In today’s job market, where competition for top talent is fierce, retaining employees has become a top priority for many businesses. Retaining employees, however, is not as simple as it may seem. According to the latest CIPD Labour Market Outlook, UK employers are increasingly turning to counteroffers as a way of retaining key staff, as skills shortages persist.
This may seem like a quick fix, but it’s important to ensure that as an employer, you have a clear process for considering counteroffers.
The Report Findings
CIPD’s report on employers resorting to counteroffers sheds light on an increasing trend. Here’s a glimpse of the essential findings from the report:
The report revealed that 40% of UK employers have made a counteroffer in the past 12 months. Of those that had made a counteroffer, 38% matched the salary of the new job offer, and 40% offered even higher sums. Counteroffers are most prevalent in London (58% of London-based employers in the last 12 months) making it the ‘counteroffer capital’ of the UK.
• Of those employers that are using counteroffers as part of their retention strategy, more than half (51%) have increased the level of counteroffers they have given over the last 12 months.
• A quarter (25%) of employers who have used counteroffers previously anticipate the need to offer even more in the next 12 months, with only 8% anticipate offering fewer.
• Nearly half (45%) of employers believe counteroffers are effective in retaining employees for 12 months or more, compared to three in ten (29%) of employers who believe it is ineffective.
• Just one in five (22%) employers that make counteroffers have a formal policy regarding them.
The CIPD is urging employers to have a clear process for considering counteroffers, as part of a fair and transparent reward and recognition strategy that looks beyond pay. These strategies should consider the broader employer offering, for example:
• Flexible working
• Additional paid holiday
• Opportunities for career development
• Better pension contributions
Turnover and Retention – What You Need To Know
CIPD’s “Turnover and Retention Factsheet” provides a comprehensive overview of how to measure turnover and retention, and understand why people leave organisations. Here are some key takeaways:
Calculating Turnover Rates: Organisations can assess their turnover rates using a simple formula: (Number of employees who left / Average total number of employees) x 100. This metric helps companies quantify the extent of their employee attrition.
Monetary Implications: Employee turnover carries significant financial implications, including costs associated with recruitment, training, and onboarding. It can also disrupt team dynamics, leading to reduced productivity.
Holistic Retention Approaches: Organisations aiming to reduce turnover should implement a combination of strategies, such as providing competitive remuneration, enabling skill development and career advancement, recognising and rewarding achievements, and fostering a supportive workplace atmosphere.
Unveiling Insights Through Exit Interviews: Conducting thorough exit interviews can provide valuable insights into the factors driving employee departures. This information is invaluable in tailoring effective retention strategies.
Employee turnover and retention are critical issues for employers to address, particularly in today’s competitive labour market. CIPD’s research underscores the intricate relationship between employee turnover and retention strategies. While counteroffers can serve as a temporary solution, a more comprehensive approach to employee retention is essential for long-term success. By prioritising employees’ well-being, career growth, and job satisfaction, organisations can foster a culture where employees are motivated, engaged, and less inclined to explore external opportunities.
Here at Spectrum HR Solutions, we can ensure that you have the right people, with the right skills, in the right roles, at the right time. Contact us for expert HR support today:
Tel: 07880 518998