The Biggest Mistake You Can Make When Making a Job Offer

Sep 25, 2023

Think about the last time you hired someone. How’d the negotiation go, and was it uncomfortable at all? Did you feel like you came out on top, or did they take the win?

If you’re hiring right, this question might not make any sense. It shouldn’t be possible for one party to succeed at the cost of the other. Instead, a job offer should be a win-win scenario. It can be easy to think that a very good deal on a new hire is a ‘win’, but actually it comes at the cost of long-term consequences. Hiring can often fall into the trap of being transactional, but offering a salary that is lower than what the market bears is potentially one of the biggest mistakes you can make when hiring talent.

Making an offer does not have to be a negotiation. You’re not buying a car, trying to get a good deal. You’re investing in the sustained success of your business. You’re hiring a person who you want to produce for/with you. Socializing compensation details prior to making an offer can also reduce any surprises at the finish line. The goal is to make an offer that will be accepted without question or hesitation so forethought and planning the offer discussion is important.

In making a job offer, you’re essentially showing a candidate how much you value them as an addition to your team. This is a critical opportunity to demonstrate that your organization puts its people first, and will always act with their best interests at heart.

On this note, pay transparency laws are ramping up. In eight states it is already legally required for employers to disclose salary ranges across all positions. In other words, this information is currently available to 25% of the workforce, a number that is soon expected to rise to roughly 50% as 16 other states are considering passing similar laws. While many organizations are fearful of the impact these laws might have on their business, studies actually show an expected increase in talent retention as a result.

Whether these laws affect your state or not, candidates know when the offer is lower than expected. It can be tempting to think that making a low-end offer is a cost-cutting tactic, but it actually tends to cost more in the long run. Hiring a candidate for less than their worth has many costly consequences.

Undermines employee satisfaction

Employees who come into work feeling appreciated, indispensable, and well taken care of are going to bring a lot more to the table. Studies have shown that happy employees are significantly (20%) more productive than their less satisfied counterparts. A new hire’s initial mindset is a clear baseline which will inform their satisfaction levels throughout their time on the job.

Reduces engagement levels

Employee engagement is one of the greatest indicators of an organization’s long-term sustainability. When your team is genuinely invested in their work, they naturally perform better. Employee engagement is also a clear indicator of company culture – a factor that is increasingly dictating businesses’ futures. Hiring a candidate with an attractive offer immediately sets the tone for high engagement and genuine interest.

Negatively impacts retention

A newly hired employee who feels they didn’t get the offer they deserved will come in with one foot already out the door. They will keep their options open or they will not hesitate to leave when a better offer inevitably comes along. Ultimately, making a lower offer undermines employee loyalty and dramatically increases turnover, resulting in more costs down the line.

Poorly reflects on company culture

Company culture has become a top priority for job seekers in recent years. Company culture consists of a mix of factors, including an organization’s mission, vision, values, and approach to upholding those notions. It’s supported of course by the people who make up the team, but first the organizational leaders serve as a model. When an organization’s leadership undervalues its team members, the tone is immediately set for a negative culture. Positive company culture must be people-centric, and so too must your hiring process.

The goal of a job negotiation should always be for both parties to walk away feeling like they’ve won. When you have a new employee coming on board, you want them to feel like a valued member of the team. You want them to show up eager to prove that your investment was worth it. You want to start off on the right foot. With or without pay transparency laws, people know when they’re being sold short. Go the extra mile to make a worthy investment in your team – in your business.

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