'5 Most Successful Counter Offers to Retain Employees' by ELMO Software
Thanks to the talent squeeze, recruitment and retention are the big challenges keeping HR leaders up at night. What skills does the business need, where do we find them, and how do we incentivise our existing employees to stay put? These are the questions organisations are desperately seeking to answer.
Offering higher wages is the most obvious tactic – and one many businesses are currently relying upon. The technology industry in particular is seeing salaries increasing at unprecedented levels. According to new research from recruitment firm Talent, this year global tech salaries have increased by an average of 15-30%. Most candidates in the sector have two or three opportunities in front of them at any given time, and counter offers have also spiked by an average of 20-30%.
But while the dollar figure might be rising, do counter offers really work? There’s a lot of debate out there about whether organisations should engage in a bidding war for their employees. After all, will a counter offer be successful long-term if the employee already has one foot out of the door? It’s also important to remember that many organisations simply cannot afford to salary match when wages are soaring.
ELMO’s latest research into the attitudes of Australian and New Zealand employees sheds new light on the predicted ‘Great Resignation’ and importantly, which counter offers are most likely to succeed in encouraging workers to stay put.
What is a counter offer?
A counter offer is where an employer makes a proposal of new employment terms to an existing or prospective employee in response to a job offer from another business. The offer could centre on an increased salary, a change to their job title / responsibilities, or their working pattern.
Most commonly, it’s an attempt by an employer to retain their existing staff member by conceding to higher wages or another incentive. Counter offers crop up in the recruitment process too. In a talent-tight market like A/NZ is experiencing currently, candidates may also use various offers as leverage to secure the best package possible.
What are the most popular counter offers?
ELMO’s Employee Sentiment Index: 2021 in Review asked participants to rank the top five counter offers that would encourage them to stay, and the results provide an interesting insight into the priorities of the post-pandemic workforce.
1. Increased salary / wage
The most obvious type of counter offer, an increase in salary / wage ranked as number one for 38% of respondents, and in the top three for almost 70%. Given the financial uncertainty of the last few years, the result is unsurprising. Who doesn’t enjoy more money in their pocket?
This counter offer ranked top in NZ too, with 51% of respondents choosing it as number one.
2. Greater flexibility of hours
The factors that ranked from second to fifth are where things get more interesting for HR leaders considering how to hold onto their talent. Given the current discourse around hybrid / remote working has focused on the benefits of working from home, it’s somewhat surprising to see that greater flexibility of hours is in fact the more popular option.
The research found greater flexibility of hours (e.g flexitime / job-share / part-time) was the second most popular counter offer, with 13% of respondents ranking it second and the same amount putting it third. The ability to work from home / remotely more often was all the way down in fifth – indicating that flexibility over hours, rather than location, might be a more persuasive counter offer.
It’s an important reminder than flexibility is not a ‘one-size-fits-all’. The type of flexibility one employee values will be different to another, and often it’s outside factors, such as childcaring responsibilities or living arrangements, that are the deciding factor. That’s why it’s vital for HR leaders to survey their people and develop a deeper understanding of what flexible working means to the individual.
ELMO Survey enables organisations to conduct and manage staff surveys throughout all points of the employee lifecycle to gain actionable insights into your employees’ attitudes and opinions towards work.
3. More annual leave
As the third most popular type of counter offer, the desire for more annual leave speaks to a trend we’ve seen emerge during the pandemic. The blurring of work / home boundaries resulted in many employees working longer hours and struggling to switch off at the end of the day. And while yes, productivity increased, so too did burnout.
To counter the problem, many organisations offered additional paid days off through initiatives like wellbeing leave, life leave, or company-wide shutdowns. Last year, the popular dating app Bumble closed its offices around the world for a week to tackle the “collective burnout” of its 700 staff.
Clearly, employees recognise the value in having more time away from the office to truly switch off, focus on loved ones, or spend more time doing the things they enjoy outside of work.
Interestingly, more annual leave ranked higher for NZ respondents (14%) compared to Australians. Additional leave was the second most popular counter offer, followed by greater flexibility of hours in third.
4. A job promotion
Employees using an external job offer as leverage for a promotion is another common scenario and it’s a situation where a counter offer could be most successful. It suggests that while the employee is actively considering other options, they’re motivated by the lack of internal movement, rather than simply a desire for more money.
Being able to visualise a career pathway is a key ingredient for engagement. Without it, employees are left wondering where their hard work is leading. Consider undertaking a skills mapping exercise and engaging in career conversations with employees to identify gaps and internal opportunities. A caveat for this approach is that any promotion must benefit the employee and the employer. Creating a new role for the sake of retaining an employee might be counterproductive, especially if there is no change in responsibilities or work scope.
This counter offer ranked fourth for both Australian and NZ respondents.
5. Ability to work from home / remotely more often
As mentioned earlier, flexibility means different things to different people. But the desire to work more flexibly – be that location or hours – is certainly here to stay. Microsoft’s research shows over 70% of workers want flexible remote work options to continue.
However, it’s interesting to see that the offer of working from home more often ranks higher for Australian employees than it does for their neighbours across the pond. In New Zealand, more wellbeing initiatives were the fifth most popular counter offer, following by more professional development / learning. The ability to work from home / remotely more often was way down in seventh, indicating that perhaps the priorities of NZ workers are slightly different.
The good news for many organisations is that embracing flexible work is an easy win. Thanks to lockdowns, communication and collaboration technology is in place and many employees have already made the shift to working remotely. The next step for organisations is to redesign their processes through a hybrid lens, asking questions like: Is our performance management process fair for those at home and in the office? Do employees have the tools they need to work anywhere? How will we keep our culture strong regardless of location?
In this way, HR leaders are increasingly playing the role of workplace designers. But instead of a paintbrush in their hand, HR technology is the tool required to create an employee experience that is as seamless, integrated, and cost-effective as possible.