When an employee reveals their intention to quit in favor of a better job at a different organization, it’s not unusual for an employer to try to persuade them to stay by offering them a higher salary. Indeed, such counteroffers are so commonplace that unhappy employees will occasionally solicit outside job offers just to pressure their current employer into giving them a raise. Yet new research from the global staffing firm Robert Half finds that while most US employers make counteroffers to departing employees at least some of the time, they usually fail to retain these employees for the long term.
In an online survey of over 5,500 senior managers in a variety of professional fields across the US, 58 percent said “yes” when asked whether they ever extend counteroffers to employees to keep them from leaving for another job. However, when asked how long employees who accept counteroffers typically remain with the company, the mean response was 1.7 years:
“Counteroffers are typically a knee-jerk reaction to broader staffing issues,” said Paul McDonald, senior executive director for Robert Half. “While they may seem like a quick fix for employers, the solution is often temporary. When employees accept a counteroffer, they will likely quit soon afterward.
Professionals should avoid these offers, McDonald advised. “Money doesn’t solve everything. If you accept a counteroffer, your employer may question your loyalty to the company. And, more importantly, the root causes of why you were looking to leave in the first place may still exist.”
The staffing firm cautions both employers and employees against counteroffers for several reasons, noting that they can cause morale to suffer by sending “the message that threats of leaving are a means of climbing the ladder, rather than outstanding performance and dedication.” An employee retained with a counteroffer will often be distrusted for the remainder of their tenure with the organization, while their performance is unlikely to improve, knowing that the firm was willing to spend money just to keep them around a little longer.
The clearly superior alternative to counteroffers is to proactively identify employees at risk of quitting and give them reasons to stay before they go out looking for a job somewhere else. According to our research at CEB, now Gartner, this means creating compelling career paths for employees, including ample opportunities for learning and professional growth, so they can see a long-term future for themselves as part of your organization.
A new survey from CareerBuilder claims that a 55-percent majority of US employees feel that they have just a job, not a career, and that 38 percent of these workers are likely to change jobs in the second half of 2017:
Almost three in 10 workers (28 percent) tolerate or hate their job. Of those who tolerate or hate their job, some of the top reasons for staying in a current position are the need to pay the bills (74 percent), its proximity to home (41 percent), needing the insurance (35 percent), it pays well (30 percent), or the job market is too tough (27 percent).
This survey picks up on something that we at CEB (now Gartner) have seen in our latest Global Talent Monitor data: Most US employees across a number of industries cite their future career opportunities as a leading reason for leaving their organization. Given this fact, it is easy to assume that this is a reflection that there is simply a lack of career opportunities available to employees, leading to disengagement and attrition. However, our data shows that this is not the case. We find that 12 percent of US employees we surveyed were actively dissatisfied with future career opportunities at their organizations and only 31 percent reported they were satisfied. The remaining 58 percent are somewhere in the middle—that is, neither satisfied nor dissatisfied, but rather neutral or ambivalent.
This finding suggests that while future career opportunities are a key part of employees seeking a new job, the claim that lack of future career opportunities is driving attrition at organizations is overstated. When we look at how an employee’s satisfaction with future career opportunities at their current organization affected their engagement levels, we do not see nearly as strong as a connection as CareerBuilder reports in their survey.
The economic expansion in the US over the past few years has led to a very tight labor market, with employment falling to historic lows and long-term unemployed citizens beginning to re-enter the workforce, but to policymakers’ vexation, wage growth has remained sluggish. Wages ticked up last month, in a hopeful sign that the stagnation may be coming to an end, but it’s too early to identify a trend.
One positive sign for the labor market and the prospect of higher wages for US employees is that the quits rate has risen to its highest level since before the Great Recession, Dan Kopf points out at Quartz, raising the prospect that employees are confident enough to leave jobs in the hope of finding better ones—and perhaps confident enough to demand higher pay:
According to recently released data from the US Bureau of Labor Statistics (BLS), more than 3.2 million people quit their jobs in May 2017, the most Americans to quit in a month since early 2001. It’s also the highest rate of quitting since June 2006. …
Why are Americans so confident? Probably because the vacancy rate—the number of open jobs for each unemployed person—is higher than it’s been in a long time. The quit and vacancy rate have a close relationship, where open jobs can encourage restless workers to quit, in turn creating new open jobs. A strong labor market with lots of churn means harder work for recruiters. The average job in the US now takes over a month to fill, compared with 15 days during the worst of the financial crisis.
Both quits and new hires can be volatile statistics, however: The Labor Department’s Job Openings and Labor Turnover Summary (JOLTS report) for April 2017 showed that both metrics declined somewhat that month, though the number of job openings increased. Meanwhile, SHRM’s Roy Maurer highlights two other reports showing that employers are hiring at a robust pace and signaling that they are willing to pay higher wages to entice talent in a highly competitive labor market:
The last few months of jobs data from the US Labor Department paint a picture of a tight labor market, with the number of new jobs slowing down as unemployment fell to a long-term low. The department’s latest Job Openings and Labor Turnover Summary (or JOLTS report), released on Tuesday, shows that US employers posted more than 6 million job openings in April—the most since December 2000, when the government began tracking the data—but both hires and quits declined. The puzzling fall in the number of workers quitting their jobs may help explain why wages are not rising as fast as economists would expect in such a tight labor market, the Associated Press reports:
Some economists argue that slower pay raises suggest [employers] may not be so desperate after all. It’s easy to post jobs on a website, but employers may not follow through by recruiting more and offering higher pay. One trend supporting that view is a decline in the number of people quitting, which slipped 3.5 percent to 3.1 million in April. People typically quit when they either find a new job, usually at higher pay, or are confident they can soon find one.
For that number to fall at the same time employers are posting a record number of job openings suggests that not many people are being lured away from their current jobs by other companies dangling attractive pay. In other cases, companies in specific industries may be offering bigger paychecks, but those raises are being offset by other trends. With the workforce aging, higher-paid employees are retiring and being replaced by younger, lower-paid workers, which could depress overall wage growth.
For organizations that derive most of their business value from their talent, the departure of a single employee can be very costly, even more so if it comes suddenly or unexpectedly. In this talent-focused business environment, the traditional practice of giving two weeks’ notice of intent to quit can leave employers with too little time to manage and prepare for an employee’s departure or begin the search for a replacement. Talent Economy associate editor Lauren Dixon highlights the different course being charted by the Chicago-based employee communication software company Jellyvision:
Jellyvision uses what it calls a “graceful leaving” policy to help both the organization prepare for open positions, as well as departing employees to have a support system for their desire to move on. When an employee begins to job hunt, considers applying to school, thinks about moving, etc., the company’s policy allows them to set up a conversation with their manager about the idea and to explore potential next steps. Managers can then provide contacts for networking and accommodate interview times — all while the employee does their work as usual. …
This policy also allows managers to better understand what the employee wants from the job, and the two can potentially make that change internally. For example, if an employee considers leaving for a managerial role, they could explore that opportunity within Jellyvision, thus retaining the worker.
Dixon hears from several experts, including our own Brian Kropp, who agree that approaches like Jellyvision’s “graceful leaving” are preferable to giving employees the cold shoulder once they announce their plans to leave. Letting employees know it’s OK to leave makes them more likely to give ample notice and even participate in training their replacement when they do, and increases the likelihood that they will return to your organization later on in their careers.
Silicon Valley (yhelfman/Shutterstock)
A survey commissioned by the Kapor Center for Social Impact and released last week looks into the reasons why employees in the US tech sector quit their jobs. Nicholas Cheng at SF Gate outlines the 2017 Tech Leavers Study’s findings, which include the startling figures that women are twice as likely to quit as men, while black and Latino employees are 3.5 times as likely to quit as their white or Asian colleagues:
The most common reason they gave for their departures was workplace mistreatment. … Of those surveyed, 37 percent said they left their jobs because they felt they were unfairly treated; 78 percent said they had experienced some form of unfair treatment; and 85 percent said they had witnessed ill treatment happening to someone else at work. Black and Latino employees, the study said, were more likely to leave due to unfair treatment at work than white or Asian colleagues.
“This study is one step forward in demonstrating that there is a problem across the tech industry,” said Allison Scott, the center’s chief research officer. “We’ve seen the anecdotes and stories written lately and what we found is that those are not one-off stories, these are experiences happening across the sector and it’s a driver for people to leave.”
Feelings of unfair treatment were by no means exclusive, however, to women and underrepresented minorities, as Bloomberg’s Ellen Huet points out:
The August Job Openings and Labor Turnover Summary, released by the Bureau of Labor Statistics on Wednesday, shows that nearly 3 million employees quit their jobs voluntarily that month. Economists see this as a sign of labor market strength, Andrew Soergel writes at US News and World Report, indicating that workers feel increasingly sure of getting a new job:
“Optimism continues to build over the near-term hiring outlook,” Sam Bullard, a senior economist and managing director at Wells Fargo Securities, wrote in a research note last month, noting that “labor market conditions have been supportive to the recent increase we have seen in confidence and consumer spending growth.”
Quits have been consistently high all year as the labor market continues its record-setting run of job creation. American employers generated 156,000 new jobs last month, according to a separate report the bureau released Friday, and have ginned up more than 1.6 million additions so far this year. And with more newly created positions and a consistently high number of job openings, domestic employees have plenty of options if they opt to leave their current positions in search of new ones. Job openings fell back slightly in August after coming just shy of an all-time high in July, but employers were still actively recruiting for more than 5.4 million vacancies.
Meanwhile, more than 5.2 million workers were hired in August – which makes it the third-best month for new hires so far this year. Professional and business services brought on more than 1 million new workers, while health care and social assistance outfits accounted for 542,000 additions.
The latest JOLTS data comes amid other encouraging indicators in the US labor market.