counter offers

One of my first clients was a small business who was three months from a massive hiring initiative. They were on the cusp of securing their second round of funding and when that happened, they were going to be doubling in size. They brought me in to create a hiring and on-boarding process that would ensure they hired the best they could during this time of growth. During the project an employee who had been with the company since day one and was very valuable to the team gave notice. While sitting with the CEO this employee’s line manager came in the room to share the news. The line manager wanted to make a counter offer as it appeared the motive for the move was based solely on salary. Without hesitation or any further questions the CEO said, “We do not negotiate with terrorists. Please accept the resignation immediately.”

Both I and the line manager were taken aback. The line manager just stared and then turned to me with that look that you know is a plea for help. I asked the CEO if he could help us understand his reasoning. While I agree that counter offers are a tricky thing and generally my thought is that they shouldn’t be made, I do usually like to fully understand and think through the situation before just saying no. I wondered if he might want to do the same.

He didn’t. He was firm on his answer. The employee’s resignation was accepted immediately. I will never forget the bewildered look on everyone’s face, especially the employee leaving, as he walked out.

Later, after the dust settled, the CEO explained his though process. It was his strong belief that people needed to believe in the business in which they worked. They needed to buy into the mission and company goals. They needed to enjoy their work and feel as though they were making a difference. He was committed to doing everything on his end to make that happen, but an employee had to take some responsibility too. Any employee who was willing to leave for money was not bought in. This employee had been with the company from day one. They had helped build something from the ground up and, the CEO thought, was as mission focused as he was. This was an employee who the CEO had spent a lot of time with. He had cast vision and asked for the employee’s feedback which he took very seriously. He was committed to this employee’s success and thought the employee felt the same. If the employee was willing to leave for money, he clearly wasn’t.

There are lots of “buts” that you could throw at this CEO, but ultimately, I agree with his line of thinking. Small businesses, especially those in startup mode, need employees who buy into the vision even if it’s going to take a lot of work to realize it. Someone who is motivated by money may only continue to be motivated by money. Had the CEO countered, there was no guarantee that six months down the road, another offer would be made for even more that would prompt the employee to want to leave again.

Last week a small business client, not in startup mode, had a highly valuable employee give notice in a similar fashion. Her departure would have left the company in a real lurch. Sure, we could replace her, but the time it took to replace her would have put the company behind. The company decided to counter and she stayed. It was the right decision for them at this time in their business.

The situations, although seemingly similar, were quite different. The first story’s employee was an exempt employee on the path to an executive level position. The second is an hourly worker with no immediate upward mobility opportunities, or demonstrated desire for them even if they existed. The first story was not going to experience a great dip in productivity if the employee left. They would need to replace him, but his work could fairly easily be put on others for the time being. Actually his opening left room for promotional opportunities for others and ended up being a win for the company. The second story would have taken a hit. This was their best employee, in a crucial department and the work could not be split as easily. The time it would have taken to regain lost productivity cost more than the dollars to counter.

In general, I don’t like counter offers. I think that if employees are unhappy enough, or motivated by money enough, to entertain other options, then throwing money at them is only a temporary fix. Having said, that, there are times when it may make sense even if it is only a temporary fix. I think what is important is that small business leaders think through their philosophy on this now, before it happens.

As a part of workforce planning, which all businesses should be doing, conversations need to be had about what would happen if employees were to give notice. Beyond just those you know may be looking or on their way out the door, but those who would absolutely surprise you if they said they were leaving, what would you do about those employees?

Waiting until it happens to think about your stance on it could lead to a rash decision. There is no right answer here and even if you take a stand, it doesn’t mean there won’t be times when you have to reconsider, but at some point in your business it is going to happen. Think now about what you might do.

Does your small business have a policy on counter offers? I would love to hear about it in the comments below.

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