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The Counter Offer (part 2)


I just completed importing several older blogs, and among them there was one titled The Counter Offer. This is the second installment of that article which was never published. In that article we discussed that a growing trend is to offer departing employees a counter offer in an attempt to retain their skills. However, often these efforts are risky and do not necessarily ensure that we have the best environment moving forward.

With that stated, it begs the question, “so what should we do with departing talent.” The best thing you can do is typically let them go, unless you have a short term strategy to retain them just long enough to replace them.

So beyond that, what are you to do. It is an excellent opportunity to a very open and honest exit interview. Beyond simply their manager or HR performing the interview, consider having someone they trust such as a different department manager, supervisor or even a peer. The goal is to obtain the best information on why they are really leaving. From that data, it should be incorporated into a 360 degree review of the department, manager and organization as a whole. How does the departing employees fit into the organization as a whole.  Typically if you were considering a counter offer this isn’t an employee you typically want to loose, and you find value in what they bring to the company.

Usually the first great employee leaving is the tip of the iceberg and we need to pay serious attention to discover what we’re doing and if we need to adjust our employee retention process. What? You don’t have a formal employee retention process? It is time to start putting one together. Here are a couple of ideas for you:

First, you don’t need to begin with compensation. Most managers who have the title because of a natural promotion instead of training or education, begin with compensation. As a matter of fact, several well published studies outright say that financial reward for performance, when even minimal cognitive skill is required, results in worse performance. Yes, this is opposite of our expectation. In our industrial era mentality, we have been raise to believe that the effort-reward system works. That bonus program is successful when we are talking about tasks which do not require cognitive thought. Areas such as assembly lines or manual labor. But the moment individuals are required to turn on their brains and use their thoughts to create productive results, money has a negative affect on performance.

What researchers have discovered is three things which lead to better performance and personal satisfaction, and isn’t that key to retaining talent:

  • Autonomy
  • Mastery
  • Purpose

Evaluate for a moment in what ways you can encourage your staff to be more autonomous (which isn’t working solo, but rather self directed); mastery (which is enabling them to become an expert at something); and purpose (the “why” behind what they get up for everyday, and it should be a paycheck). Take a look at this YouTube video: The surprising truth about what motivates us.

The next area is understanding the workplace environment. It is amazing how much the culture can impact the overall workplace satisfaction. The late Stephen R Covey, in his book The 8th Habit shares about the 6 cancers which inhibit greatness in people which include: Cynicism, Criticism, Comparing, Competing, Complaining, and Contending. This is something that is best change from the top down, as well as identify several key people in your organization at the lower levels which can be intentional about building a positive workplace environment. Also understanding how your current management processes might be encouraging these cancers.

A second perspective on the workplace environment is to understand the actual physical working space. Do your employees have the tools they need to perform their jobs, do they have the basic environmental needs met. Environmental change can be something as basic as ensuring a clean, working (non broken) environment, to very elaborate office setups designed by professional workplace designers. There is one place where in the bathroom, for years, the mirror wasn’t hung on the wall, the hand towl dispenser was broken so it was just a stack on the counter, and the TP dispenser was broken as well. Seemingly unimportant things, but it is has a slowly deteriorating effect on employee morale and pride in their workplace. A quick coat of paint, and basic maintenance made an immediate improvement in several employees pride.

Finally we get to compensation. It is always surprising to many people that this is at the end of the list. This is also surprisingly more complex than many people thing. Again, lets take a look at the first section about motivating people. Simply a bonus or higher hourly wage isn’t sufficient to improve productivity or worker satisfaction. There are two factors on compensation I’d like to focus on:

(1) is to take the issue of money off the table, employees should be compensated at a level which meets their needs, as well as provided measurable and predictable control over their compensation. An excellent tool I learned from Michael Brand, Executive Vice President at Cornish & Carey Commercial, was that he would have his team members interview with 3 competitors each year. They were required to report back on how those interviews went. Can you imagine! Encouraging your team to seek out the competition. That takes boldness. There are two takeaways from that exercise. First is that it forces the employees to evaluate their own real value in the marketplace. Many people have higher self-worth than is accurate, an interview forces that into reality, causing them to take an honest look at themselves, it can be very humbling. Imagine how your annual reviews would go if they were first required to have interviewed at three different competitors. The second was the other side of the same coin, this is the point where your organization is forced to evaluate how good is your environment to your employees. What are you doing to motivate employee loyalty?

(2) is to understand what would motivate them financially aside from their paycheck. Several places have employee owned companies or profit sharing plans. A recent survey of web developers showed, to my shock, that profit sharing was dead last in their different things which they care about, second to that was medical benefits (the group was primarily 20-somethings-think-they’re-invincible). For some employees compensation may come in the form of more PTO, better break room perks (free lunch, booze, etc), free massage or car wash. Some companies offer company vehicles, cell phones, laptops, etc. One company, Atlassian, actually gives you a one week vacation before your first day of work!

The overall goal is to ensure that you are ensuring a positive outlook and capturing the potential to become even greater with every change. Learn from departures, and bring about positive change in your environment. Not all employees who leave are those which you want to change your culture over, in fact, the majority of employees that leave are going to be incidental and insignificant to the company. However those employees which you would want to keep around, those which you have been tempted to offer a counter offer to, are the ones you can really learn something from.

In summary, be sure to capture the real reason why an employee is leaving, and leverage that to create an atmosphere where people want to stay and are not tempted to leave. Understand what motivates people is autonomy, mastery and purpose; create an environment free of the 6 cancers; ensure your environment is something you can take pride in; and finally understand compensation transcends the paycheck.

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