Stay-Put Counteroffers Can Backfire, CFOs Say

Survey finds most CFOs don't extend counteroffers to retain talent

By Stephen Miller, CEBS Jun 12, 2015
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Although employee retention concerns continue to mount, a new survey suggests counteroffers aren't the answer when it comes to keeping valued talent.

In research findings published in June 2015 by staffing firm Robert Half, eight in 10 (78 percent) chief financial officers (CFOs) said they don't extend counteroffers to keep employees from leaving.

One reason may be because CFOs believe this tactic can have a ripple effect. Among the 21 percent of CFOs who do make counteroffers, roughly one-third (34 percent) said doing so necessitated raises for other employees in the department.

The survey was based on interviews with more than 2,200 CFOs at companies in more than 20 of the largest U.S. markets.

CFOs were asked and responded:

Do you ever extend counteroffers to employees to keep them from leaving for another job?”

Yes

21%

No

78%

Don’t know

1%

Source: Robert Half



CFOs who said they'd extended counteroffers were subsequently asked and responded:

When you have extended a counteroffer, did you also increase the salaries of any other employees in your department?”

Yes

34%

No

63%

Don’t know

3%

Source: Robert Half



“Counteroffers are not an effective retention tool," said Paul McDonald, senior executive director for Robert Half, in a news release presenting the findings. “Offering more money to someone to prevent him or her from quitting doesn't typically solve the issue that prompted that person to resign in the first place. It can, however, upset the company's salary structure, prompt loyalty concerns and foster resentment among the rest of the team who may feel that they, too, must threaten to quit to receive a raise.”

Businesses must regularly review their compensation levels, particularly in today's job market, McDonald added. “Waiting until an employee quits is too late to think about whether the salaries you offer are strong enough. Employees’ frustration over their salaries could fester into a bigger problem of feeling undervalued and unappreciated, which more money via a counteroffer won’t be able to remedy.”

Related SHRM Articles:

Reward Strategies Should Target Key Talent, SHRM Online Compensation, May 2012

Make a Counteroffer—But Make Sure It's Not Just About Money, Managing Smart, March 2008

How to Make a Counteroffer, HR Magazine, November 2003

Stephen Miller, CEBS, is an online editor/manager for SHRM. Follow him on Twitter @SHRMsmiller.

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