Counter Offers: Do They Help Or Hurt Your Company?

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Insights from Recruiters and Executives on how and when they use counter offers

The traffic lights on the financial highway are all turning green, and business is starting to pick up speed. As the quest for speed has begun, firms are now trying to bring skilled employees onboard, to help them break through the wall. This quest has led to firms struggling for manpower now more than ever, and consequently counter offers have become a part of every firms toolbox. Employees however, have also picked up the tool, and are trying to leverage this perceived opportunity. But just how widespread and common is the counter offer, and what implications does it have? This is what CSA CPH wanted to shed some light on, and therefore conducted a survey about counter offers of 60 client firms, ranging from small to large, of which 31 responded. The main findings are presented as per below.

  • 75% of the firms have had a potential new employee decline their offer because of a counter-offer.
  • 60% of the firms have resorted to counter offers in their efforts to retain courted talent.
  • 78% of the firms have conducted more than 15 new recruitments over the last couple of years.
  • 35% of the respondents themselves have experienced receiving a counter-offer
  • In 10 of the 27 cases where a potential new employee has declined due to a counter-offer, it was after a they had signed a contract with the new employer.
  • In 82% of the cases the counter-offer contained a pay raise, while in 52% of the cases the employee was offered more responsibility.
  • 10% of the employees who accepted a counter-offer, have since then left the firm (anyway).

The implications of counter offers

The impact of counter offers seems to be rather ambiguous. Firms might be able to retain key employees, but at a higher pay level, and in some cases the relationship is compromised because of the process. Another study, done by Antal international reported that more than half of the respondents who accepted a counter offer, were looking for a new job a year later, because they were dissatisfied and unhappy following the counter offer. This suggest that the counter offer is not necessarily a positive, even though it can lead to higher pay and more responsibility for the employee.

The findings also suggest that counter offers can be costly for the firm making the offer, but also for the hiring firm and the other candidates. Some candidates decline the job offer late in the hiring process, because they merely wanted to leverage the job opportunity to trigger a counter offer. This imposes major costs on the hiring firm, and leaves them in need of a new candidate. Thus the process needs to be reopened, and the other candidates might have lost interest after being rejected, which could be detrimental to the process. Even a signed contract does not necessarily equal a new employee, as the study shows, and something firms need to be very aware of.

Playing with open cards

To combat the different problems surrounding counter offers, we advise that firms address the possibility that a candidate is using the job offer to get a counteroffer. This is done by thoroughly screening the candidate’s motivation, and explicitly asking them about potential counter offers. Furthermore, the other candidates may need to be kept on standby for longer, in case the first drops out in the last minute.

The use of counter offers is likely to increase if economic growth continues and talent becomes even more scarce, so firms need to develop other ways to motivate, engage and ultimately retain their most valuable talent if they are to stay on track.

Written by Nickolaj Schultz
May 2017 – Copenhagen, Denmark

CSA – Denmark

Contact with:
Camilla Treschow Schrøder
Ryesgade 108 B 2100 | Copenhagen | Denmark
Tel: +45 41271257
camilla.treschow@continental-search.com

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