2023 the Year of the Counteroffer?

According to an end of 2022 study, the total number of UK employees in a STEM occupation was just over 2.89 million, with some 2.98 million people expected to be working in a STEM job by 2026. At the beginning of 2023, the ONS?reported 120,000 job vacancies in the ‘professional scientific and technical activities’ industries, the fourth largest number from the data collected. Attracting and retaining employees in a competitive world is harder than ever for employers, and candidates are now in the perfect position to use counteroffers from their existing jobs as leverage.

The practice of using counteroffers to retain key talent is becoming widespread,? according to CIPD research. The latest CIPD Labour Market Outlook found that 40% of UK employers have turned to counteroffers in a bid to retain key staff. 51% of those already using counteroffers as part of their retention strategy say they have increased over the past year.

The CIPD research found that nearly half (45%) of employers believed counteroffers were effective in retaining employees for 12 months or more; however, almost a third (29%) said counteroffers were inefficient at keeping people in their organisation. Additionally, of those giving counteroffers, 38% matched the salary of the new job offer and 40% offered a higher sum.

The Pros and Cons

Counteroffers may help to retain key staff, avoid knowledge gaps and the cost to hire new people, but this must be weighed up against other considerations – counteroffers can exacerbate pay gaps, cause equal pay challenges or result in a drop in employee engagement. Sometimes new and fresh talent is needed, and it is not as crucial to keep that employee as the employer thinks. Employers should reward all on a consistent basis and not necessarily fight until the end if someone wants to leave. Arguably, retaining someone who may be feeling disillusioned or undervalued is simply a temporary fix.

The Alternatives

Your first step should be to understand the individual’s motivation for wanting to leave. If they believe in the business and, aside from their immediate concerns, can see a future working there, then it is worth trying to find a solution. However, if you sense that they have already checked out, it may be time to bid them farewell. This approach may seem counter-intuitive if you are already short of staff and you value their skills, but it is better to devote your energy to finding their replacement.

Secondly, if a replacement is needed, ask the larger question Why Are People Leaving Their STEM Careers? As well as helping solve the challenge of sourcing talent in sectors that need it, STEM returner initiatives also have the added benefit of increasing diversity in a host organisation. STEM returners include a population of experienced professionals who are attempting to return to work are 51% female and 38% from black and minority ethnic groups, compared to 10% female and 6% BME working in the STEM industry.

Thirdly consider your talent sourcing and the individuals or groups you may not be reaching or attracting. More on this in our article on Developing Neurodiverse STEM Talent.

Now is the time to ensure that the STEM professionals considering a career change or returning to the workforce are given the inspiration, advice and guidance they need to make these decisions. The key is to create an environment where employees feel valued and are inclined to stay. So, conduct regular salary reviews to check that you’re paying the industry rate, map out clear career paths to help employees progress and offer flexible working to support employees’ desire for a better work/life balance. That way if you do need to replace a departing employee, you’ll be in a stronger position to attract the brightest and the best.

MD Comment

Whether hiring or retaining counteroffers are likely more often than not in such a skills short market which is predicted to continue for some years to come. Having a robust framework and strategy to counteroffers whether hiring or seeking to retain will pay dividends as you grow your team.