Friday, March 14, 2014

Hold back the offer letter

Paco gets his high school application replies today. Some schools also send emails and I was asking the boys what they thought would work better: to be the first school to reply or the last. Their initial reaction was that it wouldn't make a difference. I told them that I thought it would, but I didn't know what would work better. This got us talking about A/B testing. It also got me thinking about offer letters in competitive situations (where the candidate has multiple attractive choices).

I explained to the boys that I don't simply give candidates an offer letter that they can take, maybe shop around, and ponder upon. Instead, once I am ready to hire someone, I ask them if they are ready to join. If they are, I negotiate their compensation package, get them to agree, and only then give them the offer letter to sign on the spot. If, they are not ready to join, I find out what is holding them back, and try to address it before giving them an offer letter. If the candidate wants time to think about the offer, maybe discuss with their spouse, I give them the info they need, but not an actual printed offer letter - nor necessarily a final best offer. The problem with simply giving an offer letter is that you allow another company to give them a better one. To have the "last word". You want to be in that position.

High schools don't negotiate, but colleges do. I've heard of colleges that offer applicants they are trying to recruit better scholarships than the ones other schools are offering them. They can only do this if the have the last word.

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