With unemployment low and inflation threats rising, the labour market is getting tighter and bargaining power has shifted somewhat to the hands of employees. Staff in Singapore and Hong Kong are hopeful of steeper salary increases in their annual appraisals but not all financial institutions are prepared to be generous.
There are still economic uncertainties in the world economy, not to mention the recent natural disasters in Japan. Employers are adopting a cautious attitude towards further increasing their salary costs in case things take a turn for the worst. They are typically offering 5 per cent pay rises (10 per cent at best), which is below what you might be expecting at your next appraisal. This is motivating some employees to look elsewhere. Here is a case study which illustrates some of the challenges of moving in the current climate.
The joy of multiple offers
You contact headhunters and let them know you are available. You reconnect with ex-colleagues to inquire if there are opportunities at their new firms. These efforts do not go to waste – your former workmate recommends you for a senior job with a bigger title and a respectable pay jump. Your headhunter shows you two opportunities with top global banks which are both keen to offer you a role with regional responsibilities.
Naturally you are flattered by the attention and delighted by the perceived market value you command. Believing that the offers can only get better if you start negotiating, you ask for more, pitching one offer against another. Not satisfied with just a 30 per cent rise, you demand stock options and a guarantee bonus.
One of the banks loses interest in you, but the other two are keen to meet your expectations. Comparing the remaining offers, you decided on the company with the more established name in the market. You confirm your start date, but now comes the hard part: resigning.
A blank-cheque counter
Your resignation letter goes down badly with your superior. The bank has just been acquired by a larger institution and is still reeling from the financial crisis. The last thing it wants is to spend money on hiring your replacement.
Within hours of tendering, you have a serious chat with your boss. He wants to know the exact terms of your offer and promises to do whatever it takes to make you stay. You face a dilemma, although you secretly feel happy about it. Firstly, it has been a while since you felt so wanted in your firm. Secondly, you have essentially been handed a blank cheque and are free to name your terms, if only you rescind your resignation.
You decide to give up the offer which you have already verbally accepted. Rather than taking on the risks of moving to a new role, you would rather stick with your current job and enjoy much better remuneration.
But it could all go wrong
In today’s job market, never underestimate the importance of integrity and honouring one’s words. This is especially true in a close-knit industry such as banking, in which people are extremely well connected.
In the above scenario, the key reason for the counter offer was staff retention. You are now being paid much more than your internal peers for the same job just because you have threatened to leave. This could certainly backfire on you if your colleagues get wind of it.
Your role would be further compromised the moment the firm identifies a suitable replacement at a lower cost, especially when your loyalty is now in question. I think that saying yes to an external job offer means you have a professional and moral obligation to make good your promise.
A better way
A better way of managing a job offer is to first be clear about your motivations in looking for a new position. A counter offer should not resolve the underlying issues that led you to explore outside opportunities. You probably started searching because your career had reached a plateau and you wanted to develop your skills elsewhere. (If your motivation was purely money, you should not be working in this industry at all because we have seen how greed contributed to the downfall of major institutions in the recent crisis).
Upon receiving a new job offer, be sure it is a role and organisation you see yourself growing into over the next three to five years. A decent level of negotiation on remuneration package could take place and once you are satisfied, you should honour your words and accept the offer with no second thoughts.
Just as most financial institutions are sincere in their job offers, they expect the same from the candidates they deal with. Integrity is a basic tenet of the financial services industry, and it is hard to imagine anyone doing well in a financial career if his or her words can’t be trusted.
John Koh is the managing director of executive search firm WMRC (Wealth Management Resource Centre).