Developer

Successful counteroffers require groundwork and careful handling

Making a counteroffer to a departing employee is a tricky business. Learn how to prepare and deliver counteroffers that serve your company's interests and satisfy the employee who was planning to leave.


By Ruby Bayan

High-profile companies see a sizeable chunk of their investment walk out the door each time a skilled member of the staff resigns, so they implement employee retention programs to try to keep that from happening. But competition to hire top talent is fierce in the IT industry, and tech pros are often enticed away by the promise of greener pastures. Even the best retention program won't prevent bright techies from leaving if the right offer comes along.

This is where you may be called upon to stop the employee at the door and apply one of the most essential strategies for preventing the proverbial brain drain: the counteroffer. For a counteroffer to be successful and productive for all concerned, you will need to tackle the issues that underlie the employee's decision to move on. Here is some advice from experts to help you prepare a counteroffer that will—with any luck—satisfy both you and your employee.

Ponder before you counter
Your reasons for making a counteroffer are clear: You've invested considerably in a key person in terms of training, perks, bonuses, and other premiums; you've trusted a staff member with your core systems, applications strategies, and trade secrets; and you appreciate the individual's notable contributions toward your company's successes.

Also, in the aggressive and sometimes cutthroat IT world, counteroffers are part of the territory. There's no shame in holding on to human assets. However, stopping an exiting staff member is not without risks and consequences.

"A counteroffer is tricky," said Lorenzo Enriquez, application services manager of ITS International, "because it usually involves giving something out of the ordinary—a raise, promotion, position, or benefit that is usually out of sync with normal company policy and procedure." He said that in a company he previously worked for, raises were given only on an annual basis, so making a monetary counteroffer meant giving an increase outside of the prescribed schedule.

Further, Enriquez said providing a monetary counteroffer reinforces the resignation behavior. It's easy to associate the counteroffer as a reward, he said. To some of the staff it may translate to, "Hey, so that's what it takes to get promoted around here." Word gets around, and it can demoralize those who are more loyal to the organization, he said.

Another issue to consider is the effect of a counteroffer on the psyche of the employee.

"Receiving a counteroffer can be flattering because it means that you're valued," Enriquez said. "But the resulting ego boost can also make it easier for the person to reject the offer and think, 'Hah, so now you realize how valuable I am! Suffer!'"

Enriquez pointed out another important consideration: A successful counteroffer may simply buy you time to turn over an exiting person's expertise to someone else. "Let's face it, once he's started to consider working somewhere else, it's really just a matter of time and the right offer before he's off again."

Despite the risks, consequences, and implications that tarnish counteroffers in general, if retaining a valuable employee is still top priority in your organization, the next step is to ensure your counteroffer works.

Do your homework
"The success of a counteroffer depends on your ability to determine the root cause of dissatisfaction," said Leigh Ishikawa, senior QA engineer of Netegrity, Inc. The important question is not how much you need to pay to keep them but what you must do to make them want to stay, he said.

Chona Quizon, retired EVP of Corporate Information Systems, Inc., listed ways to gather the types of information you will need in preparing an effective counteroffer:
  • Obtain information about the company and/or position that the person intends to move to and get an idea of what his/her reasons might be for wanting to go there.
  • Review the employee's performance records, career movement records, and potential.
  • If possible, match the person's perceived needs to the current company's interests (while also considering and balancing potential interests of other employees).
  • Determine whether the employee has "hot skills" (i.e., new or emerging technologies that are limited in supply, like expert skills in Java and specialized skills in SAP) and consider a counteroffer premium, such as a project allowance that does not necessarily touch the company's standard salary scale.

Ishikawa provided a list of people to talk to before building a counteroffer:
  • Recruiters: "As a manager, you should have good relationships with recruiters who will tell you about market conditions and industry rates that will help you attune your compensation and bonus structures."
  • Department heads: "You may have to make personal calls to your department heads to understand how benefits are implemented in your organization."
  • Coworkers: "Call on the exiting employee's peers and officemates and casually inquire about why there's a tendency to leave."

Naturally, you will have to ask the departing employee what his or her reasons are, Enriquez said. However, finding out the real reason an employee is leaving can be difficult.

"Make sure they give you the right reason," he advised. It's easier to say, 'I'm leaving because I've been given a better offer by the other company' than 'I'm leaving because you're a complete idiot,'" Enriquez said.

Handle the counteroffer with utmost care
"What will cap a successful counteroffer is the handling of the counteroffer itself," said Quizon. Given that you have all the pertinent information, how you handle the talk with the employee matters a lot, she said.

Quizon shared some tips for conducting the delicate conversation:
  • Watch your timing. Timing is important. If you receive early information or indications that a valuable employee may be job hunting, get the person to talk to you as soon as possible. This is to nip it in the bud and prevent the person from committing to the potential employer.
  • Be trustworthy. The employee must sense that you are sincere and objective in your efforts to get him or her to stay, if you want to build a trustworthy future relationship.
  • Make the counteroffer a business transaction. Your ability to handle the counteroffer will determine the continued status of the business relationship. The employee is making a critical career choice, and a sensible counteroffer and a boss he or she can trust the future with will matter a lot.

Make an offer that counts
Finally, the most important part of a counteroffer is what you have to offer—in earnest and realistic terms—for the benefit of the company as well as the employee. Money is usually first in the list of causes of employee discontent; but in the world of hard-core techies and IT gurus, it's not always about the money. Our experts recommended exploring alternatives to money for the basis of your counteroffer:
  • Career development and promotion for someone who feels his or her career has become stagnant
  • An extended vacation for someone getting too stressed or who is burning out
  • Training in a new technology for the gregarious and ambitious employee
  • A relevant project for a developer strapped with maintenance work
  • Structured leaves and flex time for a staff member hoping to be a responsible parent
  • Tools or equipment to help the employee feel better about the workload
  • A new career path for someone exploring new interests
  • Bigger challenges and more responsibilities for an overachiever

Weighing all factors
In the end, you must consider the good of the company and the likelihood that the employee will be productive and happy in the long run. If chances are good that the employee will be walking out the door in four to six months regardless of what you include in your counteroffer, you may be better off dealing with the loss sooner than later.

Have you been on either side of a successful counteroffer?
Have you been lured to stay with a company due to a counteroffer? Have you created a win-win situation for a would-be-gone employee? What made your counteroffer successful? Send us an e-mail or describe your situation in the discussion below.

 

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