The counter offer has always been a part of the recruitment process and one which I’m keen to prepare for by ensuring candidates are moving for the right reasons. But from an employers point of view, it’s an understandable reaction to your star performers leaving!
But is it worth it in the grand scheme of things?
As the job market in our sector experiences a lot of recruitment growth, employers might be hoping to hang on tight to their existing workforce by increasing their pay packet once that resignation letter lands on their desks.
Now, it seems as though the current recruitment outlook is creating a trend and popularising the counteroffer measure. According to the latest CIPD quarterly Labour Market Outlook report published, it has found that forty per cent of employers have made a counteroffer in the past 12 months, with 51% admitting to having delivered more counteroffers than before.
The statistics are more prevalent in the private sector, which has used this as a mechanism to retain employees (43%) more than the public (34%) and voluntary (20%) sectors.
Is the counteroffer culture here to stay?
I feel that if the candidate market is presenting the same struggles then it is likely that the counteroffer culture is here to stay, especially if the cost-of-living crisis continues into next year. So, as long as employers are putting off a pay rise, employees are bound to look elsewhere.
However, a counteroffer might be a short-term fix, as 50%-80% of employees accepting them leave their company within six months due to recurring issues.
It seems as though employers are starting to understand this as, according to the CIPD report, 51% of employers who have previously given counteroffers believe the number they expect to make in the next 12 months to be about the same, while a quarter (25%) anticipate offering more than in the past year.
It has to be asked, though, what kind of message this sends to other employees who have been asking for a pay raise for months but have no intention of switching jobs? Do they need to leave to have their salaries re-evaluated?
What is the impact on internal pay consistency?
The counteroffer culture may be the final straw for many employees who are questioning whether their value is only realised once they find a better job prospect.
As internal pay should be equal across the job role, using counteroffers on a select few has the potential to upset the balance, in turn upsetting those who feel that they are missing out.
They also might need to be wary of creating equal pay inequity, due to upsetting the internal pay consistency. To avoid this, employers could implement a salary review system, comparing how their pay packets hold up against the external market.
Will we see more equal pay claims as a result and, if so, what action can employers take to mitigate this?
Employees who feel slighted, might increase their claims of unequal pay but there is a loophole for employers facing legal battles:
1) Employers do not legally need to pay the same rate to employees in response to market demands.
2) If employers aren’t discriminating based on protected characteristics, there shouldn’t be any real danger of being sued.
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