Managing The Counter Offer

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What do you do when an employee tells you s/he’s been offered more money to work elsewhere?  Below we discuss:

  • 2 counter offer situations
  • Why you should be cautious
  • Before you make a counter offer
  • Three things to remember about managing a counter offer

Where you Might Face the Counter Offer

We will talk about 2 situations where you as a manager might have to use a counter offer:

  • When an employee has an offer from another company and you want to make the counter offer in an attempt to retain the employee
  • When you negotiate salary with a new job candidate

Caution!

  • It doesn’t make good business sense to overpay for a job
  • Your other employees will be watching
  • In the case of retention this rarely works anyway

Before You Make an Offer

  • Assess the risk of not keeping the current employee or not landing the new candidate.  Who else is available? What other options do you have?
  • You can only go so far with base pay.
    • What’s the highest you’re able to go?  Gather information
    • Consider internal equity
    • Overpaying for a job
    • Make sure they understand total rewards
  • Consider alternatives:
    • Retention bonus – this might at least buy you some time
    • Signing bonus
    • Alter the job
    • Schedule flexibility
    • Etc
  • Determine why the employee is leaving.  You’ll likely need to fix more than salary to keep this person long-term.

3 things to Remember about Managing the Counter Offer

  1. It’s not a paper exercise.  In both cases determine as much as you can verbally.
    • Quicker
    • Less stress
    • Better employee relations
  1. Know your limit … stay within it.
  2. Get more creative with you employment offer.

Watch the ‘3-Minute Crash Course’ about Managing the Counter Offer (CLICK THE ARROW TO START THE VIDEO):

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