275 GROVE STREET, SUITE 2-400, NEWTON, MA 02466
Continually building and advancing the skills of your team of insurance professionals is perhaps the most essential element to your organization’s success and growth. But as America faces the Great Resignation, with almost 3% of the workforce quitting their jobs in 2021, doing this has become a challenge. Losing employees, and with them the knowledge and skills they’ve spent years building, can set an organization’s expansion back significantly.
To combat high turnover and minimize the necessity to bring in new, often less-experienced talent, many insurance employers are turning to retention strategies like salary counter offers. Studies show that up to 50% of employees who state their intention to resign will receive a job counter offer from their current employer.
We understand that preserving your staff is a top priority, but insurance companies should also recognize and weigh the pros and cons of countering a job offer before making it part of their employee retention strategy. In this blog, we’ll discuss both sides to making a counter offer proposal as well as some additional strategies for employee retention.
There’s a good reason why half of employers use salary counter offers to thwart employee turnover and continue to advance their teams. We’ll start by reviewing the benefits of making an employer counter offer and why your insurance organization might want to use this strategy when employees reach for new job opportunities.
Your aim as an employer should always be to build trusting and loyal relationships with your staff. By countering a job offer with an increased salary, additional benefits, or changes to your employee’s role, you can indicate to that staff member that their place on your team is valued. When done with care, an employer counter offer can be a vehicle for you to remind your employee why their particular skills and experience are important to your organization. It can also be a spark for discussion on how their personal growth will advance the company and therefore create compound benefits down the line.
By leveraging a job counter offer, you can not only prove to your employee that you are invested in their place on your team but also gain insight into their desired insurance career path. Together you can begin, or reinvigorate efforts to build a mutually beneficial avenue towards growth.
You may be considering whether or not your company can afford to make salary counter offers when employees announce their intent to resign. Countering a job offer can be expensive, especially if you hadn’t planned for a raise but they are often more cost effective in the long run.
Hiring new insurance professionals is an expensive undertaking. Not only will you need to offer competitive starting salaries in a tight labor market, but you will also need to foot the cost of onboarding and training your new employee. Other members of the team may need to take on additional work while your new hire gets acquainted and builds the necessary skills to fully replace your former employee. In most cases, the net cost of bringing in new insurance professionals is higher than the immediate expense of making a job counter offer.
The reality is that like any retention strategy, there are no guarantees that your counter offer proposal will be successful. It’s important to consider the downsides of countering a job offer and then evaluate whether this strategy is fitting for each individual case. Let’s review the two biggest cons to using an employer counter offer.
Perhaps the most glaring drawback of salary counter offers is the frequency with which employees who accept an employer counter offer end up leaving their company later on. Data shows that up to 80% of those who accept salary counter offers end up leaving their current employer within 6 months, and up to 90% leave within a year. In fact, a poll conducted among only insurance employers found that 65% of companies only succeeded in retaining employees for the short-term using a counter offer proposal.
When you consider the complexities of why an employee might be looking to move on from your company, it makes sense that merely raising their salary often cannot solve their overall dissatisfaction with their role. Though money plays an important part in job satisfaction, most employees who choose to resign also experience discontent with their job responsibilities, work-life balance, their managers/boss, company culture, or even their overarching career path.
Even if your job counter offer is accepted, your employee may continue to search for new opportunities that meet their needs in other areas of job satisfaction. By countering a job offer you may just be delaying the inevitable and further taxing your resources.
Job resignations don’t typically happen spontaneously. If an employee announces their intent to leave the company, that means they’ve likely been on the job market for weeks or even months. As we’ve already said, this indicates that the employee is experiencing dissatisfaction in more than one area of their work.
Accepting a job offer from another organization, even if an employer counter offer eventually convinces them to stay, can erode trust between managers and their employees. Managers often begin to worry about their staff’s commitment to the company and likewise, employees can become concerned about their boss’ devotion to career development. By countering a job offer you run the risk of souring the personal relationships even if the monetary gain is enticing.
Most analysis points to the conclusion that countering a job offer does not often result in long term success. But there are always cases that are the exception to the rule and you shouldn’t completely rule out using a job counter offer to retain important staff. The appropriateness of a counter offer proposal will always depend on the individual and how motivated your organization is to keep them on your team.
If you decide to use salary counter offers as a tool to mitigate employee turnover, make sure to consider what else you can include in your job counter offer beyond increased pay. When in doubt, have a discussion with your employee about why they’re thinking of leaving your organization and how you can adapt their role and the benefits they receive to meet their career development goals.
Even better, do your best to get ahead of potential resignations and avoid the issue of salary counter offers altogether. We know no one has the ability to see into the future, and some employee movement is inevitable, but there are retention strategies that can help prevent these auction-like circumstances.
Research overwhelmingly points to personal & professional development opportunities as key elements of improved employee retention. Work on refining your employee review process can help you stay in touch with the needs and ambitions of your team. Create solid systems that ensure open dialogue between staff and their managers about job satisfaction, potential role adjustments, and raises. And continue to make it clear to your employees that their happiness and growth are valued by your organization.
Have you had success or challenges with countering a job offer? If you need information about how to appropriately use this retention tool, other ways to preserve your staff, or help filling a recently open role in your organization, the Martin Grant team is here to help! Let’s talk through your organization’s specific experiences with salary counter offers and together we can construct solutions to your staffing issues.