Counter-Offers…a litmus test of an improving economy?

Published: 10 April 2012

A professional head hunter will be well equipped to spot the warning signs of a potential counter …we like to think we’re able to mitigate future buy backs by asking the hard questions early on. I’d assume all head-hunters are unanimous in saying our rigorous processes haven’t changed, so why have we seen a marked increase in the level of counter-offers made over the last 6-12 month period?

It feels as if there has been a tangible shift; recent buy-backs haven’t been the typical 10% pay-rise ‘pat on the back’ we’re used to fending off. Instead I’m talking game changing figures and promotions 2, even 3 rungs up the ladder. We’re left asking why this is happening, and why we aren’t able to mitigate the risks?

I believe the answer could lie in the markets recent upturn. Businesses have spent 3-4 years undergoing restructuring and right-sizing programmes; they have cut the fat and have been left with lean and efficient businesses capable of generating respectable returns. All of a sudden their market is recruiting and Joe Bloggs, a prized employee or last man standing (who they could have sacrificed others to retain) is handing in their notice to help the expansion plans of the competition. Put me in that situation and I think I’d panic buy too.

That all sounds reasonable enough, but why the pop star wage increases? Simple. Businesses have streamlined, they have the best possible talent in their business who are by now settled, well trained and frankly well worth the salaries they were paid in 2008. Seemingly, employers are waking up the fact that 4 years worth of overlooked pay rises and promotions mean your typical counter-offer of 10% or a flashy car won’t be acceptable. Instead, employers are fighting back, making bold (some could argue fool-hardy) offers in the vein hope of retaining the core talent they have left. Well, at least until they can replace them with a cheaper model a year or two down the line.

The net effect of this? Firstly, it’s forcing head-hunters to be more nimble, reacting to rapidly changing situations, improving their process and ultimately success rates. Secondly, the increasing recurrence of businesses prepared to make huge counter-offers is a clear indication of increased stability in the markets – put simply, they can afford to do it (for now) and want the competitive advantage when they are out of the starting blocks.

No head-hunter will ever welcome a buy-back, and they should always be considered thoroughly before accepting, as typical risks still apply (read the small-print and make sure its on paper before you commit). This being said however, as a litmus test for the state of the economy I am willing to deal with the occasional counteroffer if it means a return to economic success. Anyway, as we recruiters always tell you, 80% of those who accept a counteroffer will be back on the market after a year anyway…. I will catch you second time round.

Korinna Sjoholm - Consultant, EMI practice

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