Quite an interesting article in light of things.
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Business Times - 29 Oct 2007
THIS WEEK'S TOPIC<
To keep or not to keep?
Would you make a counter-offer to an employee who wants to quit, and if so, what form would it take? What other solutions would you consider?
Make offers, but not in money terms
Derek Goh
Executive Chairman
Serial System
AS AN HR best practice, we implement the exit interview for staff planning to quit. This will give us good feedback on the reasons for quitting and improve our HR policy and practices. Not all quitters are leaving for more pay. Some move on for a change of environment or a career switch or to take a break. When an employee is critical to the organisational growth and profitability, then it is logical to make a counter-offer, especially in the current tight labour market.
A pay rise is not the ideal way to retain quitters as we may not want to set a precedent for more quitters demanding pay increments. Often, greater job satisfaction and motivation will keep the staff happily working for the organisation. Thus, annual corporate recognition will boost staff morale as well as raise the corporate and employee profile.
Another form of HR retention is to grant sabbaticals to deserving staff to recharge themselves so that they can return to the organisation fully energised and committed.
An overseas posting is another good change of scene for staff to rejuvenate themselves and yet remain gainfully employed.
Fong Loo Fern
Managing Director
CYC The Custom Shop
IN GOOD times or bad, loyal and capable staff are hard to come by. When times are hard, like the economic downturn of 1998, the relationship is tested on the part of the employer. Many companies took the easier way out by retrenching staff. That was not so long ago. Times have changed and the economy has posted several consecutive years of good growth. But people's memories of those hard times are well etched while new job entrants do not have any recollection of it. Employers like us recognise that the tide has turned and getting the right staff is becoming increasingly challenging and expensive.
As an employer running my own business, I have to be mindful just how much I can afford to put aside for staff salaries without severely affecting profitability. Yes, I would consider making a counter-offer to an employee who wants to quit - but not always in the form of higher salaries.
We are all creatures governed by emotions and needs. While money could be a main factor, sometimes there are other factors like more flexible hours, a better work environment, recognition or simply the opportunity to work in a different job function.
It is important to get to the root cause of the resignation. From experience, if all the employee values is a higher salary, I would let him go. It is just too stressful and time-consuming to have to go through the process of 'bargaining' each time the employee is lured by a higher salary from another company. I think what is important for businesses is to build a culture that is people-oriented and which encourages personal development, loyalty and a shared vision.
Always keep them motivated
Joel G. Momberger
Managing Director
Informatica S-E Asia, Divisional Headquarters, Asia Pacific
TALENT management programmes have gained importance in sectors like IT, retail, banking and financial services which witness high levels of employee turnover. Informatica believes that employee retention is of utmost importance as each individual brings a unique set of skills to the organisation. This is especially so in the IT sector where talent is already rare and people with requisite skills and experience are difficult to find.
While monetary compensation such as salary, perks and stock options are a given, it is the intangible benefits like a career roadmap and healthy work environment which determine whether one will seek out greener pastures. Counter-offers are usually not an effective solution to talent retention. Employers need to understand that employees want attention, interaction with bosses, performance incentives and clear direction on exactly what is expected of them. These are the basic needs of employees at all levels and it gives them the reason to stick around.
Sam Yap S G
Group Executive Chairman
Cherie Hearts Group Int'l
AT CHERIE Hearts, we believe that the best option is to prevent such a situation from happening in the first place. It is always better to spend some effort retaining a good employee than to let him go and seek another one. The costs associated with rehiring and retraining new employees are often high, if not higher than retaining current ones.
We recognise that employees today, especially the younger ones, have high aspirations and are constantly seeking opportunities to achieve them. Hence, we seek to provide our employees with these opportunities, through challenging job assignments, promotion prospects, good work-life balance, etc. Of course, remuneration plays a part as well, so we offer competitive pay packages that are in line with the industry.
Having said that, in exit interviews, we do check with employees to see if we can match their needs, other than financially. A horizontal move may be deemed necessary in order to retain them.
Leonard Tan
Managing Director
Diethelm Singapore
WITH a raging talent war in the market these days, addressing the issue of employee retention is an urgent across-the-board business concern. The yearly expense to an organisation of replacing a good employee (including replacement, training and lost performance costs) can range from a couple of months of the employee's salary to even his annual salary. Turnover of talented employees also erodes morale among those who stay and quite likely harms customer retention.
The challenge today is not just about retaining good talented people, but more importantly, about fully engaging them. It is about capturing their hearts and minds at each stage of their careers. To be fully engaged requires emotional involvement in the work.
If an employee who has proven to be an asset to the organisation reaches the point of quitting, understand his core reasons for doing so. There is usually no real mystery for his disengagement; the common factors include a lack of challenge, uninteresting work, limited career growth, restricted development opportunities, a bad boss, lousy colleagues, and the perception of unfair pay. Whether or not to make a counter-offer, as well as how far to go, depends on the reason(s) for the employee's intention to quit, the company's ability to meet his demands, the company's alternative(s) if the employee does leave and very importantly, the message that will be sent to the good talented employees who are still fully engaged. Smart retention goals, therefore, need to be established. It is true that we often have to compete on compensation and benefits, but we really win on culture, learning and development.
The speed and intensity of change today requires all managers to be responsible for the retention of their staff and to be alert to problems that can be fixed. Retention must be part of the organisation's DNA. Recognise managers who keep good employees, ie, anyone at any level who brings value to the organisation.
Reciprocity is fundamental. Employees are investors in the organisation and expect a return on their service investment. Employees' engagement, commitment and loyalty are a result of being challenged, developed, appreciated, heard and respected. Thus, check in with your talented employees often. Build learning relationships in all directions and hold all partners responsible for the success. Train intelligently continuously and create a development culture.
Of course, it's often said, too, that people don't leave the organisation; they leave the boss. So yes, be aware that people are always watching and assessing us and our actions as leaders. We need to walk our talk.
Dora Hoan
Group CEO
Best World International
AMONG the top reasons for quitting a job is better compensation. Understandably, a job more than anything is for bringing home a good pay cheque, and essential talent must be justly rewarded. Another foremost reason is perceived lack of opportunity for advancement within the organisation.
Quite simply, talented employees driven by professional success and status may grow discouraged when there is not an apparent plan by the superiors for their professional development. When better opportunities knock, they often won't wait around for a chance to advance in their current company if they do not see it as attainable in the near term.
Must we enter a counter-offer situation? When a valuable employee resigns, the company's reaction will depend on many variables. A counter-offer may encourage an employee to stay but an employer will be better off determining in advance how to make work engaging and fulfilling for a good employee.
Poul Lorentzen
Vice-President
Dematic S-E Asia
IN DEMATIC, we strive to keep employees motivated and committed rather than resort to counter-measures when they want to leave the company. The logistics industry in South-east Asia is relatively small and often faces competition between companies for senior, experienced and talented individuals.
Our goal is to build a dedicated and skilled knowledge-based workforce which adds value to our customers through an understanding of their needs. The culture in Dematic S-E A, therefore, seeks to groom budding talent and breed staff loyalty through a balanced system of continuous reviews, recognition and rewards. Thus, we aim for employees to grow with us in the long run as an alternative to job switching at the next available opportunity.
We believe the best strategy to address staff retention is by investing in our staff through creating a conducive working environment, skills improvement and welfare. Good staff are the ultimate source of competitive advantage and a crucial asset for the long-term growth of any company.
Saw Phaik Hwa
CEO
SMRT
A DECISION to leave is never made on a whim. Thus, rather than react to departures, I believe organisations should focus on putting in place a good people strategy. This means offering staff a compelling future, investing in human capital development, creating a positive work environment and rewarding staff for their contribution.
While it is painful to lose good, capable people, it helps that at SMRT, we have in place talent development and succession planning that prepares the next generation of leaders for the helm. With our strong people policy, we have also had staff return to the fold, bringing with them new perspectives and a greater sense of loyalty and belonging to SMRT.
George Wong
Managing Director, Asean
BEA Systems
A COUNTER-OFFER should not be a means to an end. Instead of proposing extra benefits such as monetary compensation, a company should understand the motive of an employee who wants to quit. More often than not, the situation can be managed by simply getting a better understanding of the employee's expectations. At BEA, we make sure our employees are constantly motivated to ensure job satisfaction. Retaining employees is an ongoing process with well-thought through HR measures. Work-life balance, flexible work structures and clear career paths are just some of the ways that ensure employees' commitment to the company and mitigate the risks of losing valuable colleagues.
Pay if the person is worth it
Joey Chang
Chief Executive Officer/Founder
AXS Infocomm
YES, I would make a counter-offer, especially if that person is worth it, and has proven over time that he deserves to be pursued by both sides.
I have done it a number of times, and have a 50 per cent success rate. Most times, we lose the staff due to the fact that they are joining a new industry or taking on a different role. It usually starts by trying to understand where the failure is. Is it a pull or push factor? When deciding on a counter-offer, many considerations will come into play. For example, the reaction of other staff, affordability, cost of replacement, loss of time, etc.
But the cardinal rule is that at no time must the company be held to ransom, or the employee appear to be indispensable. If that is compromised, no matter how painful, I will not proceed with the counter-offer.
Often, the offer will be in monetary terms. Other methods would be to try and meet the expectations for career development and advancement. Seldom will I use perks like cars or clubs memberships.
Na Boon Chong
Director - Consulting, South-east Asia
Aon Consulting (Singapore)
I WOULD make a counter-offer if I have satisfied myself that money is the issue and the employee is a valued contributor. When we stretch employees by exposing them to challenging work and rapid learning on a sustained basis, sometimes we may not have kept compensation in pace with their development. While money is a hygiene factor, it is also an issue of fairness, recognition and sense of achievement. It would certainly have been better if compensation is planned, proactive and well-communicated. That has to go in tandem with the ability to value employee contribution and then compensate individuals accordingly.
When the counter-offer doesn't work, I would make it clear that the door is always open for a valued contributor. People often return to good companies with even more commitment, having seen the outside world and concluded that the pasture is not necessarily greener. I would also ask for a personal referral of someone who would fit in with our firm, which usually turns out to be a better choice.
Thomas Ting
Managing Director
TJ Systems (S)
WHEN an employee decides to leave the company, it is for a combination of reasons and we should identify the true reasons before any counter-offer is made. We do make a counter-offer based on how critical his role is, and business needs. In the current tight labour market we have to bite the bullet to keep talented employees in critical roles, such as the financial controller, for instance.
But money is not always the best solution as it can lead to lower morale among other employees and send the wrong message that the best way to get a pay increase is to quit. Also, retaining staff by making counter-offers is mostly a short-term tactic and not a long-term solution.
Ng Kong Yeam
Group Executive Chairman
Sino-America Tours Corporation
WHEN an employee in my company submits a letter of resignation, I normally call him for a chat and find out the reason for his resignation. The first question I ask is: 'Is money the main satisfier?' The second question is: 'Are you getting a new position at a very much higher salary, and if so, how much.'
The answer will help me decide if I should make a counter-offer. Undoubtedly, people do leave for a better deal, especially when the new package contains a large signing bonus and plenty of stock options. It's often just too much to resist.
To keep my staff, I take good care of them as well as, if not better than other companies in my industry. Money is important, but if our culture meets the needs of our employees, money alone is unlikely to make them leave.
Not wise to make counter-offers
Angeline V Teo
Principal Consultant
d'Oz International
IF YOU keep a quitter today, he might still quit tomorrow. Where do you draw the line? Keep people with passion to succeed, who are honest to themselves and to the organiation. Quitters will leave the organisation when they are not able to perform at their peak, and they do not have the perseverance to see completion of a project.
If they are lured by monetary goals today, you can only keep them for a limited time before they come back to ask for more. It is perhaps more effective to train and retain those who make a sincere contribution and add value to the organisation, rather than those who are always scheming to 'take' from it.
Jake S Jacob
General Manager
Foster's Asia
IF A team member has decided to quit solely because of money, and assuming he was being paid at the correct level given his position and experience, I would not make a financial counter-offer.
I would, however, take the opportunity to review his development plan with him (which every team member at Foster's has). I would first ask him to check that the plan and underlying objectives are up-to-date and then look for ways in which his plan can be accelerated to further support the achievement of his career goals.
Anyone who is already being paid well and who is keen to leave the business just for money is not really worth holding onto, in my view, as one runs the risk of pay increase demands becoming a vicious cycle, not to mention the question it raises in my mind regarding his passion for our business.
Fahmi Rais
CEO
iBrand Strategy Group
COUNTER-OFFERS buy people, they don't make them. As such, I have refrained from making any counter-offers to staff who have sought opportunities elsewhere. Such moves are made on the basis of either a strong push or pull factor and keeping such staff only extends the countdown of a time bomb. Once the thought of leaving has been entertained, loyalty is zero.
What I would rather focus on is to build a relationship with staff that creates a 'stay' factor. A relationship is a more effective motivator and it matters more than providing a better environment, higher pay and even greater prospects. Management-staff relationships that are built around good mentorship and sound understanding will keep staff committed and feeling appreciated and valued. A good employee is more valuable than one with good skills. It is better to keep a good employee and work on the skills, than to convince one with good skills to stay a little longer.
Teng Yeow Heng Michael
Managing Director
TR Formac
AS A management practice, I do not normally make counter-offers to staff who have threatened to resign if the company does not match his new job offer. I have done so before and these employees eventually leave as the trust is already broken. Also, by acceding to these requests, I have opened up a Pandora's Box by inducing other staff to do the same. However, I would listen to the feedback during the exit interview and make improvements without any immediate counter-offer in monetary compensation. There is no end as there will always be other jobs that can pay better.
However, as a CEO, I believe that I should compensate my people fairly and they should not have been instigated in the first place to seek alternative employment because they feel that their compensation is not adequate.
R Theyvendran
Chairman/Managing Director
Stamford Media International Group
WE would not make a counter-offer to an employee who wants to quit. We would, however, find out in detail the reasons why the employee wants to leave, especially if he has obvious potential. From such feedback, we would address any weakness in our systems.
The flaw may not always be a deficient remuneration structure. Besides monetary incentives, encouragement, motivation and a proper career path are just as important to most employees. We would endeavour to find a permanent solution so that we do not lose capable or talented staff.
Being an on-going concern, we are just as watchful of good public relations. The services of our employees will always be appreciated and wherever appropriate, rewarded. As far as possible no employee should leave our company with any ill feelings except for the fringe few, who may not fit in for whatever reasons.
An 'open-door' management policy can be practiced, where employees can just walk in and raise matters that are bothering them. Teamwork is important and for that to happen there should be good communications with employees at all levels so that whatever real or imaginary problems can be eliminated.
Industry-wise, too, it is important to have an understanding that employees are not poached improperly.
Richard Hoon
Chief Executive Offiicer
I Search Worldwide Group
I THINK it is generally not wise to make counter-offers to entice employees to stay especially when they have already made their decision to leave. If the employee has gone through the whole process of looking for a job, gone for interviews and finally accepted an offer only to be tempted to stay, why would anyone in their right mind want to retain them? They have shown no respect for others, cannot keep their commitments and are only thinking of themselves.
It may resolve a short-term staff crunch but it will create a long-term systemic challenge for the organisation. Morale among existing staff will take a dive if it gets out on the grapevine that one can hold the management to ransom and be rewarded at the same time. What message are we sending to the rest of the employees who have been loyal?
Having said that, however, if an employee is quitting due to other considerations such as a sudden change in personal circumstances or a need to achieve work-life balance, then the company should do all it can to accommodate the employee to allow him to stay. But any accommodation given should be above board and be made available to all employees.
Ideally, a company should try to avoid such precarious situations in the first place by creating an environment where their company is the preferred place to work, and where employees feel they are valued and appreciated. Adequate succession planning and competitive compensation will also help.
By all means, woo employees but not quitters!
Lim Soon Hock
Managing Director
Plan-B Icag
IN MY more than 30 years of working life, I have succeeded in only one counter-offer. It turned out to be a bad decision, as the incumbent involved had to be terminated subsequently.
I would strongly discourage companies from making a counter-offer to employees looking to leave as it is a waste of a company's time and resources, unless there are exceptional reasons for doing so. Having said that, employers must carry out the requisite exit interviews with the intention of gathering feedback from employees who have resigned, so that they can improve their employee relations and employment practices.
I would propose companies spend time and resources focused on creating a congenial yet challenging work environment for the employees. Apart from having a benefits and compensation policy which is competitive and designed to attract and retain employees, companies must intensify their efforts to promote work-life harmony. More importantly, companies must have a succession plan in place to ensure that the business operations will not be inadvertently compromised, should incumbents leave the companies.
The best returns a company can realise is through investment in human capital, more so in today's highly competitive milieu where talents are greatly sought-after and where every company wants only the best to take them forward.
Higher offer should be strictly justifiable
Dhirendra Shantilal
Senior Vice-President, Asia Pacific
Kelly Services
IN OUR tight labour market where talent is scarce and top candidates are in limited supply, the success and continued growth of an organisation depend significantly on its ability to attract and retain valuable talent. With the war for talent persisting and average salaries scaling up, key employees who have valuable skills and work experience are highly sought-after by other organisations.
Organisations should determine the criteria for defining which employees are key based on the impact of their role, performance, difficulty in replacing and long-term potential. These are the individuals that management and HR can consider making a counter-offer if they decide to leave.
The decision to extend a counter-offer should not be reactionary but based on reason and management consideration as the decision will affect the manager, staff and the organisation. As the employee is likely to have considered many factors before choosing to leave, money may not be the primary factor and, therefore, a salary increment can only be a short- term solution.
In the quest to attract and retain the best talent, it is critical for organisations to develop good performance management strategies and know how and when to engage their top performers. With performance management, leaders would collectively, and in a structured manner, talk about performance, development and aspirations with their employees so as to consistently align the organisation's vision and objectives to the desired behaviours, expectations and results expected from its employees.
In turn, employees will be engaged in the company's strategy and understand the important role they play in the organisation. Once you win the heart and trust of your employees, you will have a motivated and focused talent pool that will enable your organisation to achieve greater success.
Liu Chunlin
Managing Director
K&C Protective Technologies
OUR company, K&C Protective Technologies, is what you would call a boutique firm, offering niche protective design and solutions for buildings and infrastructure. As such, we require a tight fit between our staff's capability and attitude and the company's business requirements. We have a process to spot talent and track staff development. When an employee wants to leave because of any mismatch that was not evident previously, we would reluctantly have to agree. There is no point perpetuating an untenable situation with higher pay, even if it is hard getting a replacement in a tight labour market.
For staff that fit well into our business, we would manage their development and track personal aspiration. If higher pay is justifiable, we would agree but we would certainly like to do it in a way where we are in control by pre-empting the situation.
Staff stay with you for a host of reasons other than pay which can be a coarse measure if it is solely relied upon. People find satisfaction in a workplace when there are things like appropriate challenge, personal development, a conducive work environment, hours allowing family-work balance, recognition, trust, teamwork, welfare, etc. In other words, one has to manage a basket of conditions which ensures you have strong staff with you to help you meet the challenges of the business.
Deb Dutta
VP, Asia Pacific & Japan
Brocade
WHILE the knee-jerk reaction would be to make a counter-offer to a departing employee, I personally seek a deeper analysis of the reasons for the employee's departure. I try to focus on the appropriateness of the goals and expectations of the employee that he feels the new environment will help accomplish more optimally than the present employment and determine how realistic they are.
This understanding helps me choose from a range of appropriate actions including counter offers, new roles, new locations, counseling or, in some instances, letting the employee go as the best action.
Contrary to popular belief within hiring managers, monetary considerations are not the No 1 reason for employee departure. Every organisation strives to hire the best talent. What is more important, though, is to continually develop, empower and grow this critical resource, especially in a tight marketplace. Rather than seeking creative methods of retaining employees when they announce their departure, I prefer to create an environment where they feel respected, energised, collaborative and passionate about their roles, their teams and have pride in the environment they work in. Being able to create this work environment is what Gold Standard organisations are all about!
Corrective measures could help
Lim Pun Kok
Managing Director, South Asia and Australia/New Zealand
Blue Coast Systems
WHEN an employee tenders his resignation, I believe that it is always important to find out the exact reason why he wants to leave. Have a candid talk with the person. Ascertaining this would allow you to better understand the needs of the person and to see if corrective measures, like improving the current working environment, can be done to get him to continue. For example, if he has a conflict with an immediate supervisor then instead of losing this talent, a reassignment could be implemented to solve this issue.
Generally, counter-offers are needed when a company does not adjust existing salaries according to the market rate. At Blue Coat, we have a firm assessment of market trends in salaries and regularly conduct salary reviews to ensure our employees are well taken care of. What has worked well for us is our proactive HR approach of regular feedback sessions on improving work environment and employee productivity. Organising regular social and team building activities do help bond the team and create a family atmosphere.
