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5 Ways to Negotiate with an Employee Who has a Better Offer

Updated: December 15, 2011 2:05PM



When you have a truly great employee, there's always the risk that someone else will figure that out and try to hire him or her away from your company. There may come a day when your employee comes to you with the plan to resign, with a better offer in hand. Whether your employee went looking for that offer or had it drop in her lap, you need to be prepared to negotiate if you want to keep that particular individual on staff.


Before you settle on a strategy, it's worth considering exactly what a given employee is worth to your business. Don't just think about the salary you pay. Consider what business that employee brings in, whether any clients might go with her if she leaves, and even what it would cost to search for and hire a new employee. All of that should factor into your decision on what you're willing to give ground on in a negotiation - and where you need to stand strong.

1. Make It a Matter of Quality of Work
Heather Belle has found that her employees see working for her company - which makes handbags - as a matter of quality of life: "I have a small business and find that people want to stay and it is a quality of life issue. I have also given people a lot of trust and responsibility and that often has outweighed the other offers. I ask what they want and I listen and hear that the message is beyond cash. Very often it is personal things. To be valued, to have fun, to have boundaries, to be treated fairly. A small business is very family-like and requires a bit of TLC."

It's not unusual that an employee is looking for something beyond simply making more money when they consider another offer. In many companies, it can be difficult to move up the ladder - at least in comparison with moving to a better position at another company. By talking to your employee, you may find that she wants more responsibility or a change in the work process. Since small businesses have more room to negotiate details like that, you may be able to convince an employee to stay without ever getting into the question of money.

2. Check on Benefits
More and more, benefits such as health insurance have become a crucial consideration for many employees. It's entirely possible an employee will leave a job for a new employer who offers health insurance, sometimes even taking a pay cut to accept the job. That means that keeping some employees is a matter of offering to improve the benefits package over anything else. The financial ramifications for your company can vary in this sort of situation. If you do not currently offer health insurance, adding it may be a financial burden beyond offering a simple raise.

You may also be able to offer non-traditional benefits as an incentive to stay, depending on the priorities of your employee. Sit down and talk about the sort of package that would keep your employee from moving on; that sort of consideration can simplify negotiations greatly.

3. Offer Up Education
In her business, Nicole Munoz is committed to keeping her team intact: "Finding top performers that will help you grow your business is a difficult job. You could easily go through eight to 10 hires before finding that gem... but once you do, it is important to do what you need to do to keep them!"

To that end, Munoz sat down with one of her webmasters that a client was trying to hire away. He responded that he was most interested in the educational opportunities that went along with taking on a new job and new projects. "I made a deal with him to become his mentor and provide him with many more opportunities to grow in the areas he was looking to grow in. In addition to this, we provided him with a new computer and a signing bonus for agreeing to stay for at least an additional six months."

Education doesn't always have to take the shape of helping an employee with tuition. Conferences, workshops and even mentoring situations can help you make sure that your employees are meeting their own goals. You're also creating team members who can help take your business to the next level in the future.

4. Meet or Beat the Offer
An easy solution is to agree to match your employee's new offer. David Smith has found that such an approach can keep most employees in the office. "If an employee is a valuable asset to our business, then we definitely try to meet his new offer. What I see is that employees also don't like to go to a new place (unless it is a very good company) as they've completely adjusted themselves with the old working environment. So, meeting the new offer can easily stop most of the employees from leaving."

There can be non-tangibles besides the money that make an offer more worthwhile to an employee, which may mean beating the new offer in order to keep an employee on board. The decision to do so can be even more difficult than negotiating in general and there is no right answer.

5. Wish Them Well and Let Them Go
Simply offering more money and keeping a great employee doesn't always have a happy ending. Belle once took that strategy and it convinced her that the best option is that if an employee is truly focused on just getting a better offer, she lets them go. "I regretted it and ended up firing the person. If you feel you are better than the job I offer, you should be elsewhere. It's like being in a bad relationship - you do not want to always chase after someone's loyalty."

This post originally appeared on OPEN Forum, an online community that provides small business owners with expert insights and connections that can help them run their businesses.

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