CEOs are constantly surprised when candidates – after months of endless courting and mutual interest – end up rejecting their offers. If you take only one thing away from this blog, let it be the following: “HOW you present the offer is as important as WHAT you present!” No matter how calm, collected, and methodical a candidate may seem, the experience is still highly emotional; and one seemingly innocent mistake by the prospective employer can cause a great candidate to drop out of the process. So how do we avoid this every time? There are some definite time tested tactics – when employed correctly – that can prevent wide candidate emotional swings, actually encourage positive ongoing negotiations, and enhance the likelihood of the candidate accepting. Having placed hundreds of C-level and VP folks, I can say from decades of experience that most of these basic “block and tackle” strategies are not followed in 50 percent or more of the cases.
Why then do so many CEOs take short cuts and go another path? The issue usually comes down to time, a reliance on internal (and frequently ineffective) HR protocols, and or a belief that someone else in the organization should prepare and make the offer. Therefore, if you are a CEO, board member, or any senior leader hiring a key report, consider this:
- All of the time and resources spent – personally and across the organization – recruiting an A-level candidate are completely wasted if you fail to bring that person on board.
- While standard HR procedures – particularly those that define how written offers are presented – make sense for 90 percent of hires, senior leadership roles require a change in strategy.
- Recruiting away spectacular C-level executives from strong incumbents is a highly personal business and demands a highly personal offer process.
Remember, the offer is a process and not a product! Recognizing this important fact, here are some of our best practices for closing VP and C-Level candidates. Ignore them and your closing rates will almost certainly plummet. Like many things in life, these may seem simple in theory, but fail with execution:
- Stack the deck well before the offer is ever made. Understanding all of the candidate’s decision factors upfront requires tons of probing. The candidates will not tell you everything, and what is omitted almost always rears its head at offer time. For example, what is the “floor” on comp structure that will definitely kill the deal? What issues are of greatest concern to your spouse? How important is time-family balance? How does this opportunity fit into the candidate’s long term growth plan? Often it will take multiple interviews with different team members to accurate identify these issues. Additionally, a good recruiter should be able to help surface some of the deeper, unexpressed concerns. We typically start with a minimum of 10 factors to flush out, although others may arise. The key is to address all vulnerabilities up front and proactively start working on solutions early on in the process. Once these critical issues are raised, it’s imperative that the candidate then prioritize or rank his/her key decision factors for you. This information will give the CEO an opportunity to structure an offer that places emphasis on meeting the candidate’s largest priorities in order of importance.
- Customize the offer around ranked priorities. Many companies simply prepare the offer from a standard template, stating job responsibilities, expectations, comp, legal, and a host of other policy and compliance points. However, the offer is a component of your sales process, and, like any good proposal, it should clearly align every benefit to the candidate’s pre-expressed decision factors. This can be done within the offer document itself or as a cover letter with bullet points. It’s imperative that you outline the candidate’s key objectives/goals in considering the opportunity, as well as his/her current concerns, and demonstrate that you have proactively put together a plan that addresses these specific needs.
Hence, if the candidate has told you – after considerable probing – that his/her long term goal is to generate as much cash comp as possible, you can then lead with: “We’ve created a unique variable comp structure that would allow you a total OTE 50% greater than what you can realize in your current position. Although your base may be slightly below what you were hoping for, this structure allows you to significantly exceed your highest cash comp targets. We got approval to structure the plan this way based on your specific feedback that long-term “total” cash comp was the most important decision factor for you, even more so than guaranteed income.”
This positioning does the following: a) Lets the candidate know that you are providing exactly what he/she asked for in order of importance (candidates understand that they can’t always get everything wanted), 2) flushes out whether high cash comp – at the expense of a lower expected base – is really the issue, and 3) demonstrates that your organization/culture listens to its employees’ needs and tries to accommodate when possible. Now, the candidate may change his/her mind with respect to priorities, but that gives you the ability to frame the narrative: “We designed this based on what you told us were your most important priorities. If those are different, then we can restructure things accordingly; however, we were trying to be creative and follow your expressed ideal blueprint.” With this tactic, you are putting any mismatches (or perceived disappointments) back in the hands of the candidate to redefine. But, most important, this process keeps the opportunity for dialog OPEN without either party losing face.
- Know who you have to “sell” first. Never fall for the fallacy that the candidate is making the decision solo. There are usually other influencers, and convincing a spouse, for example, is often as important as selling the candidate. Of course, you aren’t interviewing the spouse, and in some cases you may never even meet him or her until later. So really probing for spousal issues/concerns is critical before establishing final terms. There’s no point in presenting something that has to be re-negotiated extensively for spousal buy-in. If you, your Talent team, or recruiter can identify these issues prior, then you have an opportunity to engage the other influencers and sell them on the benefits of the offer. Very often, companies never discover these issues until far too late, and, by that time, the bloom is off the rose.
- Never, ever, present the offer in writing before getting verbal acceptance on ALL terms. Perhaps the greatest mistake employers make is to submit a written offer before the candidate (and his/her spouse) has reviewed and verbally accepted all of the terms. Here are some absolutely critical things to consider:
- Offers should be made by the reporting manager directly (the candidate’s future boss) and ALWAYS delivered verbally and in-person. If distance or scheduling makes that impossible, then do so by phone, but never fax or email. The hiring manager needs to be able to read the candidate’s reaction to the offer – verbal, non-verbal, physical movement, expressions, and so forth. This sets the stage for future communication between the two parties if the employee accepts.
- Verbal presentations give you a freebie to “test the waters” without the permanence of a written offer. The process allows ongoing dialog – as if both of you are brainstorming together – around an optimal structure to bring the candidate on board. Candidates assign a mental notation with written offers (rightly or wrongly) that terms are close to final. If the written terms are radically off candidate expectations (which frequently happens), the emotional let-down can be hard to overcome. Candidates can easily feel that they wasted their time, that their future employer doesn’t listen, or that their potential value is being underestimated. In either case, it can be a deal killer.
- A verbal offer gives ample time for other influencers (like a spouse) to buy in or reject the proposal, giving you an opportunity to restructure “the deal” without looking weak to the CEO or board. Going back to the well with multiple written offers can create the impression that the hiring manager can’t seem to identify critical issues or build a successful transparent relationship with the candidate. Either way, it never looks good.
- You prevent a written offer from getting in the hands of the incumbent employer and used as leverage for a counter offer.
Once the candidate verbally agrees to all of the terms, then – and only then – do you submit a written offer. Signing now becomes a forgone conclusion (a “rubber stamp”), and an opportunity for the candidate to pitch one employer against another, or self-select out of the process based on incompatible terms, is avoided. Following this formula every time insures a high closing rate, while preventing the emotional pitfall and “expectation shock” that often (an unnecessarily) tanks a great hire.