Counter offers are making a comeback in the Singapore finance sector, especially at mid to senior levels, where talent shortages are rife and the cost of recruiting replacements is high.
This is frustrating for me as a recruiter. When a candidate consents to a recruiter representing them, they are making a commitment that if a job offer is made in line with their expectations, they will take it. A recruiter invests a lot of time and effort into getting a candidate across to their client, so it’s very frustrating if a candidate decides to stay put and accept a counter offer.
Of course, we recruiters do our best to make sure that candidates are definitely ready to move and we drive the hiring process in a manner where they are unlikely to change their minds at the last minute. But exceptions are increasingly happening. From my experience, here’s what happens to a typical young banker who takes a counter offer.
Meet Thomas, the typical banker
Thomas is an investment banking associate who has spent three years in his current role working in debt capital markets. He gets headhunted by another bank to do a similar role at a supervisory level. So he accepts the offer and hands his resignation to his manager.
After a patient hearing his manager says: “I didn’t know you had aspirations to lead a team. We can offer you the same promotion and augment your package.” Thomas is flattered, says he will think about it, and then decides to accept. The environment is familiar and he will stay in his comfort zone.
However, Thomas has not asked himself why his promotion ambitions were suddenly so important to the company. The fact is, they weren’t: counter offers are made in the bank’s best short-term interests. Most of the time, it’s a test of whether the move is compensation related. And if you accept purely based on remuneration, you will probably be among the first to go if redundancies are made.
From my experience, here’s what motivates banks to counter:
• The employee possesses some important, specific skills, the loss of which would, at least briefly, unfavourably impact the bank’s performance.
• It’s often easier and cheaper to counter offer and retain a trained, established employee, rather than reinvent the wheel by identifying, recruiting and training someone new.
• When an employee moves, the company loses institutional knowledge, so it’s in their interest to retain.
• Employers do not like to be sacked! Bosses are concerned that it may make them look bad, and this could affect them negatively as they are judged by their superiors partly by their ability to retain staff.
• When a contributor quits, department morale may suffer.
Thomas should beware that the offer is likely to be a short-term solution to help the bank avoid one of the situations above. There’s a high chance that his boss is already looking for his replacement and is not convinced that he will stay in the long run. After all, the circumstances which made him look in first place probably won’t have changed.
He should also question why he received more money when it wasn’t the normal time to review his pay. Potentially he has prematurely received a raise he would have got anyway at his annual review, meaning he might have to wait longer for his subsequent pay hike.
Moreover, accepting a counter offer means he has burned bridges with the other company and his recruiter, showing all parties involved that he can be easily bought.
Thomas would have been better advised to have accepted the original offer. He would have gained the respect of his current manager (though not his approval) and would have opened a new door for himself in a different environment, allowing himself room to grow in what is still the early stage of his career.
Farida Charania is chief executive officer, banking & finance, at search firm Nastrac Group in Singapore.