IN THE LAST YEAR, accountants who have been forced to put up with negligible salary growth have found themselves facing an unfamiliar but, on the face of it, very welcome new phenomenon – the counter-offer.
Counter-offers are salary rises given by employers to tempt resigning employees to stay. This year, our research shows that almost one in four accountants have on resigning been given a counter-offer – a rise from less than one in 8 a year ago. The size of these offers is also increasing. Counter-offers are now up to three times larger bigger than they were 12 months ago, with the average counter-offer reaching 15% of base salary.
In London for example counter-offers are even more frequent and can involve sums that are twice as large. Seven out of every ten candidates in the capital are now being offered more money to stay with their current employer in their roles, and counter-offers of up to thirty percent of base salary are by no means unusual.
It’s a far cry from the cuts in salary and staff that we saw during the recession and is a very encouraging sign that demand for talent is returning and giving accountants who are prepared to make a change a long-awaited earnings boost. But there are still accountants for whom the impact of recession has changed their expectations and made them unwilling to rock the boat by seeking higher pay.
In our research into labour market sentiment in the profession, we found accountants are among the most pessimistic professionals in the country. On a scale of -10 to 10, with -10 being the most pessimistic, accountants scored -6.0, compared to a positive figure of 2.4 for the HR professionals who are hiring them.
It’s perhaps no surprise that accountants are feeling cautious after the chastening experience of the last few years. But the growth of counter-offers shows that employees who are keeping the hatches battened down and aren’t looking for better packages are effectively inflicting the punishment of recession on themselves twice.
Of course, with counter-offers, it takes two to tango. No matter how optimistic accountants feel, it’s ultimately up to the employer whether to try to tempt them with a counter-offer. Employers who frequently make counter-offers are playing a dangerous and potentially very expensive game. In a market where companies are increasingly turning their attention to strategies for growth rather than survival, an increase in the number of attractive offers from competitors makes it a challenge to retain talent. This means the temptation for employers to counter-offer is sometimes overwhelming – far better to pay more to someone good than to go through the uncertainty and expense of making an entirely new hire.
But in our experience, it’s rare for an employee who accepts a counter-offer to remain in their job for longer than 12 months. However much the City stereotype might suggest it, the movement of labour isn’t entirely determined by how much money is on the table. Our latest research into the reasons why accountants leave their jobs shows only 28% leave seeking a higher salary.
Making a generous counter-offer rarely solves the problems that led the employee to resign. If an employee is minded to leave, money is hardly ever the only reason. Better hours, more flexible working conditions and the promise of future advancement all contribute significantly to the decision as to whether to stay or go. Creating a purely financial incentive to stay is as a result an ineffective retention strategy.
So if writing a cheque isn’t the answer, what can employers do to ensure their talent doesn’t get poached? In our view, any strategy for talent retention has to be holistic. Very few professionals are motivated by money alone, so taking the time to consider the motivations of individuals is the first step to keeping them happy.
Making the office a good place to work is a strong start. Offering flexible working, a good company pension scheme and at least 25 days of holiday are considered prerequisites by the vast majority of quality candidates. But by offering less common benefits like share incentives, vehicle allowances and comprehensive family insurance cover, employers can differentiate themselves from others who might be looking to poach talent by offering eye-catching basic salaries.
But our research has shown that by far the most significant incentive for accountants is the offer of strong prospects for career development. 40% of accountants this year stated career progression was the main reason why they left their last job. This is a clear indication that for employers trying to make themselves as attractive as possible to high quality professionals, a meritocratic and prompt system of promotion is key. By being able to show that the salary rise being offered to move won’t be the last uplift for years, employers offering long-term career benefits will obtain the most committed, capable and contented workforce possible.
Dave Way, managing director, Marks Sattin
Image credit: Shutterstock
Richard Cameron-Williams, who joined RGL on the graduate programme in September 2005, has been appointed partner with effect from April 1
Andrew Howson joins the firm from EY, bringing experience in advising private equity and corporate clients across multiple sectors in the UK and Europe
Dennis Layton takes up the position on April 1 and will contribute to the firm’s goal of becoming the leading global professional services organisation by 2020
Richard Cartwright becomes the new head, taking over from incumbent head of office David Lemon