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Counter offers are back

Date: 29 October 2015

The Global Financial Stability Report from the IMF recently noted that from April to October of this year financial stability improved in advanced economies. As financial markets continue to improve, the number of instances of counter offers being produced by financial institutions is increasing.

The global finance market

The macrofinancial environment in a number of economies has improved as recovery continues worldwide, and confidence in monetary policies increases. It is noted that corporate sectors are also showing ‘tentative’ signs of improvement.

Reuters has reported that Wall Street profits rose in the first half of 2015, with broker-dealers posting $11.3 billion – an increase of 29% compared to the same period last year.

Such positive figures are leading to an increase in the number of job postings within the sector; in 2014, 2,300 jobs were added – the first year of jobs growth since 2011. This trend continued in the first half of 2015, with the industry “on pace to add more than 4,500 jobs in 2015”, according to Thomas DiNapoli, the New York State Comptroller.

The financial jobs market

With the above in mind, movement between jobs in the industry is again picking up, and this is leading to an increase in the number of counter offers being issued as firms strive to keep hold of their top talent in an already competitive market.

The use of counter offers has been gaining traction over the last year. Employers are not only trying to hold on to top talent in this way, but also avoid the associated costs of having a position stand empty or train new staff.

So, if you receive a counter offer, what should you do?

  • Candidates need to remember why it is they are resigning in the first place; whether it be for more career prospects, better pay or more training opportunities. Don’t rush into a decision. Whilst it can be tempting to stay within a company, and can also be flattering to receive such an offer, if it fails to meet the above requirements then it won’t result in long-term career improvements. Consider why it has taken you to resign for your firm to recognise your worth and whether making a move will actually satisfy your reason for moving in the first place.
  • Also think about the repercussions of accepting a counter offer. Accepting a counter offer will lead an employer to question your loyalty, a position that will likely lead to a negative employer-employee relationship and damage your future career progression at the firm. It will also likely damage your relationship with recruitment agencies, who supported you, and the business that offered you the initial job posting – making future opportunities of working with them much less likely.

  • Consider why your employer is offering you the counter offer. An employer may have felt backed into a corner and bullied into giving a counter offer in a snap response to a resignation. More often than not employers issue counter offers as they don’t want to go through the hassle of seeking out new talent, or cost associated with recruitment, training and inductions. Sometimes a counter offer is issued simply to bide the company more time before finding a replacement.

  • If you do consider a counter offer ensure your current firm are offering you the salary you deserve. Have facts and figures of what other positions are offering and question why they aren’t exceeded in the counter offer. Counter offers should provide substantial financial gain to be worth considering in light of the above points.  Always request the counter offer in writing, so that all terms and conditions are laid out. Relying on verbal agreements can lead to trouble in the future if the company changes its mind.

  • Steer clear of using your counter-offer to negotiate a better offer with your new firm. This is likely to cause your new employer to question your commitment to the role and set your relationship off to a poor start. Avoid this or risk appearing too expensive or difficult.

How do counter offers vary across different areas within the bank?

According to your area within the bank, counter offers will be awarded very differently and manifest for very different reasons.

Sales & Trading

It goes without saying that high revenue generating candidates within sales and trading roles at banks are often seen as highly valuable assets and the need to retain top performers is important. A number of banks recognise that it can be both easier and cheaper to give counter offers to sales and trading professionals, as the time and resources required to locate and train suitable replacements can be extensive. Sales and traders looking to move can therefore expect a counter offer to be put forward by their employer as a result.

Investment Banking

Counter offers are less prevalent in investment banking, but there are several reasons why banks would extend them. The most common reason for an individual within this area of banking being the recipient of a counter offer would most likely revolve around if they are performing a role or staffed on a deal that is crucial to the success of the group, or if they are a particularly senior member of staff. However, because the salary bands of investment bankers at most institutions are fixed, counter offers that are strictly related to an increase in basic salary are less common. For mid-senior level bankers, it may be that an offer can provide them with some form of guarantee.

Corporate & Transaction Banking

Counter offers in this sector are also less common, but some of the key reasons behind if a counter offer is put forward are: if a particular candidate is indispensable to the group; if they have a particularly good relationship with senior management and therefore have the ability to leverage a new deal regarding their position; or if the company itself believes it would be particularly difficult to replace the individual in the current climate.

Compliance

If confronted with a counter offer, senior level employees such as VPs within the compliance sector will usually be provided with a verbal agreement from senior management regarding a change to their position, as well as the promise of a larger bonus. An employee will typically be provided with an offer that either matches or outperforms any other offer for consideration in terms of salary, potentially by up to $50,000 on top of their base. Junior level professionals within compliance are also seeing a number of counter offers headed their way, with a more senior job title, more compensation and an increase in responsibilities. This is due to compliance managers trying to adhere to head count requirements and uphold group performance.

Risk Management & Quant Analytics

Across the risk management and quant analytics space within the last year there have been a number of firms acting aggressively when it comes to counter offers, particularly in the European market. It is more time and cost effective to retain staff in these areas in the current climate and as a result firms are being more generous in their financial incentives and promotional opportunities, as well as offering non-monetary incentives such as training courses and more flexible working hours.

With the complexity of counter-offers within the banking industry, it is essential to understand the reasoning behind why such an offer may be presented to you as a candidate and how to make the best decision for your career development. Here at Selby Jennings we understand that counter offers within the finance sector are not a one-size-fits-all practice, but manifest themselves very differently depending on the area of the bank in question.

For more information on counter offers within a specific banking sector, contact Selby Jennings today for expert-driven insight.

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