Sir Richard Branson once advised employers to train their people well enough so they can find better opportunities elsewhere and to treat them well enough that they don’t want to leave. Those are wise words. Unfortunately, most employers ignore them. If you have ever asked your boss for a raise only to suffer repeated refusals, you have experienced the primary cause of dive and save. Some employees will go through the hiring process with another company, manage to get an offer and then take the offer to their boss to leverage a better compensation. The employers would sometimes cave and acquiesce to the demand of the employee.
While you might think that this practice is justified, I see many problems with it both for the employer and the employee. To be fair, I should note that employers are not saints and employees are not lambs. Both come to the table with a bottom line. The employer wants to pay as little as possible to get the job done. The employee wants to receive as much money as possible in exchange for his or her skills. Therein lies the problem.
The relationship between employer and employee is one that runs on mutual respect and trust. The employee trust that the employer’s compensation offering is fair. The employer trust that the employee will deploy his or her best efforts to help the company accomplish its goals. When the employee discovers or develops a sense that the compensation the employer offered is not fair, the trust starts to erode. Many reasons can lead to the erosion of trust. Cronyism, office politics, club mentality, and any number of unethical behaviors on display in many companies.
So the employee receives a new offer. Should he or she take that offer to his or her current employer? Before I answer that question, let’s assume that the employee did bring the new offer to the boss. If the boss accepts to increase the employee’s compensation, he or she is acknowledging that the company has been unfair to the employee by paying less than the employee’s worth.
The question the employee has to answer is whether or not to continue working for an employer who undervalues his or her contributions. Whether the employee is aware or not, he or she is going to call into question all past and future decisions the employer will make regarding compensation and rewards. The trust element necessary for the relationship to prosper has been severely damaged.
For the employer, the calculus is not a simple one. Finding employees is easy. Finding good employees is hard. Finding outstanding employees is extremely difficult. Every time the employer has a choice between hiring a new employee or trying to keep one who wants to leave, the tendency would be to bend backward to retain the current employee. From the cost standpoint, this tendency makes sense. However, it is highly counterproductive and hurt not just the bottom line of the company but also its reputation in the marketplace. Precedents, once set, are painful to undo.
My stance is easy. When you receive an offer from a new company, it’s because you are unhappy and wiling to take your skills somewhere else. The gun to the head tactic may work today, but how long before you ask for a new raise. If you are unhappy enough to go through the interview process with another company, you should be brave enough to acknowledge that your relationship with your current employer has run its course. If your employer indeed undervalues your contribution, you owe it to yourself to move on.
For employers, the bottom line is quite simple. If you compensate your employees fairly, show them that their contributions are valuable to your business, you will never have to deal with a dive and save situation. In my view, dive and save is but a symptom of a deeper and ruinous problem. When you agree to do it, you are only kicking the can down the road.