August 9, 2011

To Counter Offer or Not to Counter Offer? Part 2

To Counter Offer or Not to Counter Offer? Part 2

In part one of this article, we considered the costs of recruiting, hiring, and training as well costs of a bad hire and the opportunity costs involved when a valued executive’s departure leaves the company in the lurch. Can you avoid this hassle and extra cost? Should you making him a counter offer and keeping the team intact, the projects on time, the sales meeting on track, the product launch as planned?

Was this prized executive completely engaged and invested in your company’s mission and objectives? Really? If he was actively looking for another opportunity there must be a reason? If an opportunity came out of the blue and has enticed her away, why isn’t the current employment situation competitive with the new opportunity? Does the company have a general employee engagement problem or is this specific to this individual?

What specifically is better about this other opportunity? If it is the monetary compensation and benefits, can you out-compete the offer? Will other executives follow suit demanding higher pay or seeking other opportunities? Is the company’s pay scale and employment offer competitive? It may be time to review your overall compensation strategy.

Does the new opportunity represent career advancement, additional training or an upgraded title and responsibilities? Does this person merit the opportunity and your company wasn’t able to provide it at this time? Perhaps a review of the internal career ladder and how this is communicated is in order, again as a general review for the benefit of your entire management team. If the person doesn’t quite merit such upgraded opportunities as she has been offered, then it doesn’t make sense to counter offer in any case.

Was your executive seduced by a better company culture, a healthier work environment, a smoother politic? If your company culture and environment don’t engage and motivate your employees, you don’t have anything to counter with. Especially in times of economic downturn, the company culture can make a huge difference in how invested and productive your employees are, from the top to the bottom of the pay scale. Discern if this is a one-off misfit with your company, or a general feeling shared by others. If the former, the company will be better off without this person. If the latter, you’d better address this now as an improving economy will only increase opportunities for current staff elsewhere.

While the costs of a new hire and lost opportunities in the wake of an important executive’s departure are significant, the costs of alienating or upsetting the remaining team may be even greater. Whether the employee is overtly leveraging another offer, or not, a company that tries to outbid on a one-off basis is likely to cause itself problems down the road; systemic issues must be considered and addressed. If this executive can be lured away by money, career advancement, title, culture, all these factors may lure others away. Exit interviews and evaluating the reasons for the voluntary separation by your prized executives are key to understanding how to strengthen the company’s talent management.

 

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