Counteroffers on the rise as companies act to retain key staff

• A quarter (23%) of executives report an increase in counteroffers over past six months
• 40% of executives are concerned that counteroffers will impact salary structure
• Employers should take preemptive measures to ensure top performers are rewarded

London, 14 February 2012 – With nearly three in four (72%) senior HR executives expressing concern over losing top performers in 2012, many employers have increased their use of counteroffers, finds new research from Robert Half UK. Nearly one in four (23%) executives say that it has become more common for their organisation to issue counteroffers to employees tempted by other jobs.  The figures suggest that while the wider job market remains stagnant, companies are increasingly ardent about keeping high performance professionals on board to help deliver business growth.

The survey queried 200 senior human resources executives about their hiring plans for the first half of 2012 and was conducted by Robert Half UK, the worldwide leader in specialised recruitment. Conducted by an independent research company, results were stratified by region, company size and company type.

Despite the rising prevalence of counteroffers, only three in 10 (31%) employers say it is at least somewhat common for employees to accept a counteroffer, leaving more than half (53%) who indicate it is uncommon and 16% who are unsure. This suggests that additional remuneration is only part of the reason employees leave for other opportunities. When senior executives were asked why they would not counteroffer, 22% said that they would not do so because they would be unable to see a future for disgruntled employees.  A fifth (20%) said that they would not make counteroffers because employees would end up leaving the business in any case.

Yet awareness of the risks associated with counteroffers appears to be relatively high. 

The biggest concern (40%) reported by senior executives about issuing counteroffers was that a department’s salary structure would become skewed, potentially opening a company up to suggestions of unfair disparities in remuneration for similar positions.  This was followed by worries that the employee would be less loyal to the organisation (28%) and that relationships between the employee and their manager or co-workers would become strained (25%).

Phil Sheridan, Managing Director, Robert Half UK said: “Some organisations have been challenged in remaining competitive amidst static remuneration increases and as such, run the risk of losing top talent to other organisations. In order to keep their best employees, companies need to ensure that they are paying competitively with an appropriate salary and bonus structure.”

Companies should also consider introducing a comprehensive benefits plan to not only encourage business-critical professionals to stay, but also present the company as an attractive place to work to potential candidates. When asked what rewards and employee benefits they plan to offer as an effort to attract and retain employees, the top responses were pension contribution (39%), flexible work hours or telecommuting (38%), health care or life benefits (30%), additional bonuses or pay (29%), a mobile/laptop (27%) and subsidised training/education (27%).

Sheridan continues: “Top performers who feel they’ve made concessions during the recession will expect to be rewarded for their loyalty.  Employers should therefore conduct regular salary reviews with all employees, even if increases are modest or deferred.  Regular dialogue with employees on a monthly or quarterly basis is vital to ensure that they remain satisfied with their role and career progression with the company.”

There are numerous resources available to help hiring managers determine employee remuneration, including the 2012 Salary Guides from Robert Half.  Speaking to a recruitment consultant can also provide insight into industry standards for financial and non-financial benefits, and help position an organisation competitively in the marketplace.