50% of Financial Services Firms now Offering Counteroffers

A counteroffer in its simplest form refers to offering an employee enhanced benefits or a higher salary after they notify you they’d like to leave the company.

In Dublin’s Financial Services market, where the demand for talent remains high, roughly 50% of firms are engaging in counteroffers when faced with losing valuable staff. It can be tempting to offer a counteroffer but there are a few damaging effects to consider before you do.

The Impacts of Offering a Counteroffer

Inflating mean salaries across the sector

By offering a pay rise to an employee in the event of a counteroffer, rather than attempting to replace them at a similar price point, there is a knock-on effect on the wider market. The increased expense of retaining the dissatisfied worker is reflected in the salary competitors will now need to offer in order to attract talent.

Dissatisfaction among employees

It is inevitable that this information will filter to colleagues, naturally causing unrest. There is a clear correlation between morale and a sense of being treated equally. Engaging in salary increases in a counteroffer scenario instigates a domino effect as other team members look to align their earnings similarly, and ultimately you could lose other people.

In recent months a candidate I worked with accepted a job offer and was aggressively counter offered on four occasions before eventually (and reluctantly) accepting. Within two weeks three of their colleagues (all from the same team) had made contact expressing interest in a move.

Naturally, they were seeking to replicate the counteroffer scenario, receiving pay increases of up to 20%. This reiterates how destructive engaging in counteroffering is for employee morale and integrity.

The recruitment process is elongated

Two months is a standard notice period within the Fund Administration market in Ireland. Regularly candidates will serve the majority of this before accepting a counteroffer resulting in the hiring firm’s process is increased by 2 months.

Other previously interested candidates most likely are hired elsewhere at this point. This can cause operational issues as the department in question is short-staffed for a considerably longer period than anticipated.

Lack of procedural conformity

In a 2018 study conducted by Cornell University in New York, it was found 83% of firms don’t follow a set procedure in a counteroffer situation.

From a risk perspective, this is an issue as there is no standardisation to the process or any precedent being followed. It’s common for the Head of Department and Managing Directors to deliver counteroffers, particularly in the Fund Admin area.

Strategically this results in a false sense of importance being instilled in the employee as the Senior Management are content to apply pressure for them to stay.

The following figures from Cornell University reaffirm the lack of substance when counteroffers are delivered; “60% of employees do not receive a promised pay raise, 82% do not see a change in title, and 70% of employees remain working at the same level of responsibility post-offer.”

Reputational Damage

Reputation is invaluable when operating in a market as confined as Dublin. Counteroffering staff is a procedure which essentially restricts staff from leaving and portrays an unattractive image to a prospective employee.

There is an air of desperation surrounding a large firm who seemingly cannot afford to lose employees. Surely, they should feel that unhappy staff are better moving on while more committed staff should be rewarded, and new workers enticed to join.

Ways to Retain your Key People

Work-Life Balance Benefits

Having a good work-life balance is one of the key motivating components in most employee’s career changes. This is heavily interlinked with age.

As staff get older, time outside the office becomes more valuable and more restrictive, particularly when children’s needs and schedules are factored into the equation. Within the last 12 months, it has become apparent that this is vital to attracting/retaining the industry’s top performers.

I recently supported a Fund Accounting Manager’s move to a competitor in Dublin for an identical salary as they were promised they would be justified in leaving the office at 5.30 every day without exception.

Create a Strong Organisational Culture

A recent study based on research attained from 4 leading Financial Services firms in Scotland found that without the proper organisational culture in place, initiatives to support work-life balance were merely for show and not put into practice.

This resonates with the Dublin market. For example, companies offer a day in lieu in favour of paid overtime. However, it can often be extremely difficult for workers to have these annual leave days approved, which in turn demotivates employees.

This clearly depicts a situation where the organisational culture doesn’t support the work-life balance initiatives which are supposedly available. A good culture that supports strong wellbeing and a work-life balance is a key factor in retaining staff and maintaining levels of satisfaction.

Focus on these and you should see your reliance on counteroffers subside. If you’re interested in learning more about current trends in Dublin’s finance market or are looking to hire in the new year get in touch, we’d be delighted to advise.