What is it with the Low-Ball offer? And What are the Risks?

We’ve all had this happen to us. Just when the process is purring along and our client has made their final candidate selection they go pull the “low-ball” offer! Despite ongoing consultation on what the offer should be, some of these clients still seem to get it wrong!

Even after being retained and after a challenging search and protracted interview process, the client decides that although they know that the candidate is currently making $185,000 salary, and they were prepared to go to $200,000 if necessary, they think that circumstances dictate that their offer should be matching the candidate’s existing salary. That is correct. I said, “matching the candidate’s existing salary.” All of this happened after I recommended that they send a strong message to the candidate and come in with an offer at $200,000 which was within the approved range in the Search Assignment profile.

It is as if the client starts to believe their own press about what a great place it is to work. During the interview as they were selling the candidate on all the reasons he should want to join their team, and as the candidate affirmed these attractive qualities, it seems that the CEO began to think that this guy would be lucky to work there and thus no longer felt compelled to draw him in with an aggressive offer.

I am speculating a bit as to the client’s true motive, but here is the rub. If we are successful in convincing the candidate that it is the right offer, how vulnerable do you think he will be to the counter-offer? Perhaps our candidate, during the interview process, in order to further win over the CEO, conveyed how much better an opportunity it is for him and that it “wasn’t about the money.” What should the CEO do?

Here’s what he did, he matched the candidate’s salary in the offer. What impact did this have on the candidate? First it completely deflated him as he interpreted this as a statement about how excited they were about bringing him on board. Second, it made it uncomfortable for our candidate to try to negotiate because he already told them it wasn’t about the money. Furthermore, since there is a relocation involved, it makes the details relative to the other costs seem much larger.Lastly, the candidate was insulted. Generally, I believe that you want to start any new hiring relationship off on a very positive note. The general expectation is that if a company is recruiting you, they know that they will have to entice you with some measure of inducement and the currency is usually an increase in your base salary unless it is a job that pays commission or is an early start-up and offers significant equity. In this case, we can’t check either box.

If you or your client are considering making a “Low-Ball Offer,” these are the potential risks you assume:

- Increased risk of a turn-down by the candidate
- Increased risk of a the candidate accepting a counter-offer from their current employer
- Loss of “Good Will” making company vulnerable in the future

So in our case, we end up making the executive placement. However it wasn’t without problems. We had to work immeasurably harder to convey all the reasons that this new opportunity made sense to the candidate and how money was never the driver. Our client got lucky, but I’m not impressed and I seriously doubt that the candidate or his wife was. He started on time, but based upon several comments made during the process, I would say that the “honeymoon period” was cancelled due to weather.

Anyone with me?

see more blog posts at www.druedeangelis.wordpress.com

Views: 1049

Comment by Suzanne Levison on February 7, 2012 at 11:41am

Excellent Post


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