When is it Right to Counter-Offer?

The August Asia Pacific Japan HR poll looked at the controversial issue of whether HR practitioners support the provision of a counter-offer to high potential employees when they tender their resignation.

18% of survey participants felt that high potential talent was invariably too important to lose and therefore they would always support the generation of a counter-offer to retain this talent. According to Oscar Fuchs, Associate Director at The Chapman Consulting Group, the most common counter-offers used are monetary measures including salary increases and one-off bonuses. However, senior job titles, enlarged roles, and short or long term international assignments are also common.

17% of survey participants said that they often used counter-offers to retain staff and that part of this counter-offer would usually involve the opening up of other internal career paths previously not explored. “Most typically, decision makers are saying ‘perhaps we should have given you this opportunity earlier or perhaps we should have flagged to you that this opportunity was coming’ as a way of keeping the individual”, said Fuchs.

12% of survey participants responded that they never used counter-offers to retain staff who tender their resignation. “While a strong stance on this issue sets the tone and lets employees know that their bosses won’t be bargaining to keep them, should they resign it can also prove to be inflexible”, said Fuchs. “Companies with an extremely strong brand or who offer a very unique work experience that can’t necessarily be replicated in the market, are most likely not to counter-offer”.

An overwhelming majority (50%) of the 87 respondents said that they only supported counter-offers for high potential talent in exceptional circumstances. “We feel that many companies have been stretched, particularly during the recent downturn, on being able to give salary increases, one-off bonuses and international assignments, so there has been more analytical thinking on whether a counter-offer can be given in any particular situation. “The most common strategy in recent times has been non-cash measures such as job enlargement or better titles”, said Fuchs. “Being more selective on when counter-offers are given and using them as an exception rather than a rule helps to set theperception that a counter-offer will not automatically be given when someone resigns”.