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Why Your Company’s “Flight Risk” Raises Can Backfire

The other day, I came across a friend I had rarely met since I started a pretty important job at a big bank.

“Hello!” I wanted to hear about life in a business that even by investment banking standards had the knack for making news.

“Oh,” he said. “I’m gone.” He actually left a few months ago and was thought to be a temporary pandemic blip, but with a long-lasting, deeper and massive resignation, hundreds around the world. Joined as many as 10,000 people.

Figure this month It shows that 4.4 million US workers, or 2.9% of the workforce, resigned in April — From record 4 minutesOr 2.8 percent in the same month last year.

It doesn’t make much difference in other places. Here in London, it’s starting to stand out to meet people from the same organization who are doing the same job with the same phone numbers as before Covid.

Imminent economic uncertainties may change the situation, but for now, employers in many industries are struggling to stick to workers in the booming employment market.

Correspondingly, my boss is doing what I was in my previous life when fate temporarily threw me into management. They are doing their best to throw money and promotions at those who will resign, in order to convince them to stay.

But should they? The answer is not as easy as you might think.

Counter offers seem obvious to measurable and proven stars. Especially if many stars are not, stable, graceful and leaders.

It is worth considering the cost of exchanging them as to how much money people should be offered to stay.

One UK study In 2014, the average cost of finding, interviewing, temporarily replacing, and maximizing speed for new workers was £ 30,600.

The Oxford Economics study found that it could take less than four months to reach optimal productivity if new entrants were coming from companies in the same sector. But for someone in another industry, it could be eight months. 10 months for new graduates and 1 year for re-employed.

That said, counter offers can backfire if not handled carefully.

Providing stolen money to someone who is continuously low-paying is the opposite of the intended effect if it makes them worried about how much payment and recognition they have missed over the years. May bring.

It emphasizes a deeper question: Do people want to leave just for money? Or is it due to a wider range of structural issues, such as a lack of attention to career advancement? Inflexible work pattern. Lack of poor managers and miserable staff and overwork?

Be careful in the latter case. If the recipient receives another suggestion from a more well-managed organization, the paid counter offer that seems to have worked in January may have failed by April. The provider does not fix the problem, but only pays to postpone the problem.

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It is clearly wise to anticipate departures by finding out what is driving the departure and, if possible, setting up a system that warns of flight risks about internal employment opportunities, for example.Some companies that tried this Insist on it We reduced turnover and retained important staff who might otherwise have left.

Finally, generous counter offers can infuriate other employees. Especially if there is a hint that the flight risk offer was not as solid as advertised.

In the past, it was probably easier to dismiss this kind of reaction as sour grapes. But in the hot employment market, it’s more dangerous. People are likely to be sitting next to new but inexperienced job seekers and making more money in the same job.

In other words, they saidLoyalty tax“American organizational psychologist and writer Adam Grant said. He believes employers may offer “retention raises” to reward their commitments. It is by no means an easy option for all businesses. But it highlights the need to think very carefully about who will be rewarded for staying and why.

pilita.clark@ft.com

Why Your Company’s “Flight Risk” Raises Can Backfire

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