little reward. The majority of employees who accept counter offers are gone within six-months anyway. And it’s not always because they resign. In many cases they are terminated for performance issues that arise after the counter offer.
For these reasons and more, counter offers are usually doomed to fail. So, what should a manager do when a valued employee resigns?
Why a Resignation is an Opportunity
The biggest mistake managers make when an employee resigns is to take it personally. And this can color the employee’s final weeks and days in a negative way. But savvy managers know an opportunity to strengthen their team when they see one.
Exit interview. Take the time to meet with the departing employee. Thank them for their efforts on behalf of the company and wish them well in the future. Use the conversation as a chance to ask what they wish the company had done or provided for them. You’re not asking them to stay, you’re asking for their opinion. Remember that the world is small, and the world of business is even smaller. Departing employees will appreciate the respect shown to them and perhaps speak fondly of the company in the future.
Stay interviews. Now turn your attention to your existing team. Who are the stars? Who are the next generation of stars? Spend time with each, let them know they have your ear, that you value them, and that you’re open to suggestions and ideas to make their tenure with the company as mutually rewarding as possible.
Anonymous Employee Surveys. Remembering that most people are conflict-averse, an anonymous employee survey may be the best way to gauge areas in company culture, management style, and salary structure that need attention.
Company-wide Compensation Review. Random bumps in pay that recognize nothing but a manager’s aversion to having to replace someone aren’t meaningful in any lasting way, however it’s also true that a general compensation philosophy of paying employees below market rate (either by intent or benign neglect) is the quickest way to kill morale and lose your best employees. Make sure you are aware of the market rates for the positions in your company.
It’s never easy to lose a valued employee. But when you’ve been blindsided by a resignation, remember to use it as an opportunity to retain the employees who haven’t resigned.
