A lot of hiring resources make “making an offer” sound like the simplest part of the process. In some ways it is—from the employer’s perspective. After all, you have already done the work of defining the job, examining your budget, advertising the opening, interviewing candidates, assessing their relative strengths and weaknesses, and winnowing down the pool to your very top choice.
But you’re not done yet, not by a long shot, and that’s because the money end of things is likely still up in the air.
Even when you know who you want to hire, and you’re certain (or reasonably so) that the candidate wants to work for you, the amount and type of compensation offered can make the difference between a long, productive employment relationship and “Thanks, but no thanks.”
Here’s what I recommend:
- Talk with the candidate about the compensation you plan to offer prior to making a formal written offer. Like it or not, unless the candidate is independently wealthy, compensation is one of the most important factors—especially if he or she has multiple job offers to choose from. And you want to be sure, prior to making a formal offer, that it will be accepted.
- Make a strong initial offer. How much should you offer? It should be an amount the candidate can not only accept, but feel really good about. Lowballing a candidate will leave a bad taste in the person’s mouth. Top performers, in particular, know their market worth and resent being asked to work for cheap. While there is always room for negotiation on both sides after the initial offer is made, an extreme lowball offer can quickly sour the relationship beyond repair.
- Don’t play hardball. While we’re on the topic of negotiating, you don’t ever want to be in the position of negotiating tooth and nail with a candidate, as if you’re on opposing sides of a nasty lawsuit. You are ultimately looking to bring this person onto your team. Again, the relationship will be damaged if you go about the negotiations with an aggressive, winner-take-all attitude. Memories are long, and it simply does not make sense to play hardball over relatively trivial issues.
- Round up. When presenting your offer, round up to the nearest $10,000 mark. “$200,000” feels and sounds a whole lot better than “$198,700.”
- Consider total compensation. Don’t forget to discuss stock options, company perks and benefits, bonus and/or variable compensation potential, profit-sharing, merit increases, and the like. Oftentimes, these add considerable value (both monetary and psychological) beyond the base salary and should not be overlooked. If stock is involved, talk about the number of shares that will be offered, the vesting schedule, and how often new options or shares of restricted stock are issued.
- Listen to the candidate. Last but certainly not least, if the candidate rejects your initial offer—or seems less than fully on board with it—try to find out the real sticking point. It may be something that can be remedied relatively easily (and, if not, best to know this now rather than after making your formal written offer—or, worse still, after the candidate halfheartedly starts working for you).