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Counteroffers have become routine as employers struggle to retain talent, says recruitment specialist Hays.
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Most bosses offer pay rises to keep valued staff
26 October 2023
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10 minute read
Most employers think about putting more money on the table to keep hold of departing staff, according to a survey by recruitment specialists Hays.
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Half of the employers questioned said they counteroffered when a valued employee resigned while 4 per cent said they invariably came back with extra cash.
Hays Asia-Pacific CEO Matthew Dickason said counteroffers could be an effective weapon for retention.
“In today’s market, employers are pulling out all the stops to retain valued and productive staff,” he said.
“Many use counteroffers as a tool to fight for highly regarded employees. This can make it difficult for hiring managers to secure top candidates, especially when a counteroffer is made that’s hard to refuse.”
The latest data from job site Seek shows advertised salaries rising at an annual rate of 4.8 per cent following a 1.5 per cent increase over the June–September quarter.
Seek senior economist Matt Cowgill said salaries were “running hot” despite a cooling in the labour market.
“The big month-on-month increases we saw in July moderated a little in September as the once-off effect of the Fair Work Commission’s aged care award wage rise and Annual Wage Review have now passed,” Mr Cowgill said.
“But advertised salary growth is still robust at 0.4 per cent month-on-month and 4.8 per cent year-on-year.”
Mr Dickason said financial counteroffers only addressed one dimension of an employee’s decision to leave, which was rarely done on a whim.
“Counteroffers are only successful long-term when an employer actively addresses the reasons that drove you to accept another job,” he said. “Rather than offering a hollow new job title or a few additional benefits, for example, they must make real change that motivates, engages and develops your career.”
“Why would a pay rise, new job title or additional benefits be anything other than a superficial tactic to convince you to stay?”
He said employers needed to carefully craft any counter-offer they made.
“Be strategic to ensure your offer is not only competitive but compelling,” he said. “Ensure your offer ticks all these boxes, leaving the candidate with no reason to accept a potential counteroffer.”
“For instance, if a candidate’s current employer isn’t offering career progression opportunities, demonstrate a clear path for growth and development in your team.”
He said most counteroffers were stop-gap solutions to bigger problems.
“Understand the drivers of staff turnover in your organisation and fix the underlying issues to minimise the risk of employees looking elsewhere.”
“Perhaps fostering a culture of continuous upskilling, training your managers and crafting clear promotional pathways, for example, could improve job satisfaction and reduce the risk of employees leaving.”
The FY23–24 Hays Salary Guide quizzed 6,903 organisations and 7,392 professionals.
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