Is a Pay Boost the Best Way to Counter an Employee Resignation?

Employee Resignation Averted.

Your first thought to counter a resignation may be to boost an employee's compensation.

"I need to talk to you," your star employee says one afternoon. You close your office door and hear the words you dread, "I've found another position." Because you've counted on them and invested significantly in making them the productive employee they are, you're upset. Your emotions steer you toward extreme reactions — hurt and anger on one hand, worry and vulnerability on the other.

Your first thought to counter the resignation may be to make a counter offer and boost the employee's compensation. After all, it's cheaper than losing their productivity while you search for and train a suitable replacement, right? Maybe. But there's more to the issue than money. So guard that impulse for now.

How Did You and Your Employee Get Here?

Of course, there are good reasons for employees to leave that have nothing to do with job dissatisfaction. A spouse may have been offered a position out of town, or the employee wants to head in a different career direction, for example. But imagine that it's simply a straight job change.

You may want to grill the employee for the reasons behind their resignation, but as Business Insider notes, they probably aren't going to give you a direct answer. "This offer just came out of the blue, I really wasn't looking," your employee might say. But happy employees don't jump ship typically. Something is driving the person to leave, and it's likely significant, such as distrust of management, lack of opportunity for growth or working conditions that feel unpleasant.

What Now?

Bumping up an employee's compensation might not overcome those concerns. You might throw in some other perks — more time off, a new job title — but a smart employee likely has done plenty of research on their own before talking to you. And even if you two agree on a large salary bump, you may not be home free. What happens if word gets out to other strong employees? You could set yourself up for big payroll increases.

It's best to be prepared for these conversations with employees with a checklist of what to do. Most experts advise taking a measured approach that guides both sides to a graceful exit. Inc. suggests taking the following steps:

  • Be sensitive, be proactive and be inclusive — Talk with the employee about how you'll announce the departure to other employees and pass along knowledge to a successor
  • Get organized — Go over all the steps that HR sets out for departing workers, and be sure you have everything you need before they walk out the door for the last time
  • Honor their successes — Some might want a farewell party, others might want to leave quietly

Prepare For a Boomerang Employee

It's not unusual for an employee to head to what seems to be greener pastures, only to realize the new work environment is muddier than the one they left. Trends show an increase in what's being called the "boomerang employee" — someone who leaves an organization, only to return shortly thereafter.

While organizations used to have rules against rehires, that's less of a rigid policy than before. And as Entrepreneur notes, there are several good reasons to rehire a former worker, including new skills the employee may have gained elsewhere.

Should you bump up the compensation for the boomerang employee? It depends on the circumstances, of course. But you'll be in a better position to decide what they're worth to you — knowing that your decision isn't made out of panic, but out of what works best for both of you and your organization.