People First Personnel
COUNTER OFFERS… Here are 7 counter offer statistics everyone needs to know.
There are a lot of statistics floating about on the internet regarding counter offers and the cost of replacing employees. It can be difficult to find the original sources for some of them, but they do generally represent some common sense thinking when it comes to employers making counter offers to resigning employees.
Here we gather together seven of the most common counter offer statistics and explain what they mean and why both employers and employees should know about them.
1.) 80% of candidates who accept a counter offer from their current employer end up leaving within 6 months.
If the counter offer was good enough for the employee to accept it and stay, why would they then leave again so soon? The reason is that all the issues that caused the employee to think about getting another job will still be there, even if they are getting paid more for putting up with them.
A pay boost from a counter offer can put a small spring in the step of the employee, and give them some extra resilience and motivation to continue in the job. However, this boost will only ever be temporary.
In time, the same troublesome issues will start to dominant the employee’s thoughts again and perhaps even negatively affect their mental health or work/life balance.
2.) 9 out of 10 candidates who accept a counter offer leave their current employer within the twelve-month mark.
Again, being paid more is a good temporary motivator but it only lasts a certain amount of time. Psychologically speaking, humans are very adaptable and will grow accustomed to their circumstances given enough time. This is particularly true of a employee who receives a tempting counter offer.
The extra money convinces the employee to stay, but the psychological benefit will eventually wane and the employee will find themselves back exactly where they were when they first started thinking about finding another job.
3.) 50% of candidates that resign will be counter offered by their current employer.
There has been something of a skills shortage in the UK and all around the world for at least a couple of years now, so it’s no wonder that many employers make counter offers to keep their valuable staff. There are also more and more companies vying to attract the best talent for themselves, which makes holding onto the talent they already have especially important for businesses.
While there will be plenty of employees in some companies who do not possess particularly valuable or rare skills, there will always be plenty who do. It is no wonder then than half of all candidates who resign from their position are presented with a counter offer by their employer.
It is simply much easier for the employer to make that counter offer and keep the skilled employee instead of beginning a costly and time-consuming recruitment process that doesn’t even guarantee that the result will be an equally skilled replacement.
4.) It can cost the current employer as much as 213% of annual salary to replace a senior executive.
The previous point mentions how costly a recruitment process can be, and that’s just for average, ordinary employees. The costs can actually become astronomical when we’re talking about senior executives.
In fact, an in-depth study by the Centre for American Progress found that the average cost of replacing a senior executive can be as much as 213% of their annual salary. That is a lot of expense which can be minimised with a counter offer to the resigning executive.
5.) 50% of candidates that accept counter offers from their current employer are active again within 60 days.
This statistic shows that half of all employees who accept their employer’s counter offer almost immediately regret it. Often the counter offer is so tempting that it seems worth the employee’s while to endure whatever circumstances had led to their resignation in the first place.
But as previously mentioned, those circumstances do not magically get better just because the employee is receiving more financial recompense. In fact, being paid more for the same job only demonstrates that there is the possibility to earn that amount for the same job elsewhere. Yes, the counter offer is likely being made to save on the costs of finding a replacement – especially at the senior executive level – but it is still a representation of what the candidate’s skills are actually worth.
6.) Only 38% of hiring managers reported not making counter offers at all.
This statistic demonstrates the frequency at which counter offers are made. This stat means that a significant majority – 62% – of hiring managers have made counter offers.
So any employees considering handing in their resignation to take up a role at another company need to be prepared for the counter offer from their hiring manager. They should think in advance about what level of financial recompense would enable them to continue in their current role.
And perhaps also think about how long that extra money can keep them happy.
7.) 57% of employees accept counter offers made to them.
This stat is interesting because it shows how unsuccessful counter offers generally are, even if on the surface it appears like a majority of employees accept them. However, we must also factor in the 80% of candidates who accept a counter offer but end up leaving within 6 months.
Now also factor in the 50% of candidates that accept counter offers being active again within 60 days, and the 9 out of 10 candidates who accept a counter offer leaving their current employer within the twelve-month mark.
If you are looking for a new role in 2023, get in touch with our recruitment team here at People First Personnel – call 01635 283336 or email firstname.lastname@example.org.