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Sunday Reading: August 24, 2014 – Retention, Fit, and Soft Skills

24 Sunday Aug 2014

Posted by Rory C. Trotter Jr in Sunday Reading, Uncategorized

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Tags

fit, hr, human resources, retention, soft skills, turnover

<charterbenefit.com

<charterbenefit.com>

I got a really late start today, so apologies for the delay. With that said, here is your Sunday reading for August 24, 2014:

1. Ann Bares has a great post up on TLNT talking about the difference between good and bad turnover. This one is really good because it focuses on some of the major consequences of spreading turnover efforts out too broadly (e.g. you lose top performers who feel unappreciated while conversely under-performers don’t receive the incentives they need to either improve or else self-select out of the organization). This post is great because of the examples Bares gives to contextualize good vs. bad retention strategies, and also because of how it illustrates that failed strategies at one organization can succeed at another with just a few tweaks. Check the full piece out here, and as always please share your thoughts in the comments section below.

2. In this post, HR Director Kandie Kelley writes about the trap of labeling new-hires ‘bad fits’ in instances where the real challenges are failures on the part of management to clearly define expectations and properly on-board said talent. This is a good read for any line leaders or HR professionals who may be struggling with getting external hires up to speed. Before assuming performance issues are the culprit , take 5 minutes to check out Kelley’s piece here and examine if there might be other causal factors undermining your new employees ability to thrive.

3. Sharlyn Lauby has an outstanding list of 10 soft skills that every employee should have up on HR Bartender here. There isn’t one on the list that isn’t table stakes for someone looking to eventually step into the a senior leadership (or even middle management) role, so if you have aspirations for either (or are already there and struggling in your current position) check Lauby’s post out and see if you might be missing a core competency in the soft/people skills department.

As always, please share your thoughts in the comments section.

Best,

Rory

Sunday Reading: June 1, 2014 – Gender Roles, Turnover, and Reference Pricing

01 Sunday Jun 2014

Posted by Rory C. Trotter Jr in Sunday Reading

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Tags

employee engagement, hr, human resources, recognition, reference pricing, reward, turnover

<www.oberlin-college-library.org

<www.oberlin-college-library.org>

Sunday reading for June 1, 2014:

1. Peter McKelvie over at The Best Practice Manager has a great piece up talking about how relatively lower valuations of care-giving social roles serve to undermine gender equality. Specifically, he highlights that it is not enough for society to embrace a woman’s choice to enter the workforce or work part time – as long as care-giving work continues to be viewed as less value added than work in the professional sphere true gender equality is not possible. To this point, one way that we can make progress in this space is by enabling men more flexibility in their career choices. Society largely expects men to conform to traditional roles as breadwinners, in the process tying masculinity to career and thereby undermining the value of caregiver roles. This one got me thinking about my own biases (I would never adopt a stay-at-home role because, I suppose, I value career success more highly), and also caused me to think about the role that HR and talent management policies play in determining society’s broader gender roles. Check the full piece out here.

2. Recognition guru Derek Irvine recently wrote a piece for the Compensation Cafe where he highlighted that 83% of workers are looking for a new job. Buried at the heart of why people seem to be seeking new opportunities is poor management, with 15% of respondents aspiring to leave their current roles citing no possibility of advancement, 13% saying they feel under-appreciated, and 5% saying that they dislike their boss personally. That a third of engagement/potential retention issues are tied to management related issues speaks to a huge need that organizations have around building capabilities in this arena. This piece is worth reading for the insights it provides on management alone, but it also has a lot of great thoughts around pay (which topped the list of reasons employees are looking to leave their organizations) as well. Check it out here.

3. Julie Appleby, senior reporter at Kaiser Health News has a post up on TLNT outlining a benefit change that impacts up to 10 percent of large employers and may eventually impact even more. It’s called reference pricing, and here’s how it works (from the article):

Insurers or employers survey what providers are charging for a specific treatment, and then set a cap — or “reference price” – to mark the maximum amount they will pay for that service as a way to encourage consumers to choose more reasonably priced providers or treatments.

As more employers adopt reference pricing strategies, it could leave consumers on the hook for thousands of dollars in healthcare costs if they elect to have out of network treatments. This makes consumer/employee education paramount. Organizations adopting reference pricing strategies will need to effectively communicate these changes to employees so that they can make informed choices. To learn more about reference pricing (and how it might affect you) read the full piece here.

As always, please share your thoughts in the comments below.

Best,

Rory

Voluntary Separation – The Science of Saying Goodbye

28 Wednesday May 2014

Posted by Rory C. Trotter Jr in Personal Development

≈ 1 Comment

Tags

hr, human resources, resignation, turnover, voluntary seperation

<bps-research-digest.blogspot.com

<bps-research-digest.blogspot.com>

Change – both personally and professionally – is a part of being human. Over the years most of us change cities, jobs, and partners. People flow in and out of our lives like the current; some of them are quickly forgotten, while others stay with us in our memories long after they are gone, defining us.

For this reason, I would encourage you to make sure the people around you 1. If you can’t say something nice don’t say anything at all.know how they impacted your life in a positive way. 1 Don’t forget to let someone know that they made a difference. Do this not just because a bridge well-tended is one that endures to be crossed at a later date, but because while you will have both good jobs and bad, and will live in cities that are both a great fit for our temperaments and a bad match for us at that point in time in our lives. what will remain most poignant about your experiences in your memories will be the people you shared them with. Ergo, when you look back on your life you don’t want to regret the things you didn’t say. This is of course cliche’, but you are much less likely to regret saying the things that you did.

…Bringing this back to HR. In our organizations we would do well to remember that the way that we say goodbye to departing employees matters. They can choose to either be brand ambassadors to others as they move on or tear down the company to prospective future employees… the choice has more to do with the way they’re treated on the way out than one might think. And in that same vein, as professionals we would do well to remember that no one moves up on their own. Thank the people that helped you along the way – they could have helped someone else instead. And let your mentors know how they influenced you, so that they might be emboldened and encouraged to mentor others in the future.

….Another thought stream this morning. What have I gotten right here? What have I gotten wrong?

As always, please share your thoughts in the comments section below.

Best,

Rory

Retention 101: Pay People Fairly, Not “Competitively”

27 Thursday Jun 2013

Posted by Rory C. Trotter Jr in Compensation

≈ 4 Comments

Tags

compensation, employee engagement, extrinsic reward, hiring best practices, hr, human resources, pay, pay grades, pay ranges, peer benchmarking, retention, turnover

Image Credit: <idiva.com

Image Credit: <idiva.com>

Jim Brennan over at the Compensation Cafe recently recently did some compensation evangelizing about a topic I have strong convictions around:

The importance of paying people fairly (notice I said fairly and not competitively).

You can read the full article 1. …and you should. It’s very good.in the link above 1, but in short Brennan’s key points are:

1. Many companies have a compensation philosophy of not granting an employee more than a 10%-15% raise even if he or she lags the market much more than that. Conversely, the same companies have no problem paying an unproven external candidate fair market value on the 2. This is a deeply flawed approach to compensation because – as I’ve pointed out before – a company’s pay philosophy (specifically at what percentile of the market they target for a given job’s midpoint) has a significant impact on salary. This difference in pay is often not correlated with the relative performance of two employees at separate companies.basis of their prior salary. 2

2. Employers sometimes have a tendency to disqualify otherwise qualified candidates for jobs on the basis of prior salary (ex. the thinking here being that if someone makes 65k there is no way they’re qualified to do a job with a midpoint of 120k).

3. The above flaws in thinking are a product of our tendency as human being to bias our decisions by using relative relationships as a benchmark rather than objectively looking at the capability of an employee to perform work.

…I agree with all of Brennan’s points, but *not* because I have some deeply felt need to see everyone paid a salary commensurate with the value they bring to the table. In truth, most people are underpaid relative to the value 3. If employers paid employees a wage based on the value they brought to their companies it would be a break even proposition for them, yes?they add to their respective organizations. 3

Instead, setting aside the question of the “right” thing to do from the standpoint of pay equity, government legislation around pay, and even simple compensation best practice around valuating work, I’m mostly concerned with paying people fairly for two simple reasons:

Retention and employee engagement.

Organizations cannot put compensation data here anymore. Employees know... Image Credit: <blogs.screenconnect.com

Organizations cannot put compensation data here anymore. Employees know… Image Credit: <blogs.screenconnect.com>

To the above points, let me tell you something that you may or may not know: People know when they are underpaid. They don’t need access to subscription services like ERI and Paynet to learn this. With websites like Glassdoor.com, Payscale.com, and Salary.com it has never been easier to find out how one is paid relative to the market.

This is important because as much as there is an old saying that “people leave managers not companies“, the truth is that when an employee makes a decision to leave his or her organization it often starts with money.

While it’s true that an employee seldom leaves his or her company specifically because of salary, when someone knows they are underpaid it magnifies all of the other problems at work. I know many people who have left their organizations that started out complaining about their salaries, then their bosses, then the culture, then the hours, and then finally they left.

Finally – and I’ll close with this – even if an underpaid employee doesn’t quit (and sometimes – for various reasons – they can’t), they often mentally check out.

If a company doesn’t pay for performance it often doesn’t get performance.

So if you’re an employer reading this; pay people based on the value they bring to your organization, *not* just what you can get away with paying them.

It actually might turn out to be better for your bottom line.

As always, please share your thoughts in the comments section below.

Best,

Rory

If you have questions about something you’ve read here (or simply want to connect) you can reach me at any of the following addresses: 

SomethingDifferentHR@gmail.com OR rorytrotter86@gmail.com

@RoryCTrotterJr

http://www.linkedin.com/in/roryctrotterjr

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Nine Questions With the HR Field Guide

11 Tuesday Jun 2013

Posted by Rory C. Trotter Jr in Compensation, General HR, Talent Management

≈ 2 Comments

Tags

compensation, compensation structure, executive compensation, executive pay, hiring best practices, hr, human resources, retention, sourcing, talent management, TSR, turnover

As part of his popular “nine questions” series, I recently had the opportunity to do an interview with Erik Smetana, an Experienced Cross-Sector HR Strategist & Leader. Erik is a Director of HR at the University of Missouri, and also the Publisher & Founding Editor of Stymie Magazine.

Image Credit: <news.softpedia.com

Image Credit: <news.softpedia.com

Erik was kind enough to ask me some questions about myself, where I see the Human Resources function headed in coming years, and finally requested I share some insights on how to break into HR.

The spotlight / interview can be read here:

As always, please share your thoughts in the comments section below.

Best,

Rory

If you have questions about something you’ve read here (or simply want to connect) you can reach me at any of the following addresses: 

SomethingDifferentHR@gmail.com OR rorytrotter86@gmail.com

@RoryCTrotterJr

http://www.linkedin.com/in/roryctrotterjr

Google+

Hiring for Talent vs. Hiring for Cultural Fit

22 Friday Mar 2013

Posted by Rory C. Trotter Jr in Recruiting, Talent Management

≈ 7 Comments

Tags

cultural fit, hiring best practices, hr, human resources, Recruiting, sourcing, talent, talent acquisition, turnover

There has been a lot written on the subject of hiring for talent/competence vs. hiring for cultural fit.

Image Credit: <blog.smashfly.com

Image Credit: <blog.smashfly.com>

I won’t try to re-invent the wheel here. Instead, I want to talk briefly about what it means to be “talented”. From there the question of when to hire for talent vs. fit (for me, at least) becomes fairly obvious.

So… “talent” in an employment context generally refers to one of two things:

1. Exceptional technical ability

2. High potential to develop exceptional technical ability

What technical ability a given employer may be looking for of course varies depending on the job, but the possession of a relatively scare or rare skill set – or the capacity to develop one – is highly valuable in the market place.

Unfortunately, in the first case many employers often overestimate the transferability of talent (and spend too much time focusing on cultural fit), while in the second case they underestimate how important the right conditions are for talent cultivation (materially undervaluing fit).

Journalist Geoff Colvin touches on the spirit of what I’m talking about here 1. In addition to “Talent is Overrated”, if you’d like to learn more about deliberate practice I recommend the following: K. Anders Ericsson, Ralf Th. Krampe, and Clemens Tesch-Romer. The Role of Deliberate Practice in the Acquisition of Expert Performance. Psychological Review 1993, Vol. 100. No. 3in Talent Is Overrated: What Really Separates World-Class Performers from Everybody Else. 1

In the book, he shows that with the exception of a select few genetic characteristics that contribute to success in certain arenas (like height in basketball) that talent is not innate. Instead, it is the product of something called deliberate practice.

Basically, the theory behind deliberate practice states that people who are very good at a specific thing are good at it because they’ve broken down what it takes to be successful at their craft into component parts – and then focused on developing those skills in chunks on a day to day basis.

Talent doesn't always need to be a cultural fit if it stands out. Image Credit: retailleverage.wordpress.com

Talent doesn’t always need to be a cultural fit if it stands out. Image Credit: <retailleverage.wordpress.com>

Assuming this principle to be true, if an employer wants to hire a world class actuary/computer programmer/project manager/compensation consultant/financial analyst etc. the employer shouldn’t be looking at “cultural fit” so much as it should be measuring skill transferability. The asset that the employer is paying for in this case – technical ability – is likely to yield the needed value only if the technical ability the talent has is aligned with the needs of the organization. As such, I would argue that an interview (and job posting) process that accurately identifies and tests for the skills needed to be successful in a role are much more important than cultural fit in cases where companies are hiring for a specific skill or experience.

Conversely, if an employer is hiring a candidate for his or her capacity to learn then cultural fit is *much* more important. In this case an employer is hiring a candidate largely because of his/her cultural legacy. A candidate’s background (schooling/life experiences/work ethic etc.) make he or 2. And for the record, more jobs require the second type of candidate than the first. The first group is made up mostly of highly technical jobs (doctors, lawyers, scientist etc.) The majority of roles are learned (primarily) on the job, and require candidates with the right temperaments and behaviors as opposed to specific technical skills. she an attractive training prospect. 2 As such, if a candidate isn’t a good cultural fit then the work environment will likely prove to be sub-optimal for training purposes (leading to unrealized potential and a presumably failed hire).

Closing… If I’m recruiting for a role where the incumbent’s existing abilities will define his or her success in the role (and any training is negligible or non-existent), then I am looking for skills and not fit.

Not all work requires exceptional talent. Often a new incumbent just needs to fit in. Image Credit: http://www.staffmills.com>

Not all work requires exceptional talent. Often a new incumbent just needs to fit in. Image Credit: <www.staffmills.com>

On the other hand, if much of what an incumbent does in his/her new role will be based around learning internal processes then cultural fit matters a lot more in the selection process.

In the case of the former the incumbent defines the role, while in the case of the latter the incumbent is stepping into a pre-defined space where his or her ability to succeed will be determined largely by the ability to fit into what the employer does.

As always, please share your thoughts below.

Best,

Rory

If you have questions about something you’ve read here (or simply want to connect) you can reach me at any of the following addresses: 

SomethingDifferentHR@gmail.com OR rorytrotter86@gmail.com

@RoryCTrotterJr

http://www.linkedin.com/in/roryctrotterjr

Google+

Succession Planning – The Labor Costs of Lacking a Strong Bench

18 Monday Mar 2013

Posted by Rory C. Trotter Jr in Talent Management

≈ 4 Comments

Tags

bench strength, compensation, external recruiting, hiring best practices, hr, human resources, learning and development, Recruiting, retention, sourcing, succession planning, talent, talent acquisition, turnover

Credit: www.ministrybydesign.net

Image Credit: <www.ministrybydesign.net>

So Kris Dunn, the CHRO at Kinetix recently wrote a post on why counter-offers are a suckers play.

1. It was my first post so I tried to say too much, but I still think it’s a good read.I’ve already written a post sharing my thoughts on the counter-offer, 1 so I won’t rehash them again here.

With that said, Kris makes an interesting point about knowledge transfer. Specifically, he says that:

(the)…tendency to freak out over average people resigning means you haven’t institutionalized knowledge transfer and operational soundness. The knowledge is in the average person’s head and nowhere else…

2. Anna Bares, Managing Partner of Altura Consulting Group LLC points at that the 50% spread present in most traditional salary ranges actually allows a company to pay up to a 20% premium over the (company determined) market rate by design.It’s is a chilling thought, but is true in both large and small organizations. 2

Often an employee that is neither a key creator nor major revenue generator (i.e. they work in a cost center like communications or HR) is the only person in a department that can do some critical task. The completion of the task may not make money for the business, but the work is important to its continued operation. Consequently, said business finds itself in a situation where it must pay a market premium to retain talent that isn’t contributing commensurate value.

I don’t personally think it’s the worst thing in the world to overpay someone in  3. I’m not just saying that because I’m in HR – sometimes an employee working in a cost center performs so far beyond the (company set) market rate that it makes sense to pay him/her at or even above the top of the range. This of course has the makings of a great post for another day…support or operations, 3 but I *do* think it’s tough for an organization to be forced to do so because no one else in said organization can do the work.

The importance of having a strong bench cannot be overstated. Credit: www.thevarguy.com

The importance of having a strong bench cannot be overstated. Image Credit: <www.thevarguy.com>

I see one of HR’s primary jobs as being the development of a strong bench for every critical position in its organization. This starts with HR business partners having talent talks with function leaders to identify the most important roles in each department, and ends with identifying and developing bench players to seamlessly replace incumbents in those roles in the event of a departure.

Companies that don’t have strong benches end up paying a significant wage premium over time to retain talent that doesn’t provide proportional value. Labor cost are often one of the largest expenditures in any organization, and one way to control these costs is to ensure counter-offer decisions are made based on replacement costs as opposed to out of necessity.

As always, I don’t have all of the answers. What do you think?

Please share your thoughts below.

Best,

Rory

If you have questions about something you’ve read here (or simply want to connect) you can reach me at any of the following addresses: 

SomethingDifferentHR@gmail.com OR rorytrotter86@gmail.com

@RoryCTrotterJr

http://www.linkedin.com/in/roryctrotterjr

Google+

So About the Marissa Mayer Work from Home Controversy…

02 Saturday Mar 2013

Posted by Rory C. Trotter Jr in Employee Engagement

≈ 1 Comment

Tags

employee engagement, hr, human resources, retention, turnover, work life balance

So at this point almost everyone has chimed in on Yahoo’s decision to ban all employees from working from home. The edict will come into effect starting June and is expected to impact a large percentage of Yahoo’s workforce.

Telecommute 1

There have been many opinions on this ranging from kudos to condemnation. There has even been speculation that the new rule might be illegal under the ADA.

Personally I would never choose to work from home. From a networking standpoint there are certain interactions you can only have by coming into the office. Frankly, if one wants to continue to move up in the organization then 1. If your manager needs to see you in the office to know you’re working then one of two things is true: a. The work you do isn’t all that value added or b. Your manager doesn’t do his/her job very well – every manager should understand his/her employee’s work well enough to evaluate it on its merits and not by butt-in-seat time.face time – for all of its pointlessness in many respects 1 – is a must.

With that said, for those employees who have reached the points in their careers where they aren’t looking to move into bigger roles (and/or have otherwise perfectly valid reasons for wanting to work from home) I completely understand and respect their desires to not come into the office – and the outrage many at Yahoo must feel at having that option taken from them.

The thing is… Yahoo is a business and Marissa Mayer is the CEO of that 2. Disability and/or other hardship cases are perfectly valid reasons an employee could elect or need to work from home, and it will be interesting to see how Yahoo actually handles these execptions when the time comes.business. It’s her call on if employees (setting aside any ADA issues 2) can work from home or not.

As has been documented in the many links above, there are business reasons for why Mayer instituted the ban. 

Marissa Mayer 2

People will argue about the validity of those reasons until they are blue in the face – fine.

And make no mistake… there will be some retention issues at Yahoo as a result of this decision – some of the employees that will leave as a result of the move will be welcome departures… but in other instances Yahoo will lose some very, very good employees.

And it’s Mayer’s call. She’s the 5th CEO in five years, and if she doesn’t turn the company around soon then the board will be looking for its 6th CEO.

The CEO job is a lonely one as is, and Mayer has a very big spotlight on her because of the company’s brand, her Google pedigree, and her gender. So I don’t blame her for trusting her instincts (and the data that supported them), making a call that many of her predecessors may have known needed to be made (but didn’t have the courage or conviction to act on).

Let’s let Marissa Mayer do her thing. If it turns out to be the wrong decision then Yahoo’s next CEO will surely reverse it… and conversely if it’s the right play let’s all give her the credit she deserves.

What do you think?

Share your thoughts below.

Best,

Rory

If you have questions about something you’ve read here (or simply want to connect) you can reach me at any of the following addresses: 

SomethingDifferentHR@gmail.com OR rorytrotter86@gmail.com

@RoryCTrotterJr

http://www.linkedin.com/in/roryctrotterjr

Google+

The Competitive Counter Offer

22 Friday Feb 2013

Posted by Rory C. Trotter Jr in Compensation

≈ 7 Comments

Tags

company culture, compensation, counter offer, hr, human resources, pay, retention, turnover

Employee Tug of War

I recently had the opportunity to read a fantastic article from HR columnist Suzanne Lucas on competitive counter offers – and why companies shouldn’t make them.

The wisdom goes that if an employee has reached the point where they have a counter offer from another company, that said employee is already as good as gone (he/she has likely spent months going through the job search process to get that offer – think about that). As such, rather than making a counter offer a company in this situation might as well instead cut its losses.

The data shows that this is overwhelmingly true. A commonly cited statistic in HR is that depending on the industry and economy; between 2/3rds and 80% of employees still leave their organization within 6 months of accepting a counter offer (this number climbs to 85 to 90 percent within 12 months). Knowing this statistic, companies make counter offers mostly to protect themselves from the large cost of suddenly and unexpectedly losing a valuable employee (while they prepare for the likely eventuality that he/she will leave).

That said, as a Compensation Specialist (who is friends with lots of Compensation Specialists), I want to talk a little bit about the exceptions to this rule as I understand them…

1. Tangent coming. …So when I was in my very early 20s 1, I met the woman with whom I would have my first “meaningful” relationship (I was aware that everything before was going to end almost as soon as it began). I saw her while heading to meet up with someone else for a 1st date (we can’t choose when these things 2. I subsequently tested and confirmed my hypothesis by going over and saying hello. Thus (for me at least) our first encounter literally and figuratively met the criteria for the romantic clichés “love at first sight” and “she had me at hello”. happen), and I immediately hypothesized that I might be in love. 2 

I got her phone number and we began dating less than a week later. 3 Over the subsequent years she turned out to be for me all of the things that a man’s partner often is to him – smart, interesting, attractive etc.

I felt lucky.

3. Things obviously didn’t work out with my actual date that night. By the 4th year of the relationship, however, we were beginning to have problems. By the summer we’d broken up. We got back together. We broke up again (and got back together again).

The third time we broke up we didn’t get back together.

For a time after the last breakup she wanted to try to make things work again, and, I suppose (honestly) that at times I did too. Yet after some careful consideration I made the decision to shut the door on us. The decision really didn’t have anything to do with my feelings for her so much as it did the way we’d handled our problems to that point (and what this might foreshadow about a hypothetical future together). A quote from the 2001 movie 4. I’ve actually never seen this movie (or the book by the same name), but I am a huge fan of well written prose. This quote has been floating around for a while and caught my attention. If anyone has seen the movie and would recommend it please let me know. “Captain Corelli’s Mandolin” 4 makes the point more eloquently than I ever could, so I’m including said quote below:

“Love is a temporary madness. It erupts like an earthquake and then subsides. And when it subsides you have to make a decision. You have to work out whether your roots have become so entwined together that it is inconceivable that you should ever part. Because this is what love is. Love is not breathlessness, it is not excitement, it is not the promulgation of promises of eternal passion. That is just being “in love” which any of us can convince ourselves we are. Love itself is what is left over when being in love has burned away, and this is both an art and a fortunate accident. Your mother and I had it, we had roots that grew towards each other underground, and when all the pretty blossoms had fallen from our branches we found that we were one tree and not two.”

By the time of our 3rd breakup I realized that my partner and I had made the decision that our problems were bigger than our desire to be together. We were – in the words of the author above – not one tree, but two.

In life there is always adversity (sometimes minor and others major) right around the corner. A couple’s decision to face those challenges together – without splintering apart – is the difference between partnerships that last and partnerships that don’t…

5. Sometimes it takes me a while to get to the point.   …Which brings me to the competitive counter offer 5

Theoretically I’m a huge fan of the competitive counter offer. If a company is a 6. At least amongst the non-executive population. For executive populations there are some good reasons why you want to pay at median even if you have world class talent (I’ll talk more about this in a later article). pay leader in its industry (which it should be for key positions 6), offer matching is something an organization can and should do to retain top talent (at effectively market value).  

Furthermore, I strongly believe a company’s top performer(s) should be near or at the top of their position’s pay range anyway (regardless of years in the job), and if they aren’t paid at that level and get another (better) offer, the employer should just think of this as a market correction and respond 7. Responding accordingly would be matching the offer in case you’re wondering… for the record though, I also strongly believe that your median employee in a population should be closer to a 100% comparative ratio than the top of the pay range. accordingly. 7

…At least in theory. Unfortunately, once an employee has looked externally and accepted an outside offer, the employer/employee relationship is often too badly damaged to return to business as usual even in instances where the employer improves upon the external offer and manages to (temporarily) retain the employee.

With the trust in the relationship shattered (and an expectation that they’ve merely temporarily staved off the employee’s inevitable departure by offering more money), post counter offer the management team often creates a self-fulfilling prophecy by changing the nature of the relationship with the employee from strategic to technical/transactional (further alienating the very employee they wish to retain).

And so while I remain a fan of the counter offer in theory, I am only a proponent of it in practice when all of the below conditions are met:

1. The reason the employee elected to look externally is primarily tied to monetary reward and *not* intrinsic compensation:

Monetary reward alone will not solve this man's problems.

Monetary reward alone will not solve this man’s problems.

This has to be the starting point. If an employee is looking externally because he or she doesn’t like their work/boss/co-workers/wants a promotion the employer can’t give/etc. then offering more money to said employee to stay on (without addressing his/her other underlying concerns) is not a long term solution.

2. If the employee looked externally for both extrinsic and intrinsic reward reasons, all of these issues need to be negotiated as part of the counter offer process:

If you extend a monetary counter offer without addressing the non-monetary concerns, at best it will buy you some time until the employee finds an even more attractive opportunity than the last (by leveraging his/her newly increased salary during his/her next job search).

At worst, the employee’s performance will decline post counter offer (once he/she comes to regret staying or the changed office environment becomes too tense).The employee will still likely leave (or be terminated for poor performance), and you won’t have gotten the productivity you needed to justify extending the counter offer to begin with.

It's critical to really hear the employee out at this point. Money alone may not solve the problem.

It’s critical to really hear the employee out at this point. Money alone may not solve the problem.

If an employee’s non-monetary complaints aren’t fixable (or the employer doesn’t want to address them) *never* improve the monetary reward package to retain him/her – it won’t last.

If the employee’s manager really does need the employee to stay on for the time being in order to prepare for life after the time he/she leaves then a counter offer is of course fine, but extend it understanding this is a short term fix (it may even be a good idea to discuss this with the employee – in which case you may just be looking at an extended notice period assuming he/she can negotiate it with his/her new employer).

3. Assuming that monetary reward is the primary reason the employee looked externally, after extending the counter offer the employer (and employee) need to legitimately forgive and forget any issues and perceived slights.

If a counter offer is extended and accepted, both parties really need to start fresh.

If a counter offer is extended and accepted, both parties really need to start fresh.

Anytime an employee looks externally, the trust in the employer/employee relationship is damaged. In order to re-establish that trust, both parties need to reset the relationship once they’ve agreed on a new compensation package and the employee accepts.

If both parties can’t do this the new relationship is doomed to fail. An office environment where the employee is bitter that he/she had to go externally to be paid market value (and/or an environment where the employer is perpetually worried the employee will leave and treats them this way) is too poisonous for the business relationship to survive.

Ultimately, when an employer and disgruntled employee face challenging times together, they have to make a decision to either work together to address their issue(s), or else part ways. Depending on the history between the parties, it may or may not make sense to continue the business relationship (sometimes an amicable split really does make the most sense).

Regardless, a continued healthy business relationship is much like a romantic 8. while probably not being similar in any other ways. -_- relationship in at least one respect, 8 with that respect being that it requires both parties to stay engaged and committed, even when times are tough. Everything is great when a new hire first joins a company, but once the bloom is off the rose, the choice to make things continue to work is a decision both parties have to make together (and in earnest).

Employers/Employees: If times are tough and you’re thinking of breaking up… before making any rash moves take a look at your relationship and ask: Are we one tree, or two?

Best,

Rory

If you have questions about something you’ve read here (or simply want to connect) you can reach me at any of the following addresses: 

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