Bidding Wars

Should you match an offer an employee gets from another company?
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This story appears in the April 2001 issue of Entrepreneur. Subscribe »

Competition for good employees is strong, so don't be surprised when your top people get offers from other companies. The question is, Should you try to match or beat those offers? Only if it's someone who's critical to your operation, says Alan Weiss, president of Summit Consulting Group Inc. in East Greenwich, Rhode Island. "You've got to make sure it's a high-value employee," he says. "Otherwise, don't do it."

Keep in mind, there's a strong likelihood that the issue involves more than just money. Before you make a counter-offer, Weiss says, "make sure it's a matter of money and not other things. If they're leaving for less than a 15 to 20 percent increase, it's not the money; it's something else-they don't feel like they have a career opportunity, they don't like the boss, whatever."

When you craft your counteroffer, be sure it addresses all the issues that tempt the employee to leave; simply throwing money at an employee who feels stuck in a dead-end job isn't going to keep him or her for the long term. Consider offering added benefits, a promotion, more responsibility, different duties, company-paid education or whatever else the employee indicates is attractive about the other company.

If other employees find out about your counteroffer, they may use the same technique to negotiate raises. Therefore, it's usually a good idea to include a confidentiality provision in the counter-offer and to make it clear to the employee that violation of the agreement is grounds for termination. However, it's difficult-if not impossible-to enforce such a provision, so take that into consideration when deciding whether to make a counteroffer.

Jacquelyn Lynn left the corporate world more than 14 years ago and has been writing about business and management from her home office in Winter Park, Florida, ever since.

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Edition: September 2017

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