Constructing an effective job offer is an often overlooked piece of the hiring process. As a recruiter in most organizations, there is only so much leeway you have to tweak the offer. Issues of fairness and equity are often involved and when it comes to compensation, there are typically a lot of stakeholders in that conversation.
Despite this lack of full control, like all things “candidate experience,” data can be your friend when you want to optimize this step of the hiring process.
Wouldn’t it be helpful to know why every job offer is accepted or rejected and be able to use that data to refine and optimize future offers? If you know why candidates accept and why they decline, you have the ingredients to increase your acceptance rate, and therefore reduce your cost per hire and increase your quality of hire.
At Survale, our clients typically monitor feedback on all accepted and rejected offers. And they do it in real time so they can track these KPIs and gauge the effectiveness of their tactics for optimization.
So we know a thing or two about why candidates accept or reject offers, and it’s very consistent from client to client, industry to industry. But before we talk about the key factors for an effective job offer, let’s explore why job offer feedback is so important.
Effective Job Offer Feedback
At the offer stage, you’ve taken candidates through a thorough and often time-consuming hiring process. That’s an expensive undertaking. But you wouldn’t invest all that time unless you had candidates that you believe can make an impact on your organization. At the same time, finding those candidates is a time-consuming process with hard dollars associated with it. There are ad fees, sourcing database costs and more.
SHRM’s ubiquitous $4,425k estimate of the average cost per hire is accurate to a certain extent, but doesn’t include opportunity costs, etc. If you don’t already track your cost per hire, you can easily expect more than double that cost, depending on the position.
The bottom line is that a rejected offer hurts the bottom line. At this stage, you’ve invested the full cost per hire and starting over again will be even more costly. Rejected offers hurt productivity. The time it takes to re-engage and revive silver medalists and/or begin recruiting again drains productivity. And hiring 2nd or 3rd choice candidates could mean lower productivity for the position. In any case, the longer the position goes unfilled, the organization can count on zero productivity for the role.
In other words, a declined offer is arguably the worst case scenario for the recruiting function.
Understanding exactly why candidates accept or reject an offer can have a huge effect on important recruiting KPI’s like cost per hire, time to hire, quality of hire and more.
Win on Opportunity for Advancement Lose on Compensation
So what is the consistent factor that we see affecting offer acceptance rates throughout our client base? It’s Opportunity for Advancement. This is the single most important reason that candidates accept jobs. Again, this data is consistent across all companies and industries.
Actually, there are two key factors that affect offer acceptance. Candidates accept offers mostly due to the perceived room for advancement, and they decline mostly because of compensation. And this data is consistent as well.
The fact is that compensation is a ghostly presence in all job offers. It haunts you in rejections and fades in acceptance. You can’t ignore it, but all things being equal, you don’t have to inflate salaries to land first choice candidates.
The two example charts show a single company’s reasons for acceptance and for rejection. As you can see, candidates overwhelmingly accept offers because they see growth and want to grow with this employer. But wait, candidates are also pretty uniformly citing low comp as a reason for rejecting. How am I so confident that compensation isn’t a big hiring issue? Again, data.
When you see that compensation is the leading factor in rejected offers, you need to contextualize the data. In this case, the organization has successfully hired 665 candidates and were rejected by only 69 candidates. And only 30 of those candidates cited pay as a reason.
Whereas 665 candidates accepted offers and 540 cited opportunity for growth as a factor in accepting. I would say that this company has a successful formula for a great acceptance rate.
In other words, a boost in pay might have swayed less than 5% of these candidates and made no difference for more that 95% of candidates.
Effective Job Offers Start Before the Offer
This organization does a great job with their process. They know that they need to “sell” candidates on future growth, the appeal of the role itself and on their company culture. And they do this from the job ad to the offer letter and everywhere in between.
Understand that the strength of your job offers begins at the beginning of the hiring process. And if you don’tconsistently and strongly connect your opportunities with what candidates find valuable about your company, you will end up spending a lot more to hire your first choice candidates.
It all starts with understanding what is important to your candidates and then weaving that into every step of the hiring process. I’ve given you a universal truth about why candidates accept or reject offers: They accept for advancement opportunities and reject because of pay. So this bias toward “opportunity for advancement” should show up in every candidate interaction, every job description, every employee testimonial – everything.
Because pumping up the opportunity for advancement at the offer stage is too late. At this stage you’ve spent almost your full cost per hire and missed multiple opportunities to condition the candidate for an offer of a great job with a great company and, most importantly, lots of room for advancement. And you will likely need to pay more to land first choice candidates if they missed the part about advancement and are focused on comp.
At Survale, we know several universal truths that affect candidate experience regardless of the company or the job seeker . And we’ll pass on more of them right here in the coming months. We also know that most of our clients are unique and that what works for one organization’s hiring pools will not work for another. As always, data is key.