Offers

January 2006 Archive

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January 30, 2006 [Judy Cushman]

I have yet to read a good primer about how to approach an offer so that all parties come away feeling this is a great way to start the relationship. All sorts of articles are written about chemistry, values and how to keep a search on track so that you actually arrive at an end point in a timely manner. However, negotiating the offer is treated as an afterthought. This moment is one of the most critical to ensure a successful outcome of months of work.

Let’s begin at the initial phase of the courtship.

Hopefully, if either a search firm or an internal recruiter makes contact with a potential finalist, the initial discussion will describe the position and the salary range with some imprecise remarks about bonus potential, incentives, etc. At that point, the candidate should be able to indicate if the position is in his/her range. S/he might be somewhat hesitant to release total compensation information to the recruiter, but could indicate that the range is attractive or below current earnings.

This is an appropriate level of detail to be at during the early phase of the search. If, after a short discussion, it appears that the position to be filled is truly at a lesser compensation level, then the recruiter needs to immediately suggest that the candidate NOT look at the position, unless there is something the recruiter doesn’t know that could alter the situation. This puts the relationship on a totally open plane.

If the candidate wishes to proceed for what seems a good reason, the issue needs to be revisited as the finalist group is selected. Candidates can sometimes shift in their thinking and what was once their attitude toward compensation is now different. While the candidate is not THE finalist, there is a chance s/he may be.

Also I know that the natural assumption of a candidate is that he/she is eligible for the maximum compensation in the range. While the recruiter is thinking “$175K-$225K base” with the target no higher than $200K, the finalist is thinking $225, whether or not that is realistic. 

As the screening process takes this candidate up the path toward the CEO, there are several other serious contenders as well. The organization becomes narrowly focused on (generally) three candidates. It is important to have the compensation profile of each spelled out and additional concerns about the move aired. (For example, there may be special cash benefits, vesting situations, spousal compensation, housing, children and schooling needs.) 

Having this information is the foundation for a successful outcome when an offer is to be made. Do not assume the candidate is logical and professional during these negotiations. The more thorough the discussion about factors that should be considered in an offer, the better. This helps ground the candidate to look realistically at the terms of the package. As a first step,  I ask that the candidate spell out his/her total compensation picture in a confidential memo I share it with the hiring organization. If this position reports to the President, it is rare that there is an actual conversation about compensation. Generally, the Human Resource group takes over the detailed negotiation. If the position reports to a Senior VP in corporate communications, I highly recommend that s/he become involved in the compensation negotiations working together with HR. It is a good time (somewhere in the middle of the search) to reconfirm compensation ranges with the client. In some cases the number has shifted or additional observations about marketplace conditions suggest an adjustment should be made in the range.

Some organizations “play games” and regard compensation discussions as an adversarial exercise. They do not “lay their cards on the table.” They will attempt to hire an individual by finding out what the minimum figure is that s/he will take. They do not trust or delegate these negotiations to a “third party” such as their search firm.

The way they find out what the minimum figure is, is by offering a total package which is a token amount above what the individual has been earning. In some cases, when benefits are compared side by side, the offer is actually lower than the prior total earnings package.

The candidate then reacts negatively to the offer and feels disappointed, possibly insulted and begins to wonder if the potential employer really wants to hire him. S/he begins to question the culture of the organization and whether s/he would be happy there.

If our finalist is a “negotiator” and enjoys the “toe to toe” style of the organization, then this low-ball offer begins a dialog that results in confrontation, conflict and resolution, assuming the company really wants to hire him (and they generally do.).

There is an element of “bluff” on the part of the client since they do want to close the deal and they know how deep their pockets are. If this process is indicative of the way the organization does business, then the offer scenario is a true representation of the culture, and a microcosm about how it will behave going forward.

I personally cannot agree with this approach to making an offer, nor do I recommend that communications professionals chose to work in a culture where confrontation is the norm. Rather, I think the offer should come from a discussion about what the candidate wants and how well the hiring organization can adjust terms to fit the individual. (and his/her family.)

I would much prefer to have the hiring organization review the total compensation situation of the individual and take into account market conditions which are putting a premium on outstanding candidates. The company would then present an offer that demonstrates the organization has been listening to his/her needs.

Realistically, timing may be an issue. The hiring team should know if the finalist is considering any other offers and if s/he is under time pressure to make a decision. Conversely, if the company is eager to have him/her accept a position, moving quickly is essential along with limiting the amount of time the candidate can wait to accept an offer. This will put pressure on the company to move very quickly, and I do recommend speed as part of a hiring strategy in this competitive environment.

I also feel that Human Resources should discuss its recommendations with the supervisor of the new hire. If an outside recruiting firm has been involved, the search consultant can add an important perspective. If all the terms the candidate has requested cannot be met (and virtually all offers fall in that category), then the person acting as intermediary needs to provide an explanation and present the client’s perspective. After all, this is a “give and take” situation and the candidate must show some flexibility.

I do not think an initial offer should be unilaterally put on the table. That says to the candidate, “Take it or leave it.” It polarizes the situation and is premature. This can lead to bruising negotiations which start the work relationship in the wrong direction. At a time when the candidate is emotionally stretched and stressed, any hint of negativism or intransigence may push him to reject an offer simply because the negotiations were handled insensitively.

I believe the attitude should be that, “both parties want this offer to be accepted.  By the time it is presented in writing, it is a confirmation of what has been agreed to.” Having an informal go-between to suggest terms that the client feels is a good offer, starts a conversation. The candidate can then become comfortable with the framework of the offer and can think about any terms or conditions that need clarification or adjustment.

What is also positive about this approach, is that the candidate feels that s/he is being respected and valued. Having a dialog puts everyone on the same side of the equation. If this is handled correctly, the finalist should be able to accept the offer within a few days, since there is nothing new to think about. It is appropriate for the client to give the candidate a deadline for a response. This will eliminate any “shopping” on the part of the candidate and s/he will accept or reject the offer on the merits of the position (not compared to other jobs s/he is considering.)

Good luck!

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January 30, 2006  [Anonymous Contributor]

This last topic can potentially generate revenues from both hiring managers and non-JC&A candidates needing a consultant to guide them thru acceptance negotiations.  Query and expand upon what would be of value to these two demographics.

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