February 1998

Based on responses to the January letter discussing the intensity of work and the increasing pace required just to stay even, I think I hit a nerve. Many of us are questioning how we will reorder our professional lives to feel more in control about the quality and quantity of our work. We feel indispensable until we are forced to drop out due to unforeseen crises. Surprisingly, the organization muddles through without us -- which is an important lesson in setting priorities.

We somehow feel we can't walk away or just say no when a deadline is pressing. However, I sense we will see more flat out refusals (to do work) that will be met with shock and, ultimately, acceptance. The reason is simple -- there aren't many good people to be found in the wings ready to jump in and take over. Employers are learning the hard way about long lead times to find quality replacements, and are being forced to accede to staff demands. This is a hard lesson and until employers have lived through the pain -- repeated through several searches -- I don't expect they will adjust well to this new paradigm.

That brings me to the subject of this letter, which is all about the shift in power from the employer to the job seeker and how that has changed the offer process. I touched on this change last month, and one glaring statistic brings home the challenge. In the end of year flurry to close searches (that slipped into January), less than half of the offers extended were accepted. Two years ago, the expectation was entirely different. When we began a search, the intense work effort happened in the earlier phases. By the time the finalist was selected, my work was almost done. After minor behind the scenes negotiations to tweak the numbers or to explain a few details, an offer was presented and, in 90% of the cases, accepted. It was a rare exception when a candidate hesitated, rejected the package, or took a counter offer from his/her current employer.

Bringing a search to a successful conclusion today has become an entirely different effort and requires as much work at the offer stage as in the other time-consuming phases. For both the client (hiring organization) and job seeker, the pre-preparation and research involved to make a competitive offer and to evaluate it are complex and exhausting. Frankly, neither party is doing his/her homework well.

In these demanding times, both employer and job seeker must be crystal clear about their goals and expectations. An employer must know the absolute maximum compensation that can be squeezed from the budget, and not wait until the end of the hiring cycle to discover that there is a real gap between the candidate's minimum figure (especially if there is a relocation) and the total cash/compensation package that is available. Sounds pretty basic doesn't it -- but in one corporate hiring situation, two finalists, in sequence, rejected offers they could not afford to take. The key element in both cases was the cost of relocation and housing.

Another basic question that every semi-finalist should ask himself and be able to answer is, "IF THE MONEY IS NOT AN ISSUE, DO I WANT THE JOB?" Again, this sounds pretty basic, but many finalists are considering several opportunities and instead of asking the hard questions, they are saying, "I'll wait to see what the offer looks like before I really spend time seriously considering the position." Wrong! The focus then becomes "winning" the offer rather than preparing to accept or reject the opportunity. Money should not be a deciding factor -- this is putting the cart before the horse. If the job is exciting and the fit "feels" right, then that should be the driver in the decision making process. Negotiating an offer becomes so much easier if all parties feel and say that they truly want it to conclude successfully -- which brings me to a critical point about the offer process.

An offer should be a collaborative process -- not a tug between two opposing factions. Think about how basic that is and how differently most organizations think about offers. In many companies the attitude is, "what is the minimum figure I can offer." Candidates, for their part, think "what is my maximum worth on the market." In today’s environment where top-notch finalists are considering several offers, the adversarial approach sets up a bidding war.

If both client and candidate enter into good faith negotiations after determining that both parties want to succeed, then the active participation and sharing of information to put a good package together almost guarantees the desired outcome. The client is listening to the candidate and the candidate feels he/she is being treated with respect. The client creates a negotiating environment so that he/she can express concerns should the finalist request a package that may be difficult to provide. This scenario requires in-depth preparation and shared information.

I'll provide a detailed checklist below, however, the key elements that must be spelled out by the company relate to: cash compensation in the form of salary (what is the actual range?), sign-on bonus, end of year bonus or other cash/stock awards, relocation policy including reimbursement for temporary housing, and cash relocation stipend (if any).

The candidate should state in writing what his/her actual compensation is, list housing and other considerations with bottom line impact (e.g. we will not relocate the family immediately and would temporarily maintain a home and an apartment). He/she should also mention if a raise is expected very shortly, since that would affect earnings figures. On a preliminary basis, the candidate should have a rough idea of his/her housing situation, e.g. "I'm in a low cost of living area and my house would be worth ‘X’ (an estimate)."

Given how difficult negotiations have become, I've jumped in as a participant to listen to candidate requests and bring them to the attention of my clients. I also represent the client viewpoint to the candidate and attempt to clarify salary ranges (e.g. the client cannot extend an offer above the mid point of the range), limitations, and explore whether there are any issues preventing a successful conclusion. Oftentimes, money is given as a reason why an offer was rejected, when actually that’s only a cover-up or an easy way not to address the real issues.

In some instances, after listening to candidates and their financial considerations, I have asked clients not to extend offers they planned to make, saying that candidates would reject them. While speed is important in certain situations, rushing an offer can be a mistake. Meeting candidate and market expectations sometimes requires difficult internal adjustments that simply can't be made quickly. It is better to slow the outcome and put the best possible offer on the table rather than disappoint a finalist at this delicate stage.

The candidate also has homework to do. He/she should accept or reject an offer roughly within a week. If adjustments need to be made, he/she should be ready to move ahead with specific figures in mind. For example, if relocation is involved, there should be a solid understanding of differentials between the two markets. If the client has not adequately factored in all the relocation costs, then the candidate should be prepared to spell out his/her needs so that the client gains an understanding of how these numbers were derived. With only a week for decision making, this information should be gathered in advance and be available to present immediately.

Of course, family considerations should be discussed at the outset. If there are dual incomes, how does that impact the move? If children are involved, how do they feel about the change? Is everyone on-board with the move? Are there any extended-family considerations that remain unresolved (e.g. aging parents)? Are any family trips to the client location needed before a final decision is made?

Here is a checklist for both clients and candidates to use as they reach the offer stage:

FOR JOB SEEKERS:

Current annualized base salary, date/amount of last raise, when is next review? If soon, estimated range of increase.

Stock options/awards -- from last year, anticipated this year, value last year, estimated this year.

Bonus programs -- last year, this year

Stock purchase plans

401K programs/approximate value/company contribution?

Savings plans, percentage that is company contribution

Retirement plans

Vesting policy (immediately, percentage each year, 5-year wait?)

Health plan -- personal contribution/individual vs. family/deductible, what is included -- visual, dental/orthodontic, psychological

Vacation time (2-4 weeks, company closed between Christmas/New Years?)

Education policy (MBA) – will the company pay for a degree program?

Special stock considerations/pre-IPO shares/estimated value/date? for IPO

Benefits lost by leaving within 90-days/stock not vested?

Spouse/income considerations

Childcare considerations/costs

Vehicle/considerations/company lease?/purchase or additional one needed

Housing Issues: current estimated value, equity in home, speed of market (how fast is housing moving)/size of property/distance from work

Web Site: http://homefair.com/home/ -- Research cost of housing in other markets

Estimated monthly payments to move into comparable housing/estimated income to carry mortgage

FOR THE HIRING ORGANIZATION:

Maximum salary in the range

Bonus Program/range of award/history of payment/is it based on overall company performance and individual contribution?

Sign-on Bonus

Relocation allowance (cash for out-of-pocket costs)

Relocation Program/cash lump sum or reimbursement for itemized expenses/ what does that include?

Housing benefits-bridge loans, fees paid, realtor services, purchase of former home

Stock plans/waiting time

Special stock awards (pre-IPO)

401K, eligibility

Vesting/retirement programs

Company savings plans/company contribution

Health care program (and waiting time, policy on pre-existing conditions) -- what is included?

Vacation policy (can new employee take unpaid leave in lieu of paid extra week of vacation) 2-4 weeks

Vehicle policy/leased vehicle

Health club/club memberships

Salary review policy, e.g. 6-month with potential for raise

Spouse relocation/assistance program

Temporary housing program (while family stays behind)

Travel program during transition (if relocation is involved)

Print out these lists and start planning for a successful negotiating process. Let me know if you have any other items to add. Good luck.

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