By Alan Darling
Feb. 19, 2010
Ready to hire someone? Don’t make an offer.
Once all the interviews and the candidate reviews are completed, making an offer actually reduces the chances of hiring the candidate you want.
Why? Offers can be turned down.
Then how else would you hire someone?
A client has the best chance of landing and retaining a candidate when the details are discussed orally and agreed upon before anything is put in writing. At that point, the written offer merely becomes a confirmation letter.
My executive search firm worked with a private manufacturer that was owned by four partners. They decided to hire a person to lead a remote site in a location most candidates found to be undesirable. They had been searching for someone for this position for quite some time before retaining us.
The candidate was drawn to that area because he had spent his boyhood summers on a nearby lake. He was also a very attractive candidate with the perfect combination of skills and experience, which was in high demand; he had numerous other options across the country. He was earning $400,000 a year in his current location but was living in a place that didn’t fit his or his family’s lifestyle.
Because he wasn’t happy with his current location, he had agreed to move to our client’s location for $225,000 per year plus a lucrative incentive package. In addition, one of the partners had told him they would be offering him a guaranteed three-year contract.
The company’s owners got together to work on an offer to the candidate. As an aside, it’s never a good idea to have a committee of four people hammer out the details in a contract; the old adage that a camel is a horse designed by committee holds fast.
One partner said that three years was simply too long a time period and they should offer only an 18-month contract. Two other partners recommended a broader noncompete clause, a more comprehensive confidentiality clause and other changes to the contract language.
The final contract was mailed to the candidate. He read it, was shocked and dropped out of the process.
This may be an extreme example, but it illustrates the wrong way to make an offer. Promising a three-year contract and then offering less is foolish; in good recruiting, the interviewers need to be sure they are on the same page.
However, the time period was not this candidate’s major issue. It was assorted clauses in the contract language that surprised and discouraged him.
Imagine a 13-page, single-spaced contract filled with legalese, termination agreements and noncompete clauses. Research indicates that only 7 percent of communication consists of the actual words used. Thirty-eight percent consists of your tone of voice and inflection.
The remaining 55 percent of communication is visual. When negotiating in writing, only 7 percent of communication abilities are used. People can easily misinterpret the meaning and intent when something is delivered in writing.
Many people have the impression that something in writing is carved in stone. If they don’t like what they read, they walk away.
A written offer should never be thought of as the starting point for a negotiation. All too often, good recruitments turn sour when the client quickly makes a written offer with their boilerplate contract before discussing all the details with the candidate.
There was one candidate for a management position that required a rare, hard-to-find skill set. We were told by the candidate two days after his interview that, without our knowledge, the client had already sent an offer. He also told us that he had no interest in it; he was earning $120,000, and they had offered him a raise of only $10,000. They offered to cover only part of his relocation costs, so he viewed their offer as a financial step back.
A few weeks later, someone else offered him $25,000 more than our client had offered along with a better relocation package, and he accepted it. The client told us afterward that they would have gone that high, but the candidate lost all interest in them when he read their first written offer.
Companies will have the best chance at recruiting a desirable candidate if:
• They start by asking the candidate what they would require to join the organization. This should be discussed well before the person is interviewed to ensure that you are not so far separated that you are wasting your time. If the candidate stutters and stammers (as they often do) and won’t give you an answer, throw the ball back into their court by saying, “We’re still determining what we’re going to pay for this position. We’re going to pay what we need to attract the right person. Bearing that in mind, what would it take to get you to consider this?”
With a soft approach and some tact, you can usually get the candidate to tell you what they’re earning and what they feel they need to be paid to make a change. This approach also provides market data and insight that the intended compensation package simply isn’t going to work and requires adjustments.
• Discuss in detail all facets of compensation and contractual issues orally. Whether the offer will be a simple letter or a complex contract, go through it orally and point by point before sending a written version.
• Finish it in person. Perhaps the best results we’ve had have been when we’ve told the candidate, “They want to make you an offer. What will it have to contain to bring you on board?” If the candidate brings up any points that separate them from the client, we go back and forth orally until we get close. At that point, we recommend that the client and the candidate get together to work out the details. When you get face to face, the big stumbling blocks generally become little, and an agreement can be reached.
• Never present a written offer to a candidate until every detail has been discussed with and accepted by the candidate. This makes the offer a mere confirmation, rather than the start of a protracted negotiation. As an added precaution, label the offer “DRAFT” and include a note that says, “If any little things appear to be not as we discussed or are confusing, please feel free to give us a call to discuss these issues.” This will head off the candidate getting upset over an issue that may appear big to the candidate but insignificant to you.
Once we bumped into many stumbling blocks. Again, this was one of those rare cases where the candidate was earning significantly more ($390,000) than our client could pay but was willing to take less salary in exchange for a lifestyle change. After meeting her, our client described her as unusually qualified and reached up well beyond their salary range to $260,000. Fortunately for them, money was not her driving force. She had earned enough at age 53 through stock grants to retire and wanted to move back to the client’s location, which was near where she grew up (and close to her aging mother).
The client prepared an offer for her, but instead of sending it to her, sent it to us, and asked us to review it with her by phone. We started by going through the key points, and unearthed a number of minor obstacles and one major one—the client wanted to offer only a six-month termination agreement, and she felt that the industry standard for someone at her level was 18 months.
Knowing the candidate was considering only our client’s position at that time, we spent several weeks going between the client and the candidate, working out each issue until we reached an agreement (they settled on a 12-month termination agreement). Once we reached that point, the client sent her the offer/contract, which she signed within a day.
There is almost always a need for expediency when it comes to recruiting. The longer the wait, the greater the risk of losing the candidate. However, don’t use this as an excuse to formalize the whole thing too quickly by making an immediate offer in writing.
Instead, make sure that to keep a continual dialog going with the candidate, and once an oral agreement is struck, overnight the offer.
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