The recruiting industry has a variety of terms that form our parlance. Of those terms, the worst term is Falloff. Falloff means that our client company has extended an offer to a candidate and the candidate subsequently turns it down. Falloffs represent the closest thing to emotional despair for the recruiter; we take each one hard as it negates our value proposition to our clients; we find people who get hired and succeed.
 

I belong to several professional recruitment organizations with members who represent the top of their field. One organization, The Pinnacle Society is an exclusive organization that is limited to only 75 of the top producing recruiters in the US. These guys are good. Our average performance metrics are more than 3 times the average performance metrics industry-wide. As such, we understand the process and we've made or witnessed nearly every mistake that can happen in recruiting. Pinnacle Society functions as a best-practices organization, so we spend 6 days a year addressing recurring issues or problems. We track metrics of performance and we retain the top trainers in the industry to work with our organization. The problem of the year for this organization is... Falloffs.
 

The number one reason for Falloffs is a counteroffer from their current employer. Candidates are resigning and then being bought back by their own company. The issue is now endemic. The rate of falloffs varies by years of experience, but a seasoned, professional recruiter should average less than 4%. That rate has climbed to over 7% in one year. To put that into perspective, top recruiters working strictly in mid and upper management positions will place between 10-25 people each year. The normal yearly falloff rate has held pretty consistent at less than 1/yr... always painful, always a last minute surprise. That rate is now close to two a year. Twice the pain with the added bonus of creating double the amount of time and effort to accomplish the original goal.
 

The talent market has changed markedly in just the past 18 months; salaries are rising rapidly, costs of relocation are out of hand while the ability to sell a home has plummeted, commute expenses have become more visible with rising gas costs, and counteroffers have grown wildly. We've seen counteroffers exceeding 50% of their current income! Where is the market heading?
 

The War for Talent has been quietly raging for 5 years. We're rapidly running out of qualified people due to sheer demographics. The cost to a company to lose a key producer in this market is substantial and companies have begun to recognize those costs. Counteroffers used to be anathema to companies; the historical response was to not let the door hit you on the way out. That’s changed. It’s now become a completely different response that includes a nice mix of pure guilt (how could you do this to us?) and steely competition (you're not leaving, we will create a plan to keep you here and you owe it to us to at least prepare the plan).
 

Our process has changed. We've always addressed counter-offers early in our process, but now we've become rabid. We validate the unspoken reasons for leaving, reaffirm the rationale for accepting the new opportunity and then we stay with them through the entire resignation and onboarding process with our client. And still, we face an ever increasing onslaught of counteroffer tactics. Ultimately, in this economy it's not surprising that candidates accept a counteroffer, even though it’s been proven many times over that accepting a counteroffer is eventual career suicide. Counteroffers offer the candidate the chance to stay in his undervalued house a little longer, it establishes a higher starting point for the next opportunity and it delays the emotional transition into a new culture.
 

Recruiting has officially become a team sport. Our clients have to take an active role in thwarting counteroffer tactics. They need to reinforce the value to the candidate, short and long term. And they need to alert us of any signs of weakness prior to resignation. As the market continues to evolve, I firmly believe we will find ourselves in a market where extending an offer to that new VP of Marketing will be accompanied by preparing a second offer to the #2 candidate. Signing bonuses will return en masse as a means to thwart the inevitable counteroffer and employment contracts will become more common in middle management.
 

It's a thin talent pool out there, employers have little room to allow their best people to leave them and the opportunity for our clients to attract those people will require far more attention to the process: speed in making a decision, strong offers with signing bonuses and more flexible relocation policies to mitigate the costs of selling a home in this residential market.