Layoffs may dominate the headlines in financial services, but beneath the job losses another phenomenon has developed: More firms are making counteroffers to keep star players.
It’s no picnic trying to replace big revenue generators, says Neil Owen, global practice director with Robert Half Financial Services, so counteroffers have become the norm at banks and brokerages. The trend began between the end of 2011 and fourth quarter of 2012, he says.
Costs more to find new blood
“Even in turbulent economic times, investment banks, brokerage houses, asset management firms and hedge funds need to retain their top performers,” says Owen, noting that it’s expensive to replace those “with the right skill set an commercial outlook.” It frequently costs employers more to have to hunt for new blood than to try and keep someone by sweetening the pot for them in terms of salary and other perks.
Nonetheless fewer candidates are accepting their firm’s bid to keep them. Finance executives have gotten wise to the downside, says Owen. A current employer may lose confidence in staff members who are seriously considering leaving. Ultimately, you may suffer “serious reputational damage” if you take the counteroffer, says Janice Detta Colli, a recruiter heading the financial services practice at Boyden Canada.
Be wary of counter-offer
Moreover, such an offer may just be a short-term solution on the part of your boss who doesn’t have the time to deal with immediately finding your replacement, she says. “A direct report leaving may reflect or may be perceived to reflect poorly on [a supervisor] so the counter-offer allows [this manager] to strategize and implement a longer term solution once they know one of their subordinates is open to leaving,” says Detta Colli.
Detta Colli cautions finance executives not to take a counteroffer if they can help it: “Accepting a counter-offer breaks one’s trust with their current employer,” she says. That’s particularly true when you’re a senior or tenured executive.
Short term fix that doesn't last
Jeff Carter, president of property/casualty insurance company recruiter CE Insurance Services of Tampa, Fla. says that more often than not, people accepting a counteroffer will tend to exit their firms in short order. Their managers may force them out by diluting their responsibilities once they realize they’re open to leaving the firm.
“When people accept counter-offers, three to six months down the road they [almost always] come back to us and find all those reasons they first wanted to leave still exist,” says Carter. “You can almost put it on the calendar.”
“Whatever drives them to make the change—whether it’s the stability of the company or the fact that the boss is my age and there aren’t the advancement opportunities I’m looking for—those things typically don’t change,” says Carter.
Tips if you receive a counter-offer
For those who’ve received or expect to be offered a new set of perks from their present employers due to a competitor’s offer and wonder whether they should accept or run like the wind, here are a few tips:
1. Decide whether you will really be happy staying where you are if conditions besides salary, bonus, and other perks do not change. If the answer is yes, and the counter-offer meets your needs in terms of health coverage and 401(k) vesting as well as “psychic” factors like growth potential, the office environment and your daily commute, and you might do well to stay put, but if this is the case, be sure to tell your current employer about the aspects of the job that make you want to stay, says career expert Stephen Laser.
“You might take the counter-offer so long as you feel you’ve been a valued employee as well as someone with a good morale who rarely complains,” says Laser, a psychologist often hired by financial services companies to interview job candidates before they’re hired to make sure they’re right for the job.
Particularly if this is an offer that has “come out of the blue,” he says, your employer may be glad to keep someone who’s positive and really wants to stay, says Laser, but you have to make it clear that you haven’t been shaking the trees looking for another opportunity and be able to explain why you truly value this one.
2. Keep in mind that employers will be on guard for those who are basically “leveraging”—seeking more money and are willing to work for the highest bidder. If that’s your game, an employer might offer you something to keep you in your position for the short term. But your career growth may be stunted.
3. If your work has been undervalued in the past, don’t expect things to change just because you get a counteroffer. Someone who’s been with the same company for seven or eight years and gets offered a 10 to 15 percent raise to stay where they are should think twice, says Carter.
Ask yourself, “Why didn’t I get paid that much before?” the recruiter says. The bottom line: If it’s fear of making a change that’s keeping you locked into the same firm year after year, it’s probably time to move on, he says.
4. Keep in mind that letting your employer know you’ve been considering someone else’s offer is tricky no matter what. You’ve allowed yourself to be wooed by someone else.
Given that scenario, if you are not totally honest about your motives and you come across as being manipulative, “you will raise the prospect of distrust to mega levels,” says Laser.