Counteroffers in New Zealand

Research finds offers no help to retention.

Counteroffers in New Zealand

Australia & New Zealand

Counteroffers appear to be common practice among many New Zealand companies but according to research commissioned by Robert Half they do not retain employees in the long-term. The company’s research found more than eight in 10 (89 per cent) New Zealand CFOs have extended a counteroffer while 64 per cent of the same CFOs also say that the employee ended up leaving the company.

Extending counteroffers appear to be common practice in New Zealand businesses as more than one in five (23 per cent) of New Zealand CFOs respectively ‘always’ or ‘often’ make a counteroffer to their finance employees in a bid to retain them. More than one in three (35 per cent) apply this practice ‘sometimes’, less than one in 10 (8 per cent) say they ‘rarely’ make a counteroffer, while 11 per cent say they have ‘never’ extended one.

However, showcasing the ineffectiveness of counteroffers, almost two-thirds (64 per cent) of the business leaders who have made a counteroffer say their employee ended up leaving the company, with 23 per cent saying the staff member left within six months, 27 per cent saying the employee stayed for less than a year and merely 14 per cent cite he/she stayed over a year. 

Megan Alexander, general manager of Robert Half Australia said: “The reasons why people resign from companies often go far beyond salary. For an employer to offer a higher salary as an incentive to stay with the company often just delays the inevitable. Counteroffers rarely prove to be a long-term solution for staff retention.


“Many times an employer will instinctively react to an employee resigning with a counteroffer, thinking that the additional cost in hiring a replacement will be significantly more than the cost of offering a higher salary,” she adds. “Oftentimes, the most cost-efficient solution is to start the hiring process straight away.”

The costs related to replacing an employee, including onboarding and professional development are a key driver for 58 per cent of CFOs who have made a counteroffer. Another 58 per cent cite the desire to retain knowledge within the company as one of the main reasons for making a counteroffer, while 35 per cent refer to cultural fit as the employee fits in well with the company and team. 

“High turnover is a costly issue for many companies. Regularly reviewing salary levels to make sure they’re in line with industry standards can help companies ensure they’re paying their staff competitively. However, businesses need to look beyond purely financial incentives for an effective staff retention plan. A strong company culture and positive working environment are key methods to avoid staff turnover, as well as offering workplace flexibility such as the option to work from home,” concluded Megan Alexander. 



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