Baby come back: Do counter offers work?

meeting, folder, businessOne of your best and brightest employees has decided to fly the coop and you want to offer them a raise to entice them to stay. However, are counter offers actually successful and what’s the next step for the business? 

While Australian retailers explore new ways of operating to be more successful in the face of constant change, it should come as no surprise that employees too are exploring what this new retail paradigm means from a career perspective.

That’s not to say the employment opportunities presented by new retail brands in the market provide employees with any better career prospects, but there is something enticing about getting involved with a retailer at the ground level and being instrumental in that local growth story.

While retailers will want to hold on to valuable employees and recognise the role talent plays in driving success, it’s also important to recognise that when an employee has made the decision to leave, making a counter offer is not always the best approach. In fact, making a counter offer can be more counterproductive.

The truth about why good talent leaves

Employees make decisions to leave organisations for all kinds of reasons, but less often to do with a salary package and more to do with opportunity for career advancement, working with different mentors, learning new skills, improved work-life integration or better alignment on values.

As a retailer, the question to ask is: do you lose good people unnecessarily, or do you lose people when the time is right; when you’ve invested in them, developed them and got them to a point in their career when they’re seen as an attractive proposition to another business?

If you have your ear to the ground and are consistently having robust and courageous conversations with your employees, then ‘surprise’ resignations should be few and far between.

More than this, it’s about having the measures in place to ensure employees remain engaged and motivated. Every employee wants more from their role. This isn’t unique to retail. Neither is complacency. It’s about habitually asking employees what more you could be doing to keep them invested, rather than waiting until you’re faced with a counter offer situation.

If you are seeing more than your fair share of turnover, it’s worth stopping and thinking why that might be the case. Resignations can highlight a failure to recognise issues within a team or organisation, a lack of confidence in a retailer’s leadership, a disconnect between what is promised versus the reality or too few opportunities for growth and development.

But not every business is right for taking people on a career journey. Some businesses are a really good platform for bringing people in that will add value, and vice versa, for a time the business will add value to that employee and get them in a position where they have outgrown both the role and the organisation. It may simply be time for an employee to ‘fly the coop’.


Some will see talent loss as an opportunity to reduce head count

Attempting to buy back talent

Understanding the root cause of why an employee wants to leave is the most critical step in knowing whether it is beneficial to make a counter offer. But when an employee has made the decision to leave, can asking them to stay really work out?

In around 70 per cent of cases where a senior retail candidate goes through to offer stage on a role, we see employers make an attempt to ‘buy back’ talent, more so where candidates hold roles that are difficult to fill or where institutional knowledge is greatest.

In around one in five of those cases, counter offers do work.  But the question is for how long? At least half of all candidates that choose to remain with their current employer regret their choice to stay within three to six months.

Once an employee decides to explore their employment options, something fundamentally changes in their mind. So when the ‘buzz’ of the counter offer has worn off, whether it be a raise, new title, role, or boss, so too does the renewed enthusiasm. Retailers too should be cognisant of this fact and consider their talent options following a counter offer scenario.

Going back to basics

Rather than automatically going down the path of making a counter offer, or complicating an already strained situation, it’s worth considering going back to basics:

Look internally for talent

Not only does this provide an opportunity for talent to step up, it can alleviate the talent bottlenecks common among larger retailers. Succession planning also gets put back on the agenda and in many cases, highlights gaps in a retailer’s overall approach to talent management.

Rethink talent and structures

Resignations often present an opportunity to rethink team and organisational structures. Initially, they help to alleviate inevitable short-term pain when a valuable employee leaves, before holistically allowing the employer to assess talent needs to support longer term growth strategies.

Bring in new blood  

Some will see talent loss as an opportunity to reduce head count.  Others will weigh up the initial investment in securing new talent, with the potential returns gained from an injection of talent as a catalyst for change and growth.

Being prepared for action rather than reaction

As a senior leader in retail, managing talent is about being prepared for the expected and in a constantly changing market. It’s about having your finger on the pulse, ensuring your human resources and operations teams are across key talent areas and creating a dialogue with talent in the market so that when faced with a resignation, a knee jerk counter offer isn’t the first reaction.

Richard Wynn is managing partner at FutureYou Executive Recruitment. Contact him here:; 0448 416 172.

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