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Counter offers are proving to be ineffective in retaining employees for the long-term despite being common practice for many New Zealand companies. According to independent research commissioned by specialised recruiter Robert Half, more than eight in 10 (89 percent) New Zealand CFOs have extended a counter offer while 64 percent of the same CFOs also say that the employee ended up leaving the company.

Source: Counter offers prove ineffective for long term staff retention: survey | Robert Half

As What to do if employer makes counter offer when you quit explains it’s often not in your interest to accept a counter offer from an employer you plan to leave. It turns out it’s not a great idea from their point of view either.

As Robert Half explains, most people still end up leaving the company soon after. As many as a quarter are gone in six months and only 14 percent stay for over a year.

Megan Alexander, general manager of Robert Half Australia says:

The reasons why people resign from companies often go far beyond salary. For an employer to offer a higher salary as an incentive to stay with the company often just delays the inevitable. Counter offers rarely prove to be a long-term solution for staff retention.” 

At best, a boss can buy some time to find a replacement with a counter offer.

Instead of making counter offers, Alexander recommends bosses start looking for a replacement immediately. That’s good advice.

They should also reflect on why they lost an employee who they thought so highly of, that they attempted to hang on to them. Should that person have been better paid all along? It’s often not about money, but getting that wrong is dumb. The cost of hiring, training and integrating someone new will always be more than paying the right amount in the first place.

What if there is some other reason good staff want to quit? This make take some soul searching. Are you asking too much of them, are you or someone else making their lives miserable or difficult?

How to quit your job and stay friends looks at how to resign without harming your future career prospects.

Some resignations are messy. Including those where your existing employer makes a counter offer when you quit.

While these counter offers look tempting, nine times out of ten you shouldn’t consider them. You’ve made a decision to quit. Just go.

There are times when you might consider a counter offer. For example:

  1. The Leapfrog
    Your career is at an early stage. You quit to take a higher-level job elsewhere. Staying put can make sense if a counter offer involves a promotion that sees you leapfrog the external position. Although many negatives — see below — about staying put may still apply, advancing your career is more important at this stage.
  2. Changed Circumstances
    You quit because the terms of an employment change making it impossible for you to stay, but the terms change again. Say your employer plans to move your function to a distant city or a suburb that’s difficult to get to. Staying makes sense if, after you resign, your employer cancels the move.

Of course there are other special cases. A belated, grudging offer or more money or a promise to correct bad behaviour is not a good enough reason to stay.

Here are six reasons why you’ll be better off moving:

  • The Closing Door
    Failing to go could mean you won’t get another chance for some time. At least not from the spurned employer. Remember, employers talk to each other — your actions might have wider repercussions.
  • Motivation
    Something moved you to quit. Whatever it was, it must have been important. A counter offer might address all the things that bug you about your current job. It’s possible but unlikely.
  • Boss Panic
    If you’re a key employee, your manager probably went into crises mode when your resignation arrived. While the panic persists he or she would be willing to make promises he or she can’t deliver. Consciously or not, that person will say whatever it takes to keep you. The backtracking will almost certainly start within days of your agreeing to stay.
  • Funny Money
    A promised salary increases made as a counter offer are likely to be at the expense of your next scheduled increase. Employers lift employee salaries at these moments only to bypass that employee in the next salary review. When the review comes they’ll remind you of that big hike — but sidestep the reason for giving it to you.
  • Leverage
    Agreeing to stay weakens your future negotiating position. Your employer knows you blinked first last time. He or she knows they’ve got you where they want you and how to keep you under control.
  • Self-esteem
    A financial counter offer is an insult. If you were only worth $x a year yesterday, how come you’re suddenly worth $x+y today? Obviously these guys have underpaid you in the past. What’s to say they won’t do so again? If you stay, they’ll figure you lack self-respect and treat you so.

Earlier this year IBM told remote employees they must return to the office or leave the company.

It’s a turnaround. IBM pioneered allowing employees to work from home. At times as many as more than a third of the firm’s staff worked at places away from company offices.

The company often lectures others on the merits of remote work. Company marketing describes telework as the future. Moreover, IBM sells products enabling its customers to offer remote work to their employees.

IBM’s remote work policy was popular with staff. Many talented people either opted to join the company or decided to stay put because they could work from home. It’s powerful for working women with families and just as good for dads who like to see their children more often.

Productivity or IBM’s staff costs?

The official reason for the change is that working together in one place helps productivity, teamwork and morale.

There’s something in this. Collaboration is easier when co-workers sit across the aisle. Video conference calls are productive, but so are well organised face-to-face sessions. Chance meetings at the coffee station can spark fresh thinking.

Yet, you can’t help wonder if IBM’s move is about cutting staff numbers. Many remote workers may decide it is too hard to move home in order to keep their job. Some of the office demands mean people have to move long distances to keep their jobs.

There’s research, some sponsored by IBM, showing teleworkers are more productive than office-bound workers. Which argument are we supposed to believe? Can we trust anything the company says on the subject?

Ominous

Yahoo made a similar back-to-the-office move. It was unpopular. Many talented staff members quit. We all know how well that story ended.

There’s a practical problem for IBM workers in places like New Zealand. Some specialist roles are shared with Australia. There are ANZ managers are in New Zealand, others across the Tasman. They shuttle between locations and make a lot of conference calls. What happens to them under the new rules? The fear is they will be under pressure to move closer to the regional HQ in Sydney. That will not go down well with New Zealand customers.

Remote working became popular with large companies about a decade ago as suburban broadband improved. Video conferencing went from being difficult to practical.

Senior managers across the technology and other industries loved the idea of remote work as they thought it would save costs. In theory, offices needed less real estate and fewer support services when workers were elsewhere.

Things didn’t work out that way. Few savings materialised.The other part of this equation is that management went through a stage of being output-focused. That is, they were more concerned with what employees produced than in keeping close tabs on them all day long. If someone produced a report in their pyjamas or by sitting next to the pool that wasn’t a problem so long as the work was good. It seems the pendulum has swung back to command and control.

Also on:

NZ cities innovation

London, New York and Tokyo top the 2017 Innovation Cities index. Auckland limps in at a feeble 89. Wellington rates at 108.

An organisation called 2thinknow released the index. No, I’ve never heard of it either. It describes itself as a “global innovation agency”, whatever  that means.

According to 2thinknow the index scores 500 cities using 162 indicators for measuring conditions conducive to creating innovation in a city.

It says the top 50 cities, which includes Sydney and Melbourne – 2thinknow’s home, are nexus cities. Auckland and Wellington sit in the second, hub, band. Below that are node cities. 

Yes. You’ve guessed it. The 2thinknow survey is meaningless. There is no need to take it seriously.

Rod Drury AWS Summit Auckland 2015

If you’re wondering why the government was so keen to build a fibre network look no further than Victoria White’s Xero boss brings jobs to Hawke’s Bay in Hawke’s Bay Today. She writes:

Next year, Hawke’s Bay will join the likes of San Francisco, London, and Singapore, as a base for global software company Xero.

The ever-expanding company will be opening a new office in Napier — potentially at the new Ahuriri Tech Hub — which will create 30 support jobs over the next 18 months to join the company’s global customer experience team and specialist payroll experts.

The story is mainly concerned with Hawke’s Bay potential for acting as a hub for other technology companies. That’s as it should be for a Hawke’s Bay newspaper. Good luck with that project, the more tech jobs in regional New Zealand the better.

Three quarters of the way down the page, White gets to the important point. She quotes Hawke’s Bay-based MP and Small Business Minister Craig Foss, who says:

“Fibre has enabled world-leading innovative companies, such as Xero, to be based in our stunning region – living and working the dream.”

Tuanz CEO Craig Young makes the point in a Tweet:

More initiatives like this please.

Sixty-nine chief executives responded to an open-ended question as to what they would like to see on the Labour Shadow Finance Minister’s policy agenda.

“Continue to constrain public expenditure to core and effective services,” advised Unitec CRO Rick Ede. “Reset taxation and investment incentives to favour productive investment instead of property investment.

“Continue the investment approach to welfare services begun by Bill English.”

Many, but not all, of the themes on Robertson’s own priority list resonate with the boardroom. With 67 per cent per cent of CEOs predicting technological advances will be the single factor with the biggest impact on business in the next five years and a further 7 per cent singling out job losses through technology, it is clear Robertson’s Future of Work initiative falls on fertile ground.

Read the full story by Bill Bennett in the New Zealand Herald.

Robertson’s four priorities:

• Find ways for industry to add value and diversify the economy: lift productivity and add value to primary industry and invest more in R&D.

• Focus on regional development and lift wages outside the main centres. Auckland’s infrastructure and housing is under pressure. Housing costs less in the regions but there are not enough good jobs.

• Future of Work project to address the challenge of technology-led change head on.

• Share the rewards from prosperity: many people work hard and yet they don’t earn enough to buy a house.

“When I attend a business dinner, the conversation often turns to inequality. Many business leaders are concerned about this. They realise it can mean both a loss of potential and it can become a drain on the economy. Even organisations like the OECD, which is hardly a left-wing body, recognises that inequality inhibits growth,” says Robertson.