Chris Jensen, CPA, CGMA, does not view the counteroffer as a retention tool. If an employee has a job offer to work elsewhere, it’s unlikely that money is the reason for the departure.
“In most cases, when someone leaves and gives you the heads up, it’s probably best for both parties to separate,” said Jensen, the CFO at Pinnacle Exhibits in Hillsboro, Oregon. “They’re ready to move on and progress, or they weren’t fitting in.”
Jensen is not alone in dismissing the counteroffer. A recent survey by staffing firm Robert Half shows that 78% of CFOs don’t extend such offers in an effort to keep an employee.
Clearly, finance chiefs are seeking other methods to hold on to employees and keep them engaged, issues that repeatedly crop up among executives’ top concerns.
Jensen said retention steps can be taken well in advance of an employee’s getting a job offer elsewhere. They include:
Offering a competitive compensation and benefits package. Jensen said he aims to review employee compensation annually through industry and finance research. “In most cases, we’re paying in alignment with market wages,” he said. Benefits such as health-care coverage, retirement plans, or flexible work arrangements also play a role in keeping an employee happy. So, too, can more paid time off.
Providing an engaging, transparent work environment. Jensen said that having a culture in which employees feel comfortable discussing work conditions is a strong retention tool. He cited the example of one employee who voiced displeasure and was able, with consultation from a manager, to work out a schedule that offered better work/life balance.
“Hopefully, if you’ve got a good culture, you’re going to generate some of that transparency,” Jensen said. “The employee felt comfortable bringing up the dissatisfaction versus just up and quitting one day. Because we had a pretty good culture and pretty good engagement … we had a chance to address it.”
Providing opportunities for advancement. If employees believe they have a chance to ascend into roles with more responsibility, they are less likely to look elsewhere and more engaged in performing in their current job. “They’ve got to feel like they’re contributing, and hopefully, there’s a path forward for them,” Jensen said.
Trouble with counteroffers
The Robert Half survey of more than 2,200 US CFOs showed that 21% have used counteroffers to keep workers. But giving a pay raise to one worker sometimes means spending more for others: 34% of those who extended counteroffers ended up giving pay bumps to other employees in the department.
David Kvendru, CPA, CGMA, the CFO of the San Diego Association of Realtors, recalled one instance in which a counteroffer worked out for the company and the worker: the employee got a raise and a new title and decided to stay. But in most other situations, he said, more money didn’t solve the issues that caused employees to seek work elsewhere.
Kvendru recommends better communication with staff to fend off the need for a counteroffer.
“If you’re paying attention and you see someone not as engaged, not coming up with ideas, you might want to go and talk to them first,” he said. “Proactive is better than reactive.”
Related CGMA Magazine content:
“More UK Employees Seeking a Job Switch, and a Majority Want a ‘Family Feel’ at Work”: More than half of UK workers prefer an organisation where managers emphasise mentoring over pure results, according to a new survey.
“Workers, Managers Differ on Effectiveness of Employee Recognition”: Many managers think their companies do a good job recognising employees for their efforts, but employees don’t see it the same way. A report from earlier this year shows the divide between management and staff, and it offers tips for bolstering recognition practices.
—Neil Amato (firstname.lastname@example.org) is a CGMA Magazine senior editor.