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The Real Cost Of A Counter Offer?

24-02-2016
Employer advice

Due to an industry-wide skills shortage, there's been a significant rise in counter-offers. What is the real cost to the business of making this counter-offer?

Rewind four or five years before the shortage of staff. When people resigned then, Businesses were confident that they could replace their current team member with someone equally qualified and for the same sort of salary. There was no real counter-offer culture and as a result, wages tended to stay the same across the industry in each given area.  One would leave, and they would be replaced quickly and at the same price.

Fast forward to today. One of your technicians hands in their notice. What is your initial thought? How much will it cost to keep them compared to the price of replacing them? Is there an amount at which it is too expensive to counter-offer? If you increase the pay for one technician and the other technicians find out, it may result in a workshop full of technicians demanding a pay rise.

Private sector wages are rising at the fastest rate in fourteen years, and employees are starting to reap the rewards. This is true across all positions within the motor trade. There is a significant difference between the salaries advertised with us now and those of five years ago. With the skills shortage across the board, simple economics of supply and demand would suggest that basic salaries in the motor industry will continue to increase in the foreseeable future.

This brings me back to my original question. What is the real cost of a counter offer?  If you do not make the counteroffer, you then have recruitment costs, training costs and the risk that the individual may not fit in with the team. If you do make the counter offer will you have the whole dealership threatening to leave and then have to increase salaries across the entire dealership?  As we have previously expressed, statistics from the National Employment Association confirm that almost 80% of people who accepted a counteroffer are no longer with the company six months later. So after you have now offered the whole Service Department a pay rise, the person that started the whole thing is leaving after six months.

 

So, can you accurately measure the cost of a counter offer?