Willingness to Offer Match: Identifying the Counteroffer Payceiling

Abstract

Compensation professionals often face a conflict when the retention of an employee depends upon matching the offer of a competitor firm. While managers may wish to avoid the turnover of given employees, the authorization of exceptional pay packages to outbid raiders could adversely impact the company’s compensation practice. Offer matching is likely to escalate compensation costs and create individual equity problems within the workforce. In planning for employee retention, managers should consider and declare, prior to any external recruitment event, the maximum amount of pay that would, reflective of the company’s overall business interests, be allotted to preempt an employee departure. This article introduces the willingness to offer match concept. It also presents a preparatory exercise to elicit information from a manager on the counteroffer pay ceiling for an employee. The use of this information, as an input for various incentive arrangements, in formulating employee retention tactics is discussed.