5 Common Mistakes Companies Make When Extending a Job Offer

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After a long search, finding the right candidate can feel like the light at the end of the tunnel. While many hiring managers may think that the hard work is behind them, extending and negotiating the job offer can often be the most important step in the process.

Even with a mutual interest between the company and potential employee, a job offer can go awry. While an offer can be used as an opportunity for companies to motivate and excite a new employee, there are many common mistakes that companies make that can kick things off to a less-than-appealing start.

Here are the five common mistakes companies make when extending a job offer

Offering the bare minimum

Although some candidates will share minimum salary expectations with potential employers and recruiters, companies should avoid offering the lowest possible number. In today’s job market, candidates have many choices and are difficult to retain. A 2016 survey in the BlueSteps Executive Job Outlook Report said that 90.2% of the management-level professionals surveyed would be interested in hearing about different job opportunities this year.

“Candidates have access to salary and market data now more than ever before,” said Christine Walsh, Director of Talent, Engagement & Development at Nielsen “In my experience when organizations try to save a few thousand dollars in salary, they end up spending more in future attrition costs as the new hire is likely to leave when he/she finds a job that pays the appropriate market value.”

Instead, companies can use the job offer as a way to motivate and excite candidates about a future with the company. Even the smallest tweaks to a candidate’s offer can make a difference. For example, offering a candidate $100,000 instead of $98,000 is a small difference in cost, but can have a huge psychological impact. This six-figure income will make a candidate feel he/she has achieved a career milestone and will feel more desired and valued at the company.

Paying based on past job history

Although it can be tempting to create an offer based on a candidate’s previous salary, it’s important to factor in the responsibilities of the job first.

“Some organizations use a candidate’s previous salary as a starting point for the salary offer,” Walsh went on to say. “This strategy can be ineffective since it is likely that the new job responsibilities and qualifications are different than that of the candidate’s previous position.  If an organization feels a candidate is capable of doing the job, they should pay him/her appropriately regardless of the last salary.”

Even when considering past salary, there may be instances when a candidate felt underpaid in the past. It’s important to evaluate the role and performance the company expects from the candidate and make an offer based on the candidate’s value to the company.

Ignoring the “All-In” Value

Just a decade ago, benefits were rarely discussed in job interviews. Candidates were far more concerned with negotiating a higher salary than worrying about health benefits, vacation time and other company perks. Today, employees are much more likely to evaluate the “all in” number of an offer to ensure the career move is worthwhile.

The “all in” number is made up of base salary, health benefits, bonuses, 401k, paid vacation time, and any other perks of the job. While a company may extend an offer for a 10% increase in salary, if the health benefits are more expensive, it may cancel out the excitement of the higher paycheck.

Leaving a Waiting Period After the Final Interview

Communication and transparency is key to the success of any hiring process. After all, the process will show the candidate a window into the company’s culture. When companies wait too long after the final interviews to make a decision, it can make all candidates, including your top choice, feel like second best.  He/She may assume that you have already extended an offer to someone else.

Keeping active communication between you and candidate will make the potential employee feel desired and important, helping to maintain the excitement and momentum in the process.

Skipping the Call

Although there are many ways to communicate with candidates throughout the interview process, the offer should always be made via phone call. A face-to-face meeting or phone call will allow the company to gauge the candidate’s excitement, while also displaying their interest in the potential employee.

After the initial offer, companies should then send the offer letter through email so details can be presented and recorded. The letter should cover the “all in” number, performance expectations, supervisor details, as well as any other details about the company culture.

This process will create more excitement around the offer and will help to create a positive long-term relationship between the company and new employee.

The Purple Squirrel Take

Even when there’s limited budget to negotiate salary, there are easy ways to sweeten the deal and “wow” a candidate. Adding extra vacation time or offering a sign-on bonus can help a candidate feel desired and valued. Many candidates will consider the “all in” value of the offer instead of just looking at the base salary when deciding on a new position.

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