There’s more than one way to get ahead in the corporate world. Photo / 123RF
“The best way to get a raise is to apply for a new job,” a media colleague once told me.
He worked for one of New Zealand’s two major television companies. More
his ten-year stint with the company, he courted the competitor’s interest a couple of times.
Each time they cast the bait for more money. And each time, his current employer matched the offer and persuaded him to stay.
When asked if he felt guilty, his response was emphatic: “I’m loyal to anyone who pays me what the market says I’m worth.”
His argument was that most companies were unlikely to give you a raise unless they were pushed in that direction. So they weren’t exactly loyal to him either.
His career advice was always: follow the money.
He didn’t believe it was more important to follow his passion. He always said he could use his extra cash outside of working hours to follow any random passion that caught his eye.
His strategy may have been brutal and ruthless, but it seemed to work for him, especially when his talents were finally nabbed by a lucrative business outside of the media business.
His experiences also served as a reminder that the counter-offer dance between employers is not limited to creative (passionate) endeavors.
In a recent survey conducted by the Association of Employers and Manufacturers, 40% of the 335 companies that responded said they had been advertising staff for more than six months.
One employer went even further saying, “We eventually find people, but we have to resort to headhunting and poaching staff from other companies.
The unwritten subtext here is that there will likely be a counter offer on the table from the current employer.
And that counter-offer doesn’t always have to be about the money.
Writing for the Harvard Business Review, US executive Mita Mallick recalls seeing the impact of counteroffers myriad times in her career.
“I remember the associate brand manager going up two levels in less than two years after ‘resigning’ to two different bosses,” she says.
“I remember the colleague who told everyone the news of his resignation, only to stay and get the role I was applying for. I remember the woman who got one of the vice- coveted president of our organization. A colleague later revealed to me, “Oh, she pretended to quit. She used another offer to help her get the promotion.”
When this series of events is obvious to the rest of the staff, it can seriously affect team morale.
“This can cause gossip within the team, with speculation about how and why it happened,” Mallick writes.
“It can also erode respect for the individual if others feel they are undeserving of the promotion and ultimately devalue it.”
To use a familiar analogy to most, it’s a bit like seeing a telecom or pay-TV provider offer discounts to new subscribers, but nothing to loyal members who have been paying full fees for years. It seems to reward those who are less loyal while ignoring those who have long been dedicated to the cause.
Marsden Inch recruitment specialist Barry Williamson describes counter-offers as “the bane of recruitment”, which rarely yields a desirable outcome for either worker or employer.
“First, if the employee thinks a big raise is a gift, they should think again. There is always an expectation with those raises. Second, if the employee was a valuable member of staff, the company should have protected his investment by ensuring the employee was taken care of.”
For Williamson, the counteroffer offers a short-term solution but does not resolve any of the issues that led the employee to want to quit in the first place.
“As recruitment consultants, we will not ‘bargain’ with candidates and warn them that this is likely to happen when they quit and talk to them about the potential consequences,” Williamson said.
“The grass is very rarely greener when money is the only motivation.”
Williamson is not wrong. Studies by recruitment agencies in the UK have shown that 70% of employees who accept a counter-offer will be on the job again within six months.
The additional problem is that this exchange of personnel between companies does not allow much improvement within the talent pool.
“The ‘swivel chair’ business only increases costs for companies because the pool stays the same, but the payroll overhead continues to rise,” says Williamson.
This has the effect of driving up base salary expectations for some jobs – a trend clearly seen in Queenstown, where staffing shortages have led employers to pay up to $27.76 an hour for entry-level staff.
This is, of course, good for staff trying to make ends meet, but it puts considerable pressure on businesses as their margins get ever thinner.
One of the most extreme versions of counter-offer culture can be seen in football transfers.
Super agents of star players often aim to get the most out of clubs, desperate to retain the big names.
This horse trade saw weekly wages in the English elite rise from around £20 ($38.85) in 1961 to £33,868 ($65,780) 50 years later.
That hasn’t slowed down, with top players sometimes earning upwards of £500,000 ($971,000).
This trend has seen some European clubs adamantly refuse to engage in the haggling that allows these wages to balloon to risky levels.
In recent years, football club AC Milan have allowed star players Gianluigi Donnarumma and Hakan Çalhanoğlu to leave after failing to meet their salary expectations.
This is, of course, the extreme side of the market, but it indicates the risk of letting the culture of the counter-offer take hold too heavily.
In New Zealand, the impact of wage inflation should only be temporary. The relaxation of border rules will eventually lead to a return of immigrant workers and increasing competition for roles. The flip side is that it goes too far, stifling wages as inflation continues to climb.
Additionally, if the economy falls into a recession, many companies will begin to reassess their workforce, leading to layoffs. This, in turn, will slow wage growth.
But given that the battle for top talent never goes away, the counter-offer will likely remain a fixture in salary negotiations for the foreseeable future.
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