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:
- 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.
- 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.
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.
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.
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.
Overseas readers wanted to know how New Zealand is filling its tech industry vacancies. Here is my story published earlier this year in London-based Computer Weekly.
Wellington is as far as you can fly from Heathrow before you start coming back. New Zealand’s capital is almost 19,000km and at least 24 hours away. The city is small by European standards, with only 200,000 people calling it home.
And yet Wellington is a regional technology hub. It is the nation’s biggest technology user and the government is based there. Wellington is also home to Weta Workshop, established by director Peter Jackson to create computer graphics for The Lord of the Rings movies. It is where New Zealand technology entrepreneur Rod Drury began Xero, the small business accounting software-as-a-service market leader. Dozens of small tech startups inhabit buildings all over the small South Pacific city.
Read more in New Zealand calls for tech specialists at Computer Weekly
Tomorrow night I’m chairing an interactive panel discussion on the skills challenge facing New Zealand technology companies. It’s part of Massey University’s ecentre cloud series. The session starts at 5:30 at the Sir Neil Waters Building, Massey University Albany.
Innovative companies depend on talented knowledge workers. They are in short supply everywhere, New Zealand is no different from other western nations. Yet with our innovators going through a golden age, the problem is particularly acute now.
This certainly is a golden age for New Zealand innovators. A whole raft of entrepreneurial companies are taking leading edge technology products and services to the world. We’ve always had innovators, but Xero’s global success has inspired others to shoot for bigger goals. Vend, the Wynyard Group, E-Road and PowerbyProxi are some of the best known.
For every high-profile innovator that you’ve read about in the business pages there are dozens of smaller companies queueing up behind.
It’s exciting times. For the first time in history we are creating a new wave of exactly the kind of high growth technology companies our economy needs to lift us from relying on producing commodities. Exciting times, but also worrying times because fewer students are signing up for courses in the subjects that feed these industries: science, technology, engineering and maths. It’s not just at the university level, school students are turning their backs on these subjects.
We can shake our heads, complain and make loud noises about this problem — that’s an understandable response. But the centre cloud discussion panel is going to look for answers. The plan is for people to come away from the session with a better idea of the shape of the problem and some positive ideas about how to fix it.
Among other things the Financial Services Annex of Secret Trade in Services Agreement (TISA) published this week by Wikileaks includes clauses which mean banks and other finance companies can quickly import overseas IT workers. Continue reading
The Sydney Morning Herald reports IBM Australia could cut as many as 1500 staff. Many of the jobs will go offshore to Asia and New Zealand.
IBM refuses to confirm or deny the report.
At first sight this could be a good thing. After all we get good, well-paid jobs with a multinational employer. If you want a job with IBM, I hope you’re lucky.
It isn’t all positive.
First, Australia and New Zealand are effectively a single market for tech jobs. Many senior IBM people in the two countries have responsibilities that stretch from Invercargill to Darwin or further. With some of those jobs going to Asia the total pool of work for Australians and New Zealanders will be smaller.
Second, New Zealanders will be among the 1500 getting laid off in Australia. Some may be your friends or relatives.
Third, there’s a worrying implication in the SMH story. IBRS analyst Alan Hansell says he:
wouldn’t be surprised if New Zealand ended up benefiting the most from the cuts. This was because of the country’s cheaper real estate, lower mandatory superannuation for employees and lower labour rates.
Lower superannuation and lower labour rates are not the kind of competitive advantages most countries aspire to.
Up to 1500 Staff to Go in Offshoring Redundancy Drive, Sources Say.