Articles From the Team
Is making a counteroffer a wise move for my business?
Turnover vs attrition
It’s without a doubt that staff retention should be on every good manager’s mind, whatever their profession. Why? It’s impossible to run an effective business when staff turnover is high; if you keep your existing staff happy they’re likely to turn into long-lasting members of staff who understand your way of working. They’re likely to know your clients and hold do the job well. The thought of losing this can seem disastrous.
However, there can be positive effects when the “right” people leave your team. If that person is set on leaving, they can unintentionally lower the morale for the rest of the team. Secondly, natural attrition can lead to fresh ideas.
Ultimately, it’s a crucial decision for any line manager: whether keeping a member of staff is the right move for the business. Whilst it might seem the more difficult route, letting someone leave and revisiting the market, is often the right thing to do.
The problem with making a counteroffer
By the time a counteroffer is made, it’s often too late. There is a plethora of statistics out there about employees who accept counteroffers, and none of them suggests it’s a viable long-term solution (80% leave within six months*).
An employer handing in their notice is not a split second decision. In the main, they’ve been through a full interview process and received an attractive offer that’s an improvement on their current job (financially or otherwise). The issue is unless you’re in a position to make changes that extend further than the employee’s financial situation, the other problem areas remain. Therefore, it’s important to deal with employee issues along the way: long before the point of a potential counteroffer.
So, how is this achieved in practice?
It might seem unusual advice to allow staff to leave once they've decided to go, and as already mentioned, constant turnover is never a good thing. However, there are better methods for countering staff turnover than offering them more money once they've decided to leave.
Ensuring team members are happy in their job starts at the beginning of the hiring process.
Hiring the right people who fully understand the role they're about to fill is critical to ongoing happiness. I speak to many lawyer candidates who declare they were “missold” their job at interview stage. This can be avoided through detailed job descriptions and an informative two-way interview format.
Secondly, regular communication is absolutely vital during the onboarding process (and beyond) so that any issues are addressed immediately. It's almost unbelievable how many of the largest firms in the world have a rigid appraisal system that takes place only once a year; lawyers feel unable to discuss their issues outside of this time.
Make sure team members are informed all year round: when they've done well and what they need to do in order to continue with their progression.
Thirdly, and often most importantly, make sure your team doesn’t feel underpaid. A salary that's lower than their external peers, and lower than the market rate, fuels a feeling of underappreciation. This means that when they go ahead and interview elsewhere, their current package is thrown out of the water.
Finally, in the event a member of staff does want to leave, an effective exit interview is a great way to help gauge how the team's really feeling. I find it astonishing how many of the lawyers we place have left without being asked for an exit interview. When a member of staff knows they're leaving, they're more inclined to be entirely honest about their motivations. You can use this information to make your workplace a better place for its remaining staff.
Whilst the logic behind making a counteroffer is obvious, there are better solutions that have a much greater long-term effect on team retention and performance.