Should You Give Someone a Pay Rise or Promotion If They Hand In Their Notice?

Previously we talked about what to do if a team member wants to leave. It was a popular post and I received a bunch of follow up questions from subscribers. One of which was whether you should fight to keep someone who has handed in their notice. I touched on this last week but am going to take the opportunity this week to go into more detail.

In particular, a couple of questions revolved around whether you should give someone a promotion or pay rise if these are the reasons that they are leaving.

We’ll explore these two in some detail and talk about when it’s appropriate to offer them in order to keep someone on your team.

But just before we get to that, let’s briefly talk about what you need to do first.

Get as much information as possible about their reasons for leaving

Before you can even make a decision on whether you should try to keep someone from leaving, you need to have a full understanding of their reason(s) for handing in their notice in the first place.

This starts when they first come to you and have the conversation about leaving. Whilst it may catch you off guard, you need to take this opportunity to ask them about the reasons why they’re leaving. They may well volunteer those decisions and be very open about them which can be helpful but if not, you may need to poke and prod a little bit to understand a bit more.

Given that you may have been caught off guard in the first conversation, it’s reasonable to arrange for a follow up with them to talk more. But you do need to do this as quickly as possible, ideally the same day or the day after they’ve told you that they’d like to leave.

You can take a bit of time to prepare for this and ensure that you can come out of that conversation with a full understanding of why they’d like to leave.

At the end of this first conversation or two, you should:

  • Understand what role they are moving to (if any).
  • Understand their reason(s) for leaving.
  • Understand if the decision is final or not.

Let’s briefly talk a little more about that last point.

Is the decision final?

During the course of asking questions, learning about their new role and their reasons for leaving, you should also seek to understand whether this decision is final or if they’re open to a conversation about staying. 

If they’re not and the decision is final, then the chances are that you can’t change their mind and it’s going to be a waste of everyone’s time to try to convince them to stay. It could also damage your relationship with them if you try to keep them despite them telling you that the decision is final.

Now, having said that, if you really do want to try to keep them, you can push a little more.

For example, if they say that the decision is final, you could follow up and ask if they’re open at all if you can overcome their concerns, or ask if they are at least willing to listen to an offer from you.

If the answer is still no, then you should call it and accept their decision.

Should you give someone more money to stay?

A common reason why someone decides to leave is because they have been offered a higher salary elsewhere. If you have the authority and budget to match (or exceed) this higher salary, then it can be very tempting to increase their salary and get them to stay.

If money is literally the only reason that they are going, then increasing their salary could be a good decision. However, if there are a few reasons and their salary is just one of them, then you need to be confident that you can also resolve the other issues as well. Otherwise, you’re putting a band aid over the problem and it will come off again at some point.

The other consideration is whether their new salary would fit within your current pay structure. Most roles will have salary bands attached to them and it’s usually not a good idea to make an exception and pay someone more than a salary band allows. If you do this, then you’ll end up with a disparity amongst team members which may be unfair. 

It also makes further pay rises more difficult for this individual because they are already paid more than their colleagues, meaning that the gap will only get bigger as time goes on.

In my opinion, you should only increase someone’s salary to keep them if one or more of the following are true:

  1. They are already underpaid and therefore, the pay increase is a fair increase anyway.
  2. The increase in salary would keep them within the salary band for their role and therefore, in the same ballpark as colleagues in the same role.
  3. They were likely to get a similar salary increase within the next 3 months anyway during a regular pay review.
  4. They actually deserve the pay rise due to their current role and responsibilities.
  5. If they have other reasons for leaving, you are confident about resolving them for the foreseeable future.

Otherwise, it’s almost certainly the wrong move to offer them a higher salary to stay.

One word of caution here – you should be prepared for them to receive a further counter offer from their potential new employer. It’s not uncommon for you to match or exceed their new salary offer, only for them to come back and say that they have been given an increased offer by the new company.

If this happens, you should decide how far you want to go to keep someone. But overall, I’d avoid getting into a “bidding war” for the team member.

Should you give someone a promotion to stay?

Another big reason for someone to leave is because the new role they’ve been offered is more senior than their current position.

The principles here are actually very similar to the section above – you should only counter an offer and give someone a promotion if certain conditions are present.

For example, here are some reasons why you should NOT give someone a promotion to stay:

  • They are not ready for the responsibilities that come with the new role.
  • You would need to make substantial changes for the promotion to happen e.g. creating a new team or new service.
  • The promotion accompanies a pay rise that doesn’t fit with your salary structure.

You should only give someone a promotion to stay if they were genuinely already on course to be given it within the next 3-6 months anyway. This means that you’re essentially giving it a bit sooner than you’d have liked, as opposed to giving it way ahead of time.

If you do this, you should highlight to them where they have gaps between their current skills and experience, and the new role. Then work with them to plug them as quickly as possible. Given that you’re promoting them earlier than planned, it’s likely that they’re not technically ready for it yet, so it’s best to be open about that, tell them that you’re putting your faith in their abilities and support them along the way.

Overall, if someone is open to staying, offering them more money or a promotion to stay isn’t necessarily a bad thing. But the conditions need to be right and to be honest, it’s usually not the right thing to do and often just defers deeper issues until 6-12 months further down the line. 

So I’d certainly think hard about doing this and only do it if you’re absolutely confident that it’s the right thing to do for them and your team.

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