“The best way to get a raise is to apply for a new job,” a media colleague once told me.
He was working for one of the two major television companies in New Zealand.Over his decade-long stint at the company, he courted interest from the competitor on two or three occasions.
Each time they put out the lure of more money.And each time, his current employer would match the offer and coax him to stay.
Asked whether he felt guilty, his response was emphatic: “I’m loyal to whoever pays me what the market says I’m worth.”
His argument was that most businesses were unlikely to give you a raise unless they were nudged in that direction.So, they weren’t exactly loyal to him either.
His career advice was always: follow the money.
He didn’t buy into the notion that following your passion was more important.He always said that he could use his extra money outside of work hours to follow whatever random passion caught his eye.
His strategy might have been brutal and unforgiving, but it seemed to work for him – especially when his talents were eventually nabbed by a lucrative business outside the media sector.
Advertisement Advertise with NZME.Read More ‘$90k the new $70k’: NZ workers have 20,000 incentives …Wage by age: How much should you expect to earn at …His experiences also offered a reminder that the counter-offer dance between employers isn’t limited to creative (passion-filled) businesses.
In a recent survey conducted by the Employers and Manufacturers Association, 40 per cent of the 335 businesses that responded said that they had been advertising for staff for more than six months.
One employer went even further saying: “We are eventually finding people, but we are having to resort to head-hunters and poaching staff from other companies.”
The unwritten subtext here is that there will likely be a counter-offer on the table from the current employer.
And that counter-offer doesn’t always have to be about money.
Writing for the Harvard Business Review, US-based executive Mita Mallick recalls seeing the impact of counter-offers myriad times in her career.
“I remember the associate brand manager who jumped two levels in less than two years after ‘resigning’ to two different bosses,” she says.
“I remember the colleague who had told everyone his resignation news, only to then stay and get the role I was up for.
I remember the woman who got one of the most coveted VP jobs in our organisation.A colleague later revealed to me, ‘Oh, she fake-resigned.She used another offer to help her get the promotion’.”
Advertisement Advertise with NZME.When this train of events is blatantly obvious to the rest of the staff, it can badly affect team morale.
“It can cause gossip among the team, with speculation as to how and why it happened,” writes Mallick.
“It can also erode respect for the individual if others don’t feel they deserved the promotion and ultimately devalue it.”
To use an analogy familiar to most, it’s a bit like seeing a telco or pay-TV provider offer discounts to new subscribers but nothing to the loyal members who have been paying the full fees for years.
It seems to reward those who are least loyal while ignoring those who have long been devoted to the cause.
Marsden Inch recruitment specialist Barry Williamson describes counter-offers as “the scourge of recruitment”, which rarely delivers a desirable result for the worker or the employer.
“Firstly, if the employee thinks that a large increase is a freebie, they should think again.These increases always come with an expectation.Secondly, if the employee was a valuable staff member, the company should have protected their investment by ensuring the employee was being looked after.”
To Williamson, counter-offers a short-term solution but doesn’t address any of the issues that led to the employee wanting to resign in the first place.
“As recruitment consultants, we will not enter into ‘horse-trading’ with candidates and we warn them that this is likely to happen when they resign and talk to them about the potential consequences,” Williamson says.
“The grass is very rarely greener when money is the only motivation.”
Williamson isn’t wrong.Studies by recruitment agencies in the UK have shown that 70 per cent of staff that accept a counter-offer will again be on the hunt within six months.
The added problem is that this trading of staff between companies doesn’t allow for much improvement within the talent pool.
“The ‘revolving chairs’ activity only increases the costs to business, as the pool remains the same, but salary overheads continue to increase,” says Williamson.
This has the impact of pushing up the baseline salary expectation for certain jobs – a trend seen clearly in Queenstown, where staff shortages have led to employers paying as much as $27.76 an hour for entry-level staff.
This is, of course, good for staff trying to make ends meet, but it does heap pressure on businesses as their margins get thinner and thinner.
Perhaps one of the most extreme versions of counter-offer culture can be seen in the business of football transfers.
Super agents of star players often aim to squeeze the most they can out of clubs, desperate to hold on to the big names.
This horse trading saw weekly wages in England’s top flight rise from around £20 ($38.85) in 1961 to £33,868 ($65,780) 50 years later.
This has not slowed down, with top players sometimes earning in excess of £500,000 ($971,000).
This trend has seen some European clubs now outright refusing to engage in the horse-trading that allows these wages to inflate to risky levels.
In recent years, football club AC Milan has allowed star players Gianluigi Donnarumma and Hakan Çalhanoğlu to depart after failing to meet their salary expectations.
AC Milan cut its losses and allowed goalkeeper Gianluigi Donnarumma to join PSG.
Photo / Getty Images This is, of course, the extreme side of the market, but it does point to the risk of allowing counter-offer culture to bed in too significantly.
In New Zealand, the impact of wage inflation is only likely to be temporary.Relaxed border rules will eventually see a return of immigrant workers and competition growing for roles.The flip side is that this goes too far, stifling wages while inflation still hurtles upwards.
Also, if the economy does slip into a recession, then many companies will start to reassess their staff levels, leading to some redundancies.This, in turn, will slow down the wage growth.
But given that battle for top talent never disappears, the counter-offer is likely to remain an integral part of wage negotiations for the foreseeable future.
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