2016: THE YEAR OF THE COUNTER OFFER
“I’ve lost the last 7 Candidates I have offered to either a counter offer from other companies or counter offers from their existing employer” – Head of Function, Big 4 Accountancy Practice in Dublin.
As Ireland continues to impress with economic growth, the need for strong employees to meet the expanding workflow and business requirements is also growing. Since the start of 2016, for many Hiring Managers, larger budgets are available along with faster sign-off for new hires and an increase pace of the recruitment cycle. This has resulted in the hiring manager deciding, and offering, a potential recruit a higher salary rate compared to the “recessionary and recovery” years.
This method has set the stage for a Candidate to be counter-offered by their current employer. This effectively places the current and potential new manager in a bidding war for the candidate, resulting in the risk of having potential work flows go unattended. Managers must make their proposal for the talent, or lose out with the leverage typically sitting in one or more of the following areas: salary and benefits, career advancement or working conditions.
Strategic Talent Influences
Ireland has seen an increase in the rate of new opportunities across all sectors. To combat the loss of employees, organisations are now taking a more holistic approach to employee retention – with it topping around 32% of global operations top priorities in the overall company strategies for 2016. Alongside this, roughly 60% of global operations increased their emphasis on improving employer branding and company environment to assist in the retention and attraction of new talent.
This strategic approach, which falls under a company’s Employee Value Proposition (EVP), is focused specifically on the subtle elements of employee retention, such as building ‘team spirit’ and the perceived view (whether accurate or not) of working for the organisation. These are appealing factors a company can emphasise when trying to sway a Candidate to either remain in a position, or potentially not consider a career move in the first place. On the other hand, for a company trying to attract this Candidate, these EVP tactics can make the transition to a new employer all that much easier. This is placing the onus on a company to create an environment that allows them to be in a competitive position to lure the talent.
Gaining Versus Retaining
Speaking from ‘hands-on’ experience of the current market, the overriding factors for gaining or retaining a Candidate typically pivot on either a remuneration package or career advancement potential. Unfortunately the emphasis is usually on the former; remuneration, a reason that should not be the overriding factor when selecting a career prospect.
A large percentage of the workforce in Ireland has not made a career move over the last few years and have not seen large salary increments that they could typically have made if the economy had been in a more stable and prosperous position. With this strong theme in the market of available salary lifts, people are searching for new career prospects, in droves, looking to benefit from it.
As for career advancement, opportunities had become stagnant in many companies but now the career hungry Candidate will find plenty of opportunities in the market. However more importantly, these opportunities will find that Candidate through strategic searching and proactive marketing presence of an organisation.
Although altering working conditions for an employee such as working from home, flexitime or relocation to a more convenient office are factors that can play a role in making an employee stay with a company, these are less common, perhaps because it may be against company policy or because the employee needs a new challenge, but market trends show a majority of cases are focused on money and career growth.
Counter Offer Challenges
With all factors considered, this makes the latter stages of the recruitment process a tricky path to take for an organisation. There are two Decision Makers at play here, one with talent to lose and one with talent to gain. Each has a budget to adhere to and is representing a company with an offer, a strong reputation, a current opportunity and career advancement potential that they can provide. Today’s Candidate who knows their worth does not generally need to leverage their talents to prompt a counter offer as companies are creating a bidding war all by themselves to remain competitive. If we combine this scenario with a Candidate who knows how to negotiate, or introduce a 3rd opportunity that may come along it becomes a very tough process for any Hiring Manager.
This climate can very easily leave Candidates in a very strong position of control, where the options and offers are coming hard and fast and if the current options do not meet their preference, there will be another along shortly. Thus leaving a situation where companies must develop or enhance their strategy for candidate attraction, and Hiring Managers specifically caught in a potential bidding war.
Losing out on a Candidate, and re-starting a hiring process, is a costly and timely exercise, which has become too common a theme for Irish based companies. In order to avoid this, there needs to be an emphasis on every stage and touch point of the hiring process. Using interviews for more than just candidate screening must be leveraged to give insight into the business culture and operations. When offering a role to a future employee there needs to be a strong understanding of an individual’s drivers and a careful handling of the offer delivery.