What to Do When an Associate Doesn’t Want to Renew Their Contract
Maybe the contract renewal has been with the associate for a while and you’re hearing radio silence. Maybe they’ve told you they have no interest in renewing. Either way, you find yourself in limbo while you consider your next move.
While every situation has factors that make it unique, here are some guidelines to consider.
Take a step back and assess your feelings concerning the situation before you do anything else.
It is easy to get emotionally involved in contract disputes, especially with long-term associates or people you work closely with. Even when personalities are involved, this is not a personal matter. It’s about what’s good for your business and future. Go into the situation calmly and with a proper perspective.
If you have not heard from the employee, directly address the situation.
If you have not had an associate acknowledge the contract offer, ask if there is any additional information you can provide for them or any aspect of the contract they feel is not clear. Sometimes, people have misplaced the contract, missed the email, or had other things going on in their lives. At worst, you will gain a sense of clarity and in many cases, the situation may resolve itself.
If an associate has declared intent not to renew their contract, clarify the reason. It is normally one of three things.
- They have accepted a new job and have signed a new contract. This normally means there’s little you can do about it and the best place to spend your energy is to begin a new employee search.
- They are relocating due to a family or life situation. While this is often an insurmountable reason, there are times and workplaces that can tolerate teleworking in some positions. Be open to mutually agreeable solutions if possible.
- They are willing to remain in the position; however, the compensation package is not what they are seeking. Assuming it is an associate you wish to keep, shift the burden to them by saying something like, “I can’t promise anything, but what would you like to see changed in your contract?” Sometimes, the answer may surprise you and be something that is easily attainable.
If you don’t want to retain the employee, begin the search process.
There are times you may be relieved that an associate may not want to renew their contract. This becomes a self-solving problem and ETS is here to help. We have the industry’s most extensive network of vision contacts and we can help you find an exceptional candidate.
If you want to retain the employee, assess the hard data of the employee to your organization.
Gather data concerning their total compensation package, the direct and indirect revenue generated, and growth potential. Compare salaries for associates in similar capacities in comparable markets. If you need an accurate salary/benefit assessment, contact your ETS representative for the latest data on salaries and trends on compensation and benefits.
Consider soft costs.
What is the cost of a business disruption caused by the loss of this associate? What will it cost to recruit a replacement? Will you have relocation costs or new technology costs associated with replacing the employee?
Anticipate ripple effects.
Will recalibrating the compensation for one employee set in motion a ripple effect of everyone in your practice expecting a raise? While confidentiality is expected in contracts and negotiations, in many organizations the salary numbers “get out.” What would be the repercussions if that happens?
Do the math.
If it is an employee you can retain, it really boils down to math. Using an appropriate mix of compensation costs and opportunities for that employee to grow revenue versus his or her replacement costs, you should be able to figure out how to improve your compensation package. Of course, other factors are at work, including the overall financial viability of your practice and your future plans. Very often, the desired change may not be so much in financial compensation, but in terms of leadership, responsibility, and potential for growth. Is this a person you can invest in and grow with?
In many professions, the employment market has been hot and this can lead to good associates looking toward greener pastures. Extenuate the positives of your organization and culture and your positive plans for the future when discussing contracts and continued employment with a valued associate. Be honest in expectations and sincere in commitments, and employees will often recenter and you will have a better chance to retain them.
Before making any promises or changes to contracts, always consult your attorney and HR professional. And sometimes, it’s just time for a change and there’s nothing you can do. That’s OK, because ETS is here to help you find the perfect associate.
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