As counteroffers increase, how else can businesses keep top talent?

With organisations facing difficulties in filling vacancies, Brian Sparling suggests ways to retain valued employees

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Earlier the year, the CIPD released research revealing British employers are resorting to counteroffers in a bid to keep valued staff. The report found that 40 per cent of UK companies had used counteroffers in the last 12 months to try to convince an employee to stay. Of those companies, 40 per cent admitted their offer was higher than the offer the employee received elsewhere. While this figure may seem surprising, it is a well-known strategy for employee retention for those who know the value of retaining high-performing staff over hiring someone new.  

In a tight labour market, the importance of retaining top talent is heightened even further. The CIPD research reinforces this notion. But counteroffers are often not enough to retain top talent - employers should be looking at pre-notice retention strategies.

Counteroffers shouldn’t be used as a first resort to keep staff interested in their jobs and the company they work for. Employers must be doing more to retain their employees before they look to leave, and actively work to keep top performers engaged.

The importance of retention strategies

Obviously, the goal of any retention strategy is to keep turnover as low as possible. It’s a win-win for businesses to prioritise keeping top talent engaged, happy and productive, especially when recruiting new talent with the right skills is harder and more competitive than ever before.

Recent research into executive views on the work landscape revealed that 79 per cent of UK executives had experienced labour shortages at their company in the last 12 months. Of that number, more than a quarter (28 per cent) said that was down to candidates not having the right skills to fill the roles.

Skills and labour shortages should be an alarm for employers to not let top talent depart for competitors, as replacing them is proving more challenging than previous years. With so few candidates offering the right skills for vacancies, businesses must look at their existing employees and what they need to stay engaged. Not only does this keep the cost of counteroffers down, it also removes the need to pay for the advertising, interviewing, screening and onboarding costs that come with recruiting new staff.

Keeping employees engaged

As the way we work changes and evolves into something new with growing demand for hybrid and remote working, what employees want from their careers will also evolve. With generation Z shaking up workplace norms, employers are faced with new, different career desires, meaning compensation alone isn’t enough to retain staff. 

Engagement requires variation and that’s what employees are asking for – 90 per cent of employees have felt stuck in their job in the last 12 months. Employees want to try out new specialisms and see where their skills sit best and employers can and should empower them to do this.

One pivotal change in desire is the growth of non-linear career paths, which provide new and exciting opportunities to employees within their existing company. The age-old pathways for progression don’t always apply, and that same survey found that only 17 per cent of respondents aspire to senior leadership. Top employers must look to career flexibility for the next generation of workers.

By expanding the pathways for the exploration of skills and experience, businesses can potentially fill gaps in workforces, as well as increase morale, instead of forcing employees to seek other organisations for opportunities.

Turning to AI?

With many employees wary of what changes artificial intelligence will bring to their roles and the future workforce, employers have an opportunity to show quite the opposite: how AI can make their roles less admin heavy and more exciting.

With AI-driven tools, employee skills and interests can be matched to the right role and it provides an opportunity to try a new specialism. AI can also be used to categorise skills into buckets, so leaders can see where the business is lacking and look to the workforce to fill those gaps rather than looking to external talent.

Businesses must look to AI to help support the emergence of non-linear career paths, but also general retention strategies. Its ability to help identify weaknesses within teams and flag them is invaluable to already time-poor leadership teams.

When 84 per cent of employees say having a clear career path makes them more loyal to their employer – and, increasingly, those career paths are non-linear – employers shouldn’t be tentative.

With solid retention strategies, businesses can avoid having to use counteroffers as a first resort to keep staff; in fact, it shouldn’t have to be a consideration if preventing the loss of staff is a priority. Having a counteroffer in your back pocket is always helpful, but with initiatives to engage employees and offer flexibility, it shouldn’t be necessary.

Brian Sparling is payroll services and compliance principal of EMEA at Ceridian