Counter offer on resignation?

You know the scenario. One of your most valuable employees comes in to your office. They have been asking all morning if you could spare a few minutes. You can see the envelope in their hand and you know that they are about to resign. You don't want to lose them.

OK so you think fast. What options do you have? You don't want to lose this employee because you have trained them and they know the job. They are valuable. It will take time training someone else let alone the cost to hire both in time and money.

So what do you do? Knee jerk reaction time. Make a counter offer. Offer more money. More money than the new job offered. Make it well worth their while staying. That makes life easier. They accept. Job done. No worry. No more issues, no problem.

Except that the problems are now only just beginning. More than 70% of people who receive and accept a counter offer still leave or are 'let go' within a year. OK so maybe this gives you time to sort things out but think about it. You have just raised the salary of one employee and the others will now be looking at their own remuneration. Notwithstanding that the original employee is now staying, having already decided to leave. People rarely leave a job because of money anyway. The other issues are most likely still there, festering. You have now started sowing the seeds of discontent in your own organisation and will almost certainly start to see more leavers as a result.

The very worst case scenario is that you now have a disenfranchised employee who doesn't want to be there and who is now earning too much money to leave. They either stay in the company potentially spreading disharmony or you later have to terminate their employment through redundancy.

Don't do it. Don't make a counter offer. Garden leave is maybe the answer and I will talk about that next week.