The number and size of counter offers to job candidates around the world is growing. But there are dangers for both employer and employee in offering or accepting them. By Calum Robson, freelance journalist.
The global demand for finance skills is growing at such a rate that accountants can increasingly expect a generous counter offer when they resign to take up a job elsewhere, according to research. With skills shortages on the horizon, many employers regard putting more money on the table as less cost and hassle compared to filling a vacancy.
A survey by Marks Sattin found that, in the UK and Ireland, a third of all job seeking accountants receive counter offers worth on average 15% of their annual salary. Last year, only one in 20 might be counter offered, with average rises of only 5%.
Accountants in London fare even better. Seven out of 10 receive counter offers, representing as much as 20-25% of salary. Companies in oil and gas, retail and media are the keenest to hold on to star players. In financial services, private equity firms are the most eager to counter offer, although investment banks easily outbid them, offering 30% for exceptional candidates.
Dave Way, managing director of Marks Sattin, says the resurgence of counter offers is proof of the economic recovery driving recruitment activity. ‘Companies are once again getting used to working harder to hold onto valuable employees,’ he says. ‘Many have been caught out by how quickly the market has recovered.’
Candidates are increasingly being offered multiple job offers, boosting confidence and a sense of their market worth. Way says companies that haven’t yet lifted pay freezes are being forced onto the back foot, and warns: ‘Relying on a reactive counter offer strategy can be costly. Quality finance professionals know they have options.’
An international phenomenon
The urge to counter offer knows no borders. Guy Day, chief executive of recruiters Ambition, says: ‘The Australian job market is booming. There is a danger of skill shortages as more businesses ramp up their hiring activity. Employers are making increasingly valuable counter offers as they fight to keep talent on board.’
In Hong Kong, Day says many employers are offering salary rises of as much as 20% to retain their best people. But this has simply led to other employers pre-empting them with even more generous initial offers, as well as signing-on bonuses. ‘Maintaining contact with recruits during their notice period is another tactic,’ he says. ‘Drinks with the new team and invites to attend meetings all help to build bridges, and prevent counter offers being accepted.’
But some offers are irresistible. Marks Sattin’s research indicates that accountants in Hong Kong could receive counter offers equating to a 20% pay rise, with investment banks offering as much as 35%. In Singapore, employers are less inclined to counter offer in the first place – but those who do typically offer rises of 20%. For the most highly prized candidates, rises of 50% are not uncommon. In the Gulf, Marks Sattin’s Dubai office also reports greater counter offer activity, although the average increases of 12.5% are less spectacular than elsewhere.
Offer and accept at your peril
While counter offer culture may be back, caution is called for. Recruiters say many candidates who accept counter offers soon return to the job market. ‘If the original reasons for leaving had nothing to do with money, they’ll tend to surface again, however flattering the package that persuaded the candidate to stay,’ says Kira Owen of Twenty Recruitment.
‘Candidates who change their mind quickly realise they’re still frustrated or unhappy. But by the time they realise their mistake, the employer they turned down is likely to have already found someone else. Even worse, the vacancy may still be open but the employer no longer wants to consider the candidates they feel let them down at the last minute for purely financial reasons. That’s tough to take, especially if the candidate works in an industry where news about who’s been looking travels fast.’
Owen says employers also need to think twice about making impulsive counter offers. That means getting a grip on the employee’s motivation before hitting the panic button and raiding the headcount budget. ‘When someone resigns, of course it’s going to seem easier and more expedient to make a counter offer and hope the problem will go away,’ says Owen. ‘But that may simply store up trouble further down the line.
‘If the candidate really wants to be promoted or relocated, or wants a move to a different team, then a higher salary alone will be of limited shelf life as an alternative.’
For the moment, though, that message may be lost in the post-recession scramble for finance talent. As Dave Way concludes: ‘When caps on pay have been tight for the last two years, counter offers are a way of making up for lost time.’
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