Job offer construction is one of the elements in a headhunting process where the headhunter can add a lot of value. This is by its nature a sensitive time for all parties in an offer process; the candidate has often been through an intensive interview process and wants to close the deal, but is fearful of getting a low job offer. The client wants to close the candidate but is worried about them being too expensive and may have budgetary constraints. It’s the headhunters role to sit in the middle of this and try to work out a deal. But how can you approach doing that?
A good initial approach is to make sure the hiring company knows exactly how much the candidate is paid today. The headhunter will normally ask the candidate at interview stage how much they are paid, but often nuance is missed around long term incentive plans and company benefits – and you need this detail at offer stage. Prior to making the candidate a job offer, it’s a good idea to send them a form which captures all the details of their current compensation. Without that, the risk of a rejected, “low-ball” offer is much higher.
It’s very natural for candidates to want more money to change roles, as people want to feel that they are always progressing upwards from a compensation perspective, particularly when they reach key career milestones like an exciting new role. Companies should, within reason, offer candidates pay rises when they can, but this isn’t always possible.
Early stage companies are often cash-constrained – many of them may not make a profit and be reliant on venture capital or private equity funding. These sorts of companies often can’t afford to give candidates rises in salary. In this scenario, are there other things like equity you can offer the candidate in lieu of more salary? It’s also important to make sure that the candidate knows of these constraints – most people are quite reasonable when they know the reality of what is possible and what is not, but if you don’t set the right expectations, an offer that is equal or lower than their current compensation is quite likely to be rejected.
The headhunter’s role is so valuable here in that they can have honest conversations with both the candidate and prospective employer to hammer out a deal. If the candidate and client were talking directly to negotiate the job offer, both parties would worry about being too honest and offending the other. Recruitment processes are like a romance, and whilst practical details like offer dimensions are very important, they can sometimes take the romance out of the situation. Furthermore, if either party finds it hard to be honest with one another, the chances of negotiating a deal that is satisfactory to everyone is much diminished.
Armed with the candidate’s current compensation in detail, and a sense of their expectations from the headhunter, it’s then the hiring company’s job to put together an initial job offer. This will usually be communicated to the candidate through the headhunter.
Should this first offer be the best job offer or leave room for negotiation? There is no easy answer to this question as both approaches have pros and cons. Making your best offer first tells the candidate you want them and aren’t playing negotiation games. It gives you the best chance of getting a “yes” back straight away. However, some candidates will negotiate all first offers out of principle, and will feel better about the commercial deal if they feel that they have negotiated a stronger deal for themselves. An initial offer that is 5-10% lower than your highest offer leaves wiggle room for such a negotiation. Which approach to go for depends a lot on the context of the offer, and the nature of the candidate involved.
When it comes to job offer negotiations, the headhunter’s role is to sit in the middle and without being biased to either party, have direct conversations with both to determine an appropriate financial package for all. The headhunter needs to make sure that both client and candidate understand each other’s constraints, empathizing with and understanding each other’s positions. The headhunter has a huge financial interest in closing the deal (and the project) and the best way to do that is to act fairly and impartially between client and candidate.
Once verbal terms have been agreed, the hiring company needs to put together the paperwork and further references may need to be completed. Thankfully, as important as the formal paperwork is, it’s very rare for deals not to happen once a package is verbally agreed.