How do I prevent candidates from leveraging counteroffers?
Counteroffers occur when a candidate accepts your company's offer of employment, returns to her current job to give notice, and then decides to remain with her current employer after being countered with a pay increase or promotion. In such cases, your recruitment efforts will be for naught, since the interviewing, reference checking, and salary negotiations will all be undone. In short, you'll have lost the candidate that you hired and will have to start the recruitment process all over again.
Companies often ''work on'' their employees with counteroffers while those individuals are in their two-week notice periods. Appeals to loyalty, guilt, and even fear have been known to entice workers to stay when combined with increases in salary or promotions.
The bottom line is, you can't know whether a candidate's current employer will aggressively entice him to stay; you have to assume that all candidates will receive counteroffers from their present companies. Therefore, it's an important proactive strategy to stay in contact with new hires who have given notice to their current companies. After all, people are creatures of habit, and, as the saying goes, the devil that you know may be better than the devil that you don't know. Translation: ''Maybe it's not as bad here as I originally thought, and leaving for another company might raise a whole new set of problems for me. I think I'll stay put!''
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Addressing counteroffer possibilities occurs early on in the interviewing process. From meeting one, employers should discuss the possibility of a counteroffer:
- Bill, what is your motivation for leaving your current company?
- What are the three criteria you're using in selecting another company?
- What would have to change at your present company for you to stay there?
With such questions on hand from initial interview rounds, you'll have a firmer grasp of the possibility of a candidate's counteroffer acceptance.
In addition, before the offer is extended, it becomes time for a ''resignation drill.'' Remember, a counteroffer is nothing more than a variable that you should seek to control before offering someone a position with your company. Therefore, part of your offer negotiation will sound like this: ''Bill, we've talked about your readiness to make a move from your current company. But I don't want your emotions at the time of the offer to cloud your better business judgment. Let me ask you this: Tell me about the counteroffer that they'll make you once you give notice. If you gave notice to your boss right now, what would she say to keep you?''
This query mentally prepares the individual to deal with the counteroffer awaiting her. This way, when it comes, the candidate may say to herself, ''Oh, this is what my new company already warned me about.'' If, on the other hand, the current employer doesn't make a counteroffer, then the candidate (who, because of your prompting, is preparing for one) may feel disappointed that she wasn't pursued more aggressively. This will only reinforce her conclusion that accepting your job offer was the right thing to do all along. In either situation, your preclosing drill will have set the stage for a smooth transition out of her present company and into your organization.
Can I rescind an offer before the start date if I change my mind?
Nope! Once you've made the offer and the candidate accepts, it would be very unwise to undo your decision and rescind the offer. A legal concept known as ''wrongful failure to hire'' may result whenever an employer has promised a position, either verbally or in writing, and an applicant has relied on that promise to his detriment. In other words, if that job applicant has placed himself in a worse position by quitting his present job or by relocating and the employer fails to provide the job as promised, then a legal cause of action for wrongful failure to hire may arise.
Wrongful failure to hire is a valid legal claim even if the job in question is at-will (i.e., not for a specified period of time). In essence, the applicant's attorney will argue that the applicant is still entitled to be given the opportunity to show that she could have performed the job satisfactorily. In cases where the applicant is unemployed at the time of the employment offer, a wrongful failure to hire claim may still be sustained if an unlawful discrimination or ''detrimental reliance'' allegation is proven.
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It's critical that you cross your t's and dot your i's before extending any offers of employment. Follow these two steps before making any offers:
Step 1: Ensure that your original job requisition has the appropriate signatures from the hiring manager, budget coordinator, and senior management member (for example, the CFO).
Step 2: Ensure that your budget will allow you to make the appropriate salary offer not only from a departmental budget standpoint but also from a human resources internal equity standpoint.
In other words, it's not enough that the departmental budget will allow you to pay a senior financial analyst $50,000. You also have to ensure that (a) the $50,000 target salary is in the position's salary range and (b) the new hire will be paid appropriately relative to her peers in the department and across the company.
So what should you do if an offer is made (verbally or in writing), and you absolutely have to rescind it? After all, hiring managers sometimes make mistakes in the form of slips of the tongue, and business conditions could change in a day should a hiring freeze be announced. The simple rule is this: Openness and honesty will be your best ally when having to deliver bad news. Be prepared to hire the candidate if she insists, but try this appeal first:
You: Debbie, we made you an employment offer yesterday, but I need to talk with you about it. I m the vice president of marketing, and Travis Griffith, the director of marketing who interviewed you last week and made you the offer yesterday, misspoke. He told you that you had the job at $50,000 when in reality, we hadn't gotten budget clearance. It was an internal communication error on our part, and I assume full responsibility for the problem. I'm very sorry this happened, and I thought the best way to handle it would be to speak directly with you and share the details of the situation.
I m not telling you, Debbie, that we won t hire you. After all, one of our managers extended an offer, and you accepted it. However, I am appealing to you for your help. This position wasn't appropriately budgeted, and the reality is that we'll have to place the job on hold indefinitely until we can figure out if we can go ahead and fill the head count. Would you mind telling me your thoughts at this point? Have you given notice at your present company?
Applicant: Yes, actually I gave two weeks' notice yesterday. My boss accepted my resignation, and today I already started working on transitioning my work projects for the next person they hire to fill my job.
You: Let me ask this, Debbie. Obviously this is somewhat embarrassing for us, and I m very sorry to have to make this call to you. Did your boss know you were looking to change jobs, and has your resignation been fairly amicable?
Applicant: Yeah, everyone's been very supportive, including my boss.
You: Then let me ask you a favor: Would you be in a position to speak with your boss about the faux pas on our side and ask her to allow you to rescind your resignation? I know that's asking a lot, but I can only appeal to your goodwill at this point and hope that you'll agree to help us in this unfortunate situation.
Applicant: Wow, I can't believe this is happening. Okay, I'll ask, but my boss is going to say, ''So as soon as that job opens up, you're going to leave us for them, aren't you?'' What should I say?
You: Debbie, I can't answer that question for you. I hope that you're not so soured on our company that you wouldn't consider coming aboard once the budget approval is done. Still, I realize that we may be losing a great candidate because of our mistake, and I also recognize that you might find another position before our job is budgeted. I guess you'll have to answer that question as openly and honestly as you can.
Applicant: Okay, I ll go speak with my boss this afternoon. I can t promise anything. However, if she won't allow me to stay past my two weeks' notice, I expect that you'll keep your promise and allow me to start on January 8. Is that a fair assumption on my part?
You: Yes, Debbie, that's correct. We won't go back on our word, but please understand why I'm making this appeal to you. And again, please accept my apology. I m very sorry to have to call you with this news.
Applicant: Okay, I ll call you back once I ve spoken with my boss.
Phew! That's a tough phone call even when the candidate is as nice as Debbie was. The moral of the story is this: You really don't have the right to rescind an extended offer. Of course you can rescind an offer, but it's bad business and it subjects your company to legal challenges that you would be hard pressed to defend.
Therefore, your only solution is to appeal to the candidate with the details of the mistakes made on your part. You can hope that the current company will understand that human error was involved and allow the applicant to continue her employment. (After all, many people, including me, would indeed understand that kind of uncomfortable situation and allow the employee to continue working if no other external candidates have been identified or internal promotions announced.) If not, then keep your word! It's bad business practice and legal irresponsibility to deny employment to candidates who have relied on your offer to give notice at their present companies.
How do I compose a job offer letter?
If your company decides to make offer letters a part of your employment practice, you need to consider a few points. First, as a rule of thumb, the more information you include in the offer letter, the better. New hires are much more amenable to ''legalese'' language stipulating employment at will and mandatory arbitration than tenured employees are. Also, the more you include regarding new-hire orientation, introductory periods, and benefits availability dates, the more informed your new hires will be.
Second, it is wise to provide new hires with two original offer letters. One is for them to keep; the other should be signed and returned to your company. Again, the logic is simple: If you're planning on using the offer letter as a written confirmation of the employment-at-will relationship or of the candidate's agreement to be governed by binding arbitration, a signed letter is preferable from an evidentiary standpoint.
Third, be sure to document the salary offer in either hourly (for nonexempt workers) or weekly (for exempt employees) terms. At least one court interpreted a salary quoted on an ''annual'' basis as a promise of guaranteed wages for the entire year. When that company terminated its employee for cause, the company was on the hook for the remainder of those annual wages ''promised'' in the offer letter. Therefore, you should never stipulate more than one hour or one week of wages in your offer letter.
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There is a sample offer letter with all the bells and whistles in Appendix I. Use this as a model to structure new-hire offer letters at your company. Note that it includes compensation and benefit information, reporting status, an employment-at-will clause, an arbitration agreement, orientation information, and a reminder to bring documents to fill out Form I-9. An offer letter is one of the best places to introduce new hires to legal policies such as employment-at-will and arbitration agreements. Not only are new hires more amenable to such agreements, but placing legal information in employment agreements helps establish them as policies.