Not wise to make counter-offers

Angeline V Teo
Principal Consultant
d'Oz International

IF YOU keep a quitter today, he might still quit tomorrow. Where do you draw the line? Keep people with passion to succeed, who are honest to themselves and to the organisation. Quitters will leave the organisation when they are not able to perform at their peak, and they do not have the perseverance to see completion of a project.

If they are lured by monetary goals today, you can only keep them for a limited time before they come back to ask for more. It is perhaps more effective to train and retain those who make a sincere contribution and add value to the organisation, rather than those who are always scheming to "take" from it.

Jake S Jacob
General Manager
Foster's Asia

IF A team member has decided to quit solely because of money, and assuming he was being paid at the correct level given his position and experience, I would not make a financial counter-offer.

I would, however, take the opportunity to review his development plan with him (which every team member at Foster's has). I would first ask him to check that the plan and underlying objectives are up-to-date and then look for ways in which his plan can be accelerated to further support the achievement of his career goals.

Anyone who is already being paid well and who is keen to leave the business just for money is not really worth holding onto, in my view, as one runs the risk of pay increase demands becoming a vicious cycle, not to mention the question it raises in my mind regarding his passion for our business.

Fahmi Rais
CEO
iBrand Strategy Group

COUNTER-OFFERS buy people, they don't make them. As such, I have refrained from making any counter-offers to staff who have sought opportunities elsewhere. Such moves are made on the basis of either a strong push or pull factor and keeping such staff only extends the countdown of a time bomb. Once the thought of leaving has been entertained, loyalty is zero.

What I would rather focus on is to build a relationship with staff that creates a "stay" factor. A relationship is a more effective motivator and it matters more than providing a better environment, higher pay and even greater prospects. Management-staff relationships that are built around good mentorship and sound understanding will keep staff committed and feeling appreciated and valued. A good employee is more valuable than one with good skills. It is better to keep a good employee and work on the skills, than to convince one with good skills to stay a little longer.

Teng Yeow Heng Michael
Managing Director
TR Formac

AS A management practice, I do not normally make counter-offers to staff who have threatened to resign if the company does not match his new job offer. I have done so before and these employees eventually leave as the trust is already broken. Also, by acceding to these requests, I have opened up a Pandora's Box by inducing other staff to do the same. However, I would listen to the feedback during the exit interview and make improvements without any immediate counter-offer in monetary compensation. There is no end as there will always be other jobs that can pay better.

However, as a CEO, I believe that I should compensate my people fairly and they should not have been instigated in the first place to seek alternative employment because they feel that their compensation is not adequate.

R Theyvendran
Chairman/Managing Director
Stamford Media International Group

WE would not make a counter-offer to an employee who wants to quit. We would, however, find out in detail the reasons why the employee wants to leave, especially if he has obvious potential. From such feedback, we would address any weakness in our systems.

The flaw may not always be a deficient remuneration structure. Besides monetary incentives, encouragement, motivation and a proper career path are just as important to most employees. We would endeavour to find a permanent solution so that we do not lose capable or talented staff.

Being an on-going concern, we are just as watchful of good public relations. The services of our employees will always be appreciated and wherever appropriate, rewarded. As far as possible no employee should leave our company with any ill feelings except for the fringe few, who may not fit in for whatever reasons.

An "open-door" management policy can be practiced, where employees can just walk in and raise matters that are bothering them. Teamwork is important and for that to happen there should be good communications with employees at all levels so that whatever real or imaginary problems can be eliminated.

Industry-wise, too, it is important to have an understanding that employees are not poached improperly.

Richard Hoon
Chief Executive Offiicer
I Search Worldwide Group

I THINK it is generally not wise to make counter-offers to entice employees to stay especially when they have already made their decision to leave. If the employee has gone through the whole process of looking for a job, gone for interviews and finally accepted an offer only to be tempted to stay, why would anyone in their right mind want to retain them? They have shown no respect for others, cannot keep their commitments and are only thinking of themselves.

It may resolve a short-term staff crunch but it will create a long-term systemic challenge for the organisation. Morale among existing staff will take a dive if it gets out on the grapevine that one can hold the management to ransom and be rewarded at the same time. What message are we sending to the rest of the employees who have been loyal?

Having said that, however, if an employee is quitting due to other considerations such as a sudden change in personal circumstances or a need to achieve work-life balance, then the company should do all it can to accommodate the employee to allow him to stay. But any accommodation given should be above board and be made available to all employees.

Ideally, a company should try to avoid such precarious situations in the first place by creating an environment where their company is the preferred place to work, and where employees feel they are valued and appreciated. Adequate succession planning and competitive compensation will also help.

By all means, woo employees but not quitters!

Lim Soon Hock
Managing Director
Plan-B Icag

IN MY more than 30 years of working life, I have succeeded in only one counter-offer. It turned out to be a bad decision, as the incumbent involved had to be terminated subsequently.

I would strongly discourage companies from making a counter-offer to employees looking to leave as it is a waste of a company's time and resources, unless there are exceptional reasons for doing so. Having said that, employers must carry out the requisite exit interviews with the intention of gathering feedback from employees who have resigned, so that they can improve their employee relations and employment practices.  

I would propose companies spend time and resources focused on creating a congenial yet challenging work environment for the employees. Apart from having a benefits and compensation policy which is competitive and designed to attract and retain employees, companies must intensify their efforts to promote work-life harmony. More importantly, companies must have a succession plan in place to ensure that the business operations will not be inadvertently compromised, should incumbents leave the companies.

The best returns a company can realise is through investment in human capital, more so in today's highly competitive milieu where talents are greatly sought-after and where every company wants only the best to take them forward.

Higher offer should be strictly justifiable

Dhirendra Shantilal
Senior Vice-President, Asia Pacific
Kelly Services

IN OUR tight labour market where talent is scarce and top candidates are in limited supply, the success and continued growth of an organisation depend significantly on its ability to attract and retain valuable talent. With the war for talent persisting and average salaries scaling up, key employees who have valuable skills and work experience are highly sought-after by other organisations.

Organisations should determine the criteria for defining which employees are key based on the impact of their role, performance, difficulty in replacing and long-term potential. These are the individuals that management and HR can consider making a counter-offer if they decide to leave.

The decision to extend a counter-offer should not be reactionary but based on reason and management consideration as the decision will affect the manager, staff and the organisation. As the employee is likely to have considered many factors before choosing to leave, money may not be the primary factor and, therefore, a salary increment can only be a short-term solution.

In the quest to attract and retain the best talent, it is critical for organisations to develop good performance management strategies and know how and when to engage their top performers. With performance management, leaders would collectively, and in a structured manner, talk about performance, development and aspirations with their employees so as to consistently align the organisation's vision and objectives to the desired behaviours, expectations and results expected from its employees.

In turn, employees will be engaged in the company's strategy and understand the important role they play in the organisation. Once you win the heart and trust of your employees, you will have a motivated and focused talent pool that will enable your organisation to achieve greater success.

Liu Chunlin
Managing Director
K&C Protective Technologies

OUR company, K&C Protective Technologies, is what you would call a boutique firm, offering niche protective design and solutions for buildings and infrastructure. As such, we require a tight fit between our staff's capability and attitude and the company's business requirements. We have a process to spot talent and track staff development. When an employee wants to leave because of any mismatch that was not evident previously, we would reluctantly have to agree. There is no point perpetuating an untenable situation with higher pay, even if it is hard getting a replacement in a tight labour market.

For staff that fit well into our business, we would manage their development and track personal aspiration. If higher pay is justifiable, we would agree but we would certainly like to do it in a way where we are in control by pre-empting the situation.

Staff stay with you for a host of reasons other than pay which can be a coarse measure if it is solely relied upon. People find satisfaction in a workplace when there are things like appropriate challenge, personal development, a conducive work environment, hours allowing family-work balance, recognition, trust, teamwork, welfare, etc. In other words, one has to manage a basket of conditions which ensures you have strong staff with you to help you meet the challenges of the business.

Deb Dutta
VP, Asia Pacific & Japan
Brocade

WHILE the knee-jerk reaction would be to make a counter-offer to a departing employee, I personally seek a deeper analysis of the reasons for the employee's departure. I try to focus on the appropriateness of the goals and expectations of the employee that he feels the new environment will help accomplish more optimally than the present employment and determine how realistic they are.

This understanding helps me choose from a range of appropriate actions including counter offers, new roles, new locations, counseling or, in some instances,  letting the employee go as the best action.

Contrary to popular belief within hiring managers, monetary considerations are not the No 1 reason for employee departure. Every organisation strives to hire the best talent. What is more important, though, is to continually develop, empower and grow this critical resource, especially in a tight marketplace. Rather than seeking creative methods of retaining employees when they announce their departure, I prefer to create an environment where they feel respected, energised, collaborative and passionate about their roles, their teams and have pride in the environment they work in. Being able to create this work environment is what Gold Standard organisations are all about!

Corrective measures could help

Lim Pun Kok
Managing Director, South Asia and Australia/New Zealand
Blue Coast Systems

WHEN an employee tenders his resignation, I believe that it is always important to find out the exact reason why he wants to leave. Have a candid talk with the person. Ascertaining this would allow you to better  understand the needs of the person and to see if corrective measures, like improving  the current working environment, can be done to get him to continue. For example, if  he has a conflict with an immediate supervisor then instead of losing this talent, a reassignment could be implemented to solve this issue.

Generally, counter-offers are needed when a company does not adjust existing salaries according to the market rate. At Blue Coat, we have a firm assessment of market trends in salaries and regularly  conduct salary reviews to ensure our employees are well taken care of. What has worked well for us is our proactive HR approach of regular feedback sessions on  improving work environment and employee productivity. Organising regular social and team building activities do help bond the team and create a family atmosphere.

Charles M Ormiston
Director
Bain & Company

THERE is no doubt that the point where an employee informs me that they intend to leave the company is one of the most troubling tasks of a senior executive. One of the biggest challenges is that we all want to receive the loyalty that we feel is our due. A negotiation under the threat of departure threatens our sense of self-importance and the norms of an employer-employee relationship. We have to subordinate our ego. These are the times when every bit of skill and experience of a leader must be drawn upon.

Bain & Company is considered to be an extremely good employer - we have been named by Consulting Magazine as the top consulting firm to work for five years in a row - but our employees are in high demand in the marketplace and have ambitious career aspirations. In addition, I am frequently engaged by client executives who are facing the potential loss of a key employee and are looking for advice on how to respond.

I believe there are four key questions you should focus on at the initial stage of a potential departure:

1) Is the employee leaving because they are genuinely excited about a new opportunity (running to something) or are they unhappy with what we have been offering them (running away from something)? The answer is usually a mix of the two, but there is a bias.

2) Is the new opportunity really a good fit with their capabilities and interests? To answer this question I have to really put myself in their shoes - not look at the world from my personal vantage point.

3) Do they have any legitimate grievances that should have been addressed before and can be addressed now? and

4) Are they violating any contractual agreements or commitments that we have (for example, a non-compete)?

Getting clear and honest answers to these questions is a multi-stage process of talking to the employee, his mentors, other executives and even friends and relatives.

At the next stage, every executive needs a set of principles that they draw on to set boundaries to any kind of negotiation. These principles might include "we will not make any secret deals", "any new benefits will result in a change in policy rather than a one-off for one individual" or "we will discuss changes to responsibilities but not salary changes".

Whether an executive has these principles and sticks to them at all times will have a significant bearing on their credibility and reputation in future discussions. In the worst-case scenario, a counter-offer is spurned and remaining employees begin to see the employer as unreliable.  

In addition, at this stage you need to have a clear idea of how to communicate your firm's value proposition - the mix of short and long-term compensation, training and development, job challenge and diversity, job responsibility, camaraderie, fun and recognition that is key to attracting, developing and retaining top talent. Firms that rely most heavily on compensation as a motivating tool (eg, private banking and sales) are more likely to see "counter-offers" than firms which rely heavily on qualitative elements to reward employees.

With that as background, we would only counter-offer in the traditional sense of a higher compensation package if 1) we determined that our compensation package was out of line with the market in a particular job classification and 2) we could identify an opportunity for greater responsibility that would merit an increase. On the first, if we made the change for one employee, we would generally extend it to others in the peer group and in the second case, we would need to be very open with existing employees about the change in responsibility. These types of situations always come at a bad time - we're busy, the employee only has a few days to make a decision and the topic requires significant and genuine listening, dialogue and reflection. It is too easy to either "play hardball" or "throw money at the problem".

My primary advice to executives would be to treat each situation as one of the best learning opportunities you will have to find out how well you are doing as an employer - what do employees really value, what gives them energy at work, what detracts from their job, is compensation really in line with what alternative employers are willing to offer, who are the supervisors in the company who are commanding loyalty or are creating dissonance? It is best to spend the time and effort, even on people who will most likely depart, to gain these insights and use them to improve the value proposition to existing employees.

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