TXM Recruit Candidate
Businesses don’t like to lose their best employees, so it’s no surprise when counteroffers are made once an employee decides to leave, especially during a time where we’re experiencing the worst staff shortages since 1997.
From salary increases to additional work benefits, counteroffers are designed to keep employees from accepting another job offer, however what is the true cost of replacing a highly valued employee? Here’s 10 reasons why a counteroffer should be carefully considered…
1. People still leave a company months after receiving a counteroffer
It is well known within the recruitment industry that candidates still decide to leave a company after receiving a counteroffer. 70% of employees who accept a counteroffer leave their company within six months, with 90% of employees departing within 12 months!
2. Your reasons for wanting to leave still exist
It’s important to remember why you initially decided to look elsewhere and whether these reasons will improve based upon the counteroffer promises made. Are you leaving based on the company culture? Team? Or your relationship with your boss? Regardless of the raise, promotion or promises made to keep you, work conditions are only made a bit more tolerable for a short period of time.
3. Why did it take you threatening to leave to get what you want?
Counteroffers are only made in response to a threat to quit your job. Will you have to threaten to quit every time you deserve better working conditions?
4. The trust is broken
No matter what the company says when making a counteroffer, you'll always be considered a risk to the organisation. You may find your relationship with your employer and standing with the company has changed. You're now the one who wanted to leave. You'll lose status as a ‘team player’ and you might be at the top of the list if your company needs to make cutbacks in the future.
5. They will look to find your replacement
Counteroffers are usually nothing more than stall devices to give your employer time to replace you. Your company might just want time to search for a replacement, figuring that it's only a matter of time until you start looking around again. You may even end up training the replacement and then being let go!
7. You may be getting your promotion or pay rise early
Even if you get more money out of your company now, think about what it took to get it. You needed to have one foot out the door to get paid what you wanted, and there's no reason to think that future salary increases will be any easier. The next time you want a raise, you might be refused altogether on the grounds that you’ve already received a big increase because you were thinking about leaving.
8. It is generally in the bosses (or company’s) interest to keep you
The reality is your boss isn’t thinking of your best interest. When someone quits, it's a direct reflection on the management. Their gut reaction is to do what must be done to keep you from leaving until they are ready. That's human nature.
9. They will continue to think you are looking to leave
What will they think the next time you need to go to the doctors or dentists? Remember you’re considered a risk to the company now and unfortunately the trust has been broken.
10. And finally, what is the true cost of replacing you?
Let’s put this into perspective… if an employee was on an annual salary of £50,000, the company will most likely have to pay a new hire between £52,000 - £55,000. In addition to this, a standard recruitment fee may be between 15-20% resulting in a fee around £8,000 - £11,000. Not forgetting the internal cost of training and loss of team productivity as someone new is learning. As you can see, it costs a lot to replace you, so unless a counteroffer provides a considerable salary increase, it may be that you’re being undercut!
When you consider all the costs associated with employee turnover including interviewing, hiring, training, reduced productivity, lost opportunity costs, etc – here’s what it really costs to replace you…
• For entry-level employees, it costs between 30% and 50% of their annual salary to replace
• For mid-level employees, it costs upwards of 150% of their annual salary to replace
• For high-level or highly specialised employees, you're looking at 400% of their annual salary
If you need further guidance on counteroffers or how we at TXM Recruit can support you, contact our team today.