by Dave Clough
One obvious concern is that the person with the variable compensation now becomes keenly aware of what adds money to the paycheck, so “doing the right thing” for the company as a whole may not be in the person’s personal financial interest.
The tricky part about compensation is to be aware of what motivates the person. Personal Assessments give an indication of what is important to the individual. If the person is risk averse, then benefits might be more important to them. If the person wants to be seen as successful, then public recognition or a fancy title may be more important than a higher salary.
If the business is small, there is more leeway for compensation variation, and maybe less flexibility on total compensation package. Non-standard compensation becomes unwieldy as the company gets bigger, but consider what motivates the individual to help the company grow when it is small.
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The tricky part about compensation is to be aware of what motivates the person. If the business is small, there is more leeway for compensation variation.
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Small businesses may not be able to compete with larger businesses when it comes to compensation and benefits. But small businesses do offer other intangibles, such as flexibility in work hours that allow people to spend time with children or elderly family. Working from home (or other remote locations like shared office space) is often an added benefit for solo workers.
Small businesses also give employees access to the ultimate decision makers without having to go through the “chain of command” that is required in corporations and other large organizations. They can often offer a larger job scope that provides more variety and a more impressive title. Small businesses have to recognize that these are advantages over larger companies for many people. Uncovering the perks that are important to the prospect is essential in making a successful offer.
It could be that the offer is not for a full time position. Depending on your company policy on benefit eligibility, making the position, say, 32 hours per week could be exactly what the candidate wants. Then you have to determine if that works for the company. Does that mean taking Fridays or Wednesdays off, or does it mean two half days, or maybe 6 ¼ hours a day? Look for the Win/Win agreement that works for both sides.
When an offer is given, the hiring manger should have a good idea that it will be accepted. The salary requirements and other NEEDS should have been uncovered and explored before the offer is given.
Other needs could include:
Insurance and other benefits
Vacation already scheduled
A week of unpaid vacation because 2 weeks off just isn’t enough
Upcoming Paternity leave
Times when the candidate cannot work
Work/life balance – whatever that is for the candidate
Family time
Time for themselves
Time to volunteer
Any relocation expenses that the candidate cannot absorb to take the job
Other short-term transition-related expenses or concerns.
Now let’s consider a more strategic and less traditional way to determine what the applicant needs to decide to come to your company, and stay long term.
Ask yourself, “Why would an A-player come to your company?” For most it is not the compensation – it is whether the work is motivating or not. What motivates each candidate will be different, and you need to know that the position and compensation will motivate her before you make an offer.
The vast majority (>80%) of people change jobs for a significant career move, while a much smaller number (<20%) make lateral moves. A significant career move does not necessarily mean “for money.”
There are three things that will get people to move other than money:
Does the job stretch their abilities?
Will job satisfaction be higher?
Will there be more job growth than the current job?
If the person can easily answer yes to two or more of these, then compensation will not be an issue as long as it is fair.
How do you know if the offer will be accepted?
If the interviews were conducted properly, the candidate should be champing at the bit to get an offer and accept it. If the job is a great fit, there is a positive career move, the conversations with the interviewers were positive, the company is a great fit, you have built a good rapport as the hiring manager, and the compensation is on par or better, you should be able to close the candidate.
If you don’t know for certain that your offer will be accepted, then you have missed some steps in the earlier stages.
Some people will tell you that they have a feeling that the offer will be accepted, but how do you know (back to the discussion on trusting your gut)? I recommend that you ASK.
This was discussed at the end of the second interview. This is the second part of the trial lawyer analogy. I mentioned that trial lawyers shouldn’t ask questions of witnesses on the stand where the answer isn’t already known. If there is a surprise at this point, something has changed. In the TV or Movie drama, the opposing party typically made threats that changed the story of the witness.
In making an offer, it is usually nothing quite so nefarious. In most cases something has happened in the candidate’s personal life, or another job offer has been presented. Keep tabs on your top candidates throughout the process.
After the roundtable you should know who your first choice is. I would approach that candidate and tell her that it is looking like you are going to give her an offer, but you still need to gather more data (the reference checking and any other background checks and tests that you require).
At that time, I would say, “If we did offer you a job, would you accept it?” I know that she has no concrete data on the offer, but she should know all about the benefits by now, and she may have done her homework enough to know what a typical employee in that same position would make.
In Massachusetts starting in 2018, you can’t ask about the candidate’s current salary. The “Equal Pay Law” makes that illegal. You can only ask for the person’s salary requirements. Other states may follow, so check your local laws.
In the movie The Firm, Tom Cruise’s character, Mitch McDeere, had to figure out what his offer was without opening the envelope. He had to ask questions to figure it out, but they never told him and he brought the envelope home, unopened, knowing what is contained.
Your candidate can know what you might offer before you offer it. If she does not say immediately that she would take it, ask her what she’d want the offer letter to say. Or, you could take the approach of “on a scale of 1-10, how likely are you to take our offer?” If the number is not 8 or above, keep digging.
It might not be about the pay. No amount of money will be able to compensate for a job that does not motivate an applicant. I know that this isn’t always easy to bring up (or get a straight answer) because it is not what the candidate expects.
Once you give the offer in writing, you’ve lost control of the negotiation. If you don’t get this right, the negotiation may just be starting.
In big companies, an offer packet needs to be created for signoff at upper levels. It needs to include the total compensation with benefits, relocation and signing bonus, if applicable. It needs the resume, cover letter, and anything that came out during the interview. It needs an Equal Employment Opportunity (EEO) form, and the Assessment if one is given. The reference checks and another other testing results need to be in the packet. Then it needs to get signatures from HR, Finance and at least one or two managers.
Why would you want to go through all of that if you didn’t know that the offer would be accepted? What if the candidate is just trying to get a raise at his current job, or looking to negotiate a higher price on another job offer? Unless you can make an offer like the one The Firm gave to Mitch (Mercedes-Benz, low interest mortgage and 10% above any other offer), you don’t know that the candidate will accept it.
If you are worri
ed about offering too much and throwing off your compensation structure, consider a “signing bonus.” This is a one-time deal sweetener that won’t come back to haunt you every year. Even in times when the hiring market was not very competitive, I typically gave a small signing bonus because it was unexpected, was very meaningful to the candidate, and helped ensure a motivated new hire.
If you finally get all of the information you need and propose a win/win acceptable offer, you won’t have to worry about the candidate waiting for another offer or surprisingly not showing up on day 1. Then again, you always have to worry about the latter – more on that in the next chapter.
Vocalizing the offer always seems to be a bit awkward. You hope the candidate is excited about the offer, and she is hoping that the offer is good. I always liked to give the offer face-to-face to see the person’s reaction.
You should discuss how the company is doing and how future coworkers are looking forward to having the position filled, etc. If you are getting nods as you speak, the candidate might be ready for the offer. To transition into that discussion, use language like, “We’ve interviewed [X number of] candidates and some were very good. The hiring team agrees with me that we should offer you the job. We think you will fit in well, add to our culture and have the opportunity to grow professionally. So I’ve got an offer here that I think you will be happy with.”
Ask if she can accept the offer on the spot. If it is accepted, GREAT! You’ve done a great job to get a candidate that fits.
Whether it is accepted or not, you still need to take the steps in the next chapter.
Summary & Action Items
When an offer is given, the hiring manger should have a good idea that it will be accepted. The salary requirements and other NEEDS should have been uncovered and explored before the offer is given.
Other needs could include:
Insurance and other benefits
Vacation already scheduled
Upcoming familial leave
Times when the candidate cannot work
Work/life balance – whatever that is for the candidate
Family time
Time for themselves
Time to volunteer
Any relocation expenses that the candidate will absorb to take the job
Chapter 17: Post Offer
Congratulations, you’ve followed an effective process to get the right candidates into interviews, interviewed well, checked all the data you can find on the candidate, made an offer, and it was accepted. You should feel good about yourself - you are done, right? Wrong. You are not done until the candidate shows up for work and gets through Day 1.
We’ve seen situations where a candidate will verbally accept a job offer, then change her mind the next day. You then have to re-open the job listing, start sourcing candidates and start the whole process over again. The steps below will outline how to prevent this. It may appear to be over the top, but I can tell you that it works!
We’ve been in a market that is candidate friendly for a while, and if you make an offer to the perfect candidate, you need to ensure that she will show up. Here’s how to make sure she comes aboard (substitute parent/significant other for spouse if appropriate):
Make an offer that the candidate will happily accept. Make sure the position provides an opportunity for professional development. It may also include an unexpected bonus just to get the candidate excited about the job. Tell her that you fought for more incentives, as another way to motivate her.
Make it stick – Ask her, "Is this decision yours alone? Does anyone else have a say in this decision?" Even if she says no, ask, “What will your spouse think of this decision? Will your spouse be fully supportive?” If there is hesitation, you don’t have a deal yet.
If #2 is not a solid answer, walk the candidate through this process. The following may sound too direct, so make it less confrontational and just part of the conversation:
"What will your spouse say?"
"Why are you accepting this offer? Is it a better opportunity than your current job? Be ready to tell your spouse why this job is a better fit. Do you think the reasons are convincing? Why is this transition good for your spouse?"
Is there anyone else who will influence this decision? Walk through b. again for this person.
Leaving is hard – "When you give your notice for your current position, what reaction do you expect?"
"Will they be happy for you?"
"Will they want you to stay more than 2 weeks?"
"Will they be unhappy and walk you to the door?"
"Will they counter-offer with, 'What will it take for you to stay?’” (This question will expose whether you are being used to get a raise at the current position.)
"If they do, what will you do?"
"If you decide to stay,
do you think your wanting to leave will shake the trust they have in you? If so, do you think that may put a target on your back?"
"Will the reasons that you want to leave now change? Will you want to leave only a few months from now when nothing really changes?"
I recommend that you go in and tell them, “I’m giving my notice today. I’ve given this a lot of thought, and this is an opportunity that is great for me. I’ve fully considered this and my mind is made up.”
If they push further, tell them, “There is nothing you can say that will convince me to stay. I am excited for the transition and so is my family. Please don’t try to jump through hoops to keep me. It may be flattering to me, but the basic reasons for leaving will not change.”
The candidate is saving them all the work that it would take to counter offer.
PHB Tip: By the way, if the old company counter offers, the candidate will look to you to sweeten the deal. Nip that in the bud. That is why you tell them up front that you fought for them and gave them a very good, motivating offer. She is less likely to come back asking for more if she feels you’ve already fought for her.
If she rejected the counter offer, more bad feelings would result. Terms like ungrateful and manipulative may be used.
Test the eagerness of the candidate – “Would you like some pre-work that you can do before you arrive to ensure you hit the ground running?”
If she answers yes, you should feel pretty good that she will show up.
If she answers no, pause and let her fill in the dead air. She’ll either reconsider or answer why she will not have time to look at it before she starts.
Either way, this question can give you more certainty depending on the answer.
To really seal the deal, send flowers (or something the spouse might like) to the house with a note, “Welcome to our family. We’ll be even better with you on the team.”
If there was any doubt in her mind, her guilt and/or her spouse's will prevent any reconsideration.
This gives the spouse confidence that the new company cares and that the right choice was made.
An alternative (or supplement) would be to send some company clothing that can help them envision being part of the team.
And you thought you were done when you gave an offer!
Follow this process, and your perfect hire will show up eager to contribute immediately.
Summary & Action Items
Make an offer that the candidate will happily accept.
Now ask – "Is this decision yours alone? Does anyone else have a say in this decision?"
If #2 is not a solid answer, walk the candidate through the process outlined in this chapter.
Offer to First Day flowchart:
Give the offer
Was it accepted immediately?
YES – Make it stick and coach
NO – How will the decision be made?
Are you happy with the decision process?
YES – Coach and give tips
NO – Walk through the steps, role play and coach
How and when will you give your notice?
(Confident in answer?)
YES –
Get commitment and seal the deal
NO – How and when will you give your notice?
Chapter 18: Onboarding
Now that you’ve hired the best value candidate and an A-player, how do you keep her excited about the opportunity? She has made the decision to leave where she was to join your company, and likely is expecting this change to be a great career move.