TO RETAIN the best and brightest employees it sometimes seems like a good idea to offer more money, but recent research suggests that cash doesn't always talk.
A study, commissioned by specialised recruiter Robert Half surveying 160 chief financial officers in Australia, shows more than 94 per cent of Australian CFOs have extended counteroffers to employees while 66 per cent of the same CFOs also say that the same employee ended up leaving the company.
David Jones, senior managing director at Robert Half Asia Pacific says these figures demonstrate employees are looking for more than just financial incentives to stay with a company.
"Counteroffers are often an immediate reaction to a skilled employee resigning, however offering a purely financial incentive to remain with the company rarely works. It can be a very costly way to delay the inevitable," says Jones.
Extending counteroffers is definitely common practice in Australia, according to the survey.
More than 34 per cent of CFOs "always" made counteroffers to employees in a bid to retain the talent. A quarter said they applied the practice "often" and 26 per cent said "sometimes".
However, two-thirds or 66 per cent of those who did make counteroffers said their employees ended up leaving the company, with 37 per cent saying the employee left within six months, 20 per cent saying the employee stayed for less than a year, and nine percent staying for over a year.
Jones says business leaders need to address issues of staff retention proactively.
"With the war for talent and companies actively poaching top employees from competing organisations, business leaders need to proactively address their staff retention measures and not wait until one of their top performers wants to leave the organisation," says Jones.
"Managers need to check in frequently with their employees to make sure they're challenged and satisfied with their career path, as well as regularly assess salaries to ensure compensation is fair."
The survey revealed 68 per cent of CFOs who made a counteroffer said the costs related to replacing employees are a key motivator.
Desire to retain knowledge within the company was one of the main reasons for making a counteroffer for 60 per cent of CFOs, while 40 per cent cite a shortage of skilled finance professionals.
Jones says that in addition to counteroffers being largely ineffective in retaining staff, they also set a toxic precedent to other employees.
"Business leaders will send a message to staff that, unless they threaten to resign, their pay rise request won't be considered," says Jones.
"So while staff retention is the key driver for extending a counteroffer, it might actually have the complete opposite effect within the wider business."
Business News Australia
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