Resignations: should you make them a better offer?

Shock resignation

One of our subscribers was surprised to receive a resignation from a long-standing member of staff. When they discussed the situation with them, the employee admitted that their new job role comes with a higher salary.

If possible, our subscriber would like to retain this employee and is wondering if they should automatically put a better offer on the table. What’s our advice?

What’s the reason?

The first thing to consider is the reason for making the employee a better offer. For example, if this is a key employee, and/or one with a wealth of experience and knowledge about the business, it may be in our subscriber’s interest to keep them.

However, if the reason for making an offer is to avoid the cost and time of trying to find a replacement employee (who could bring in other skills and expertise to the business) it may be time to part ways.

Pay issues

The second issue to consider is the wider pay implication. For example, if our subscriber increases this employee’s salary it may cause a pay disparity within the business and leave them vulnerable to equal pay claims.

On top of this, there’s the affordability aspect, not just in terms of the immediate cost of the pay rise, but also in, say, pension contributions and future pay rises, i.e. these will cost more overall.

Not about the money

There’s also the possibility that the employee’s decision to leave isn’t connected to their salary, although in many cases this is the principal reason behind a resignation .

Whilst some things may be negotiable, such as greater flexibility, others may not be. An example here would be holiday entitlement. Realistically, you could not grant this employee more holiday than other members of staff in order to retain them.

Won’t make any difference

The final issue to consider is that a better financial offer might not make any difference. This could be in the immediate term, i.e. the employee rejects the offer and leaves anyway, or in the long run.

Quite often, where an employee accepts a better offer from their current employer, they will decide to leave in a few months anyway. So, in the latter situation, our subscriber might only be buying itself a short amount of time.

Tip. Also, by making the employee a better offer now, the employee could be tempted to try their luck again in the future, by resigning and saying that they will stay for more money.

Tip. If our subscriber decides to make the employee a better offer to tempt them to stay and this is accepted, they should ask the employee to keep their new salary confidential. If nobody else is aware of their resignation there probably isn’t much to worry about, but if this was common knowledge amongst colleagues, they will likely ask questions about why the employee has decided to stay.