We had a brief but lively conversation, my Compensation Cafe colleagues and I, about counter-offers during our Advice on Pay from the Compensation Cafe session on last week's Proactive Employer podcast. Generally speaking, the group was not "pro" counter-offers. Reactive dollars never deliver the same ROI or the same satisfaction that proactive dollars do, and a pattern of counter-offers and adjustments can ultimately land you the reputation of having a "pay the squeaky wheel" compensation strategy. Not a winning play.
Nonetheless, it is good to have some real data on the topic of counter-offers and a just-released report Retention of Key Talent and the Role of Rewards -- released by WorldatWork, Dow Scott of Loyola University and Hay Group -- provides just aht (and addresses a number of other retention topics as well). The new study features the responses of 526 WorldatWork members. Even better, the same authors conducted a similar study on counter-offers back in 2004 (284 respondents, link to WorldatWork Journal article may be limited to premium members), enabling us to get some small sense of historical context and trends.
What do these surveys tell us?
Counter-offer approaches tend to be ad hoc and situational, rather than driven by formal policy. Few organizations have a formal written policy in place.
Counter-offers tend to go to employees who are both in key positions and outstanding performers. It is, however, also interesting to note the apparent spike in manager-driven counter-offer requests.
HR is typically (but not always) involved in counter-offers, but rarely as the primary decision maker. Not much has changed in this data over the past seven years.
How well do counter-offers work? These questions were less consistent from the early to the later survey, and responses appear to suggest a mixed bag.
Problems? Respondents in the 2012 study say its about an even bet.
For employees who accept a counter-offer, does their relationship with the employer appear to be damaged by the experience? Most respondents don't believe it has been; few, however, see the experience as having improved the relationship.
Bottom-line, are counter-offers effective? Here's where we see the pessimism break through; the great majority say not -- or only marginally so. But what makes a counter-offer effective? Perspectives among respondents are varied, with prevalent measures including employee acceptance, not disrupting business operations and retention of the employee for at least three years following the counter-offer.
The 2004 article, for those in need, offers some strategies for overcoming -- or at least staving off -- some of the negative consequences of counter-offers.
What's your position on counter-offers?
Image courtesy of www.thewisdomjournal.com
I've been on record against them since 1982 when I wrote the original "Counteroffers Are Counterproductive" for The Personnel Journal and a different version for the WSJ's Natnl. Bus. Employment Weekly. As our friend Chuck said covering the subject a few months ago http://www.compensationcafe.com/2012/04/a-cautionary-tale-counter-offers.html, they mostly are a stopgap measure, because the unhappy camper never sticks around (sometimes because they are fired thereafter as a lesson to others that blackmail is not REALLY rewarded).
Too bad Scott's research didn't repeat all the same questions this year. Also note that if you had a bad relationship with the mercenary before the counteroffer, the fact that it did not change afterwards is not a good thing. I can't imagine anyone with a good prior relationship accepting a counteroffer. Since a counteroffer usually occurs after the heart has left, the mind will eventually inevitably follow shortly thereafter. When the spirit has departed, the body cannot long survive.
That said, counteroffers can and do buy a little time to find a replacement.
Posted by: E James (Jim) Brennan | June 20, 2012 at 11:16 AM