The Rise of the Counter-Offer

Recruiting in real estate – finding the best to build a team with the right people – can be challenging at the best of times.

Recruiting in real estate – finding the best to build a team with the right people – can be challenging at the best of times.
As the job market recovers at rapid pace, the appetite to embrace new challenges coupled with a shortage of skilled professionals is creating a counter-offer culture unlike anything we have seen in a decade.

In what was dubbed ‘The Great Resignation’, brought on in part by the pandemic, businesses are under increasing pressure as they lose employees whilst simultaneously finding it difficult (and more costly) to recruit.

The reasons for why so many employees are switching job roles vary.

Some staff have been considering moving on for some time, and it’s just the current job market that’s given them the confidence to do it.
Others are leaving to pursue new opportunities to develop their careers in real estate inspired by how the pandemic has forced changes to their lives.

Companies that find themselves at the end of several resignations – with hiring becoming more time-consuming – face little choice when trying to hold on to their valued staff.

Counter-offers and recruitment

Counter-offers obviously existed before the pandemic; however, they have become even more pronounced as companies have increasingly reviewed their workforce in the face of difficult financial circumstances, identifying their key performers and in some cases, letting go of underperformers.

Ania Prosniak

Managing Director, Macdonald & Company, Germany

In a candidate-driven market, employers are increasing wages to hold on to their talented employees whilst trying to avoid hampering growth.

From 2019 to 2020, the average increase received by those accepting a counter-offer from their current employer after resigning was 17.2%.
However, in our latest poll taken in October, as many as 4 in 10 candidates report being offered a 20% salary increase from their current employers to avoid them from resigning. Many of these workers are in the Investment and Funds area of real estate, and most are at mid-senior and C-suite levels.

Perhaps not surprisingly, counter-offers are one of the biggest barriers for the businesses eager to recruit.

The results of our poll show that as the real estate sector picks up pace again, companies are prepared to compete to keep their employees, who are, after all, the future of their company.

Salaries before and after the pandemic

Our last Rewards, Attitudes and Salary Report 2020-2021 explored the changing attitudes of real estate professionals and the impact of salaries before and after the pandemic.

We found that in the UK, for example, since 2019, the median salary for 2020 to 2021 increased by £2,000. But due to economic setbacks, most real estate salaries in the UK have remained unchanged since the start of the pandemic, with just 13% receiving a pay rise.

Meanwhile, 62% of bonuses — which are often an important part of remuneration packages — were negatively impacted by the Covid-19 outbreak.

Man and woman drinking coffee

Interestingly, in the 20 years covered by our survey, salary has always remained the biggest driver for people considering a new role.

However, the pandemic has shown that financial rewards are not the only incentives for employees to stay where they are.

We found that salary was no longer the top priority, having now been replaced by work-life balance.

Despite these findings from earlier this year, the market appears to be competing with both salary and benefits that offer better work-life balance, showing just how heated employment and talent search has become in recent months.

Motivations behind making and accepting counter-offers

Counter-offers are often frustrating for both the existing and potential new employer, especially when forced to compete with a very generous pay offer or the promise of a promotion.

Whether an employer accepts the original offer or counter-offer depends on their motivations and end goal. If it’s to earn more money, they are likely to accept a pay rise from their existing employer and remain. However, if the company culture or management structure is caused them to reconsider their current role, there’s less chance of them accepting a counter-offer.

The counter-offer may take the form of a pay increase, promotion or improved benefits package. Whichever form it takes, there are many reasons why companies counter-offer. For example:

  • Loss of income — A reduction in output because of a vacancy and time to onboard new team members can delay production, services or projects. Retaining existing employees prevents this from happening.
  • Cost of recruitment and training — Training can cost between 20% and 40% of their annual salary. When combined with additional loss of time to get a new employee up to speed, a counter-offer can be a far more cost and time effective option than rehiring.
  • Pride — No one wants to lose their best employees, especially to their competitors. So, there’s undoubtedly a sense of pride involved in counter-offers and retaining your most talented employees.

A salary increase is often the first move for employers to entice candidates to stay. However, with the pandemic accelerating existing flexible working, remote working, e-commerce and automation trends, both companies and candidates have had to re-evaluate their priorities.

As a result, there are several strong non-salary motivators for people to move into a new role. These include flexible working hours, remote working opportunities, work-life balance, career progression and additional benefits such as health insurance, holiday time and other workplace incentives.

Are counter-offers good for business?

A counter-offer can very well work in an employers favour, especially in the short term. It enables companies to retain valuable knowledge and talent when businesses cannot afford to lose either, and protects morale among the rest of the workforce. It also eliminates the cost, time and effort required to recruit, onboard and train a suitable replacement in an increasingly competitive market.

Holding on to employees who feel dissatisfied or undervalued in their work will only prove to be a temporary fix that simply delays the inevitable.

Offering additional employee benefits or even a salary increase may encourage them to stay initially.

However, the reasons they wanted to move on in the first place rarely go away, and they may well eventually leave the company anyway.
There’s also the impact on the wider business to consider. If word spreads that a colleague has secured a pay rise, it could also encourage other employees to ask for an increase. If key team members leave, others may follow suit.

Group having a meeting

Prevention is better (and more cost-effective) than cure

Salary is just one part of a remuneration package offered to real estate professionals. Commission and bonuses combined with other incentives are key to both attracting and retaining talent.

To minimise staff turnover, companies must look at offering benefits, salaries and career opportunities that are both competitive and consistent with what employees in the industry expect.

There may be occasions when a counter-offer appears to be the only viable solution. But by conducting regular salary reviews, offering flexible working opportunities, providing career development opportunities and creating a healthy and respectful work environment, you’ll be closer to creating the type of workplace where employees feel valued, rewarded and ultimately, motivated to stay.

You’ll also be in a better position to recruit the brightest and best talent if you need to replace a departing employee.

We will be delving deeper into the data to discover exactly where our industry stands and how confident companies are feeling across the different real estate sectors. We will compile the results into an online report to show the average salaries and gauge the views and opinions of those employed across Real Estate Investment and Funds, Real Estate Development, Planning, Architecture and Design, Building and Construction.

These unprecedented times have had a significant impact on our industry, shifting the supply of professional talent in line with increasing demand.

Counter-offers are one of the top challenges facing employers in our industry today. Recruiting the best talent can be difficult at the best of times. But with counter-offers on the table, companies must fight harder for candidates by taking a proactive approach, from offering a competitive salary and benefits package to creating a positive, healthy and respectful work culture.

Hear the career advice and journeys of those leading in their sectors, from Development and Architecture to Funds and Asset Management, in our Accelerating Careers in Real Estate series.

Subscribe to RE:MAIL

Everything real estate to learn, collaborate and connect. Sign up for your monthly roundup of industry news, insights, career podcasts with industry leaders and more.