Executives warned over ’human auctions’

Frantic ’tug of wars’ between employers desperate to retain staff and companies wanting new talent are causing a rise in the number of ’buy-back’ packages being offered to high flyers, say recruitment experts.

John Wakeford, managing director of search and selection company Hitchenor Wakeford says executives must beware of the effect that extended haggling can have on career prospects.

A ’buy-back’ package is where an existing employer offers an improved package to match the new offer received by the employee. Packages can include share options, tax-free bonus payments and equity in the business. One recent case involving a top salesperson saw him accept a buy-back share package with a value of 500,000.

Wakeford warns that there are many examples of recruits going to their old offices to sever ties and clear their desk with the ink still wet on a new employment contract, only to find that their expected ’departure’ turns into a protracted ’tug of war’ negotiation:

These unseemly human auctions can deflect the candidate’s attention from some of the more important underlying issues. Of course, it’s very flattering to be suddenly heaped with admiration, especially when it’s underpinned with cars, cash, promotion, share options or other future benefits.

These tend to obscure the real reasons why the candidate was seeking a move in the first place. Usually, these include such non-monetary factors as seeking to increase their breadth of experience, working for a more dynamic or ambitious organisation, making better use of untapped potential or progressing to higher levels of responsibility.

Those who accept being bought-back into their old role might find themselves a bit better off financially but they’re often sacrificing much more.

Their existing employer isn’t going to change his management spots overnight. Complacent employers aren’t suddenly going to discover new opportunities, new products and new markets to conquer. If you turn your back on wider opportunities, you’re ultimately selling yourself short.

Wakeford also points out that those who reverse a decision to move-on may find that their loyalty and commitment may be brought into question in the future. He says they may be better off in the short-term but longer-term prospects may have been irreversibly damaged.

In short, there is a strong argument for taking independent advice about career moves. A skilled external negotiator is in a much better position to appraise an executive’s real value and hammer-out an appropriate package. The difference might be as much as 50-60,000 a year.

Employees tend to compare themselves with colleagues to gauge their personal value to their employer. This can create ’clusters’ of undervalued staff by comparison with the market as a whole.

He concedes that tug of war tactics are less likely to work in the upper echelons of management. Our candidates for board positions and senior management roles have usually given a great deal of thought to their career move. Once they’ve decided to take-up a brilliant new opportunity, they are unlikely to let a hasty ’buy-back’ offer deflect them from it.