Identifying and recruiting a top-tier executive for your management team can be problematic and, at times, exhaustive. As with most arduous endeavors, project success makes even the most painful process worthwhile. Closure is the key, however, and the final step of the search process is fraught with pitfalls and hazards. All the efforts of both the search executive and client to recruit the successful candidate hinge on closing the deal with an appropriate offer delivered in the most professional, efficient and effective manner.
Smart Business spoke with Craig C. Neidhart, a partner with TNS Partners Inc., to gain an understanding of the offer process and learn how to achieve a win/win agreement.
What is the executive search firm’s role in making an offer?
Just as in every other step of the process, the search firm is a partner in the offer process. The development, delivery and acceptance of the offer are addressed jointly with the client to ensure successful conclusion.
How does a company get prepared to extend an offer?
First of all, make sure you have gathered all the necessary facts regarding the executive’s current entitlements. You, the HR team, or the executive search firm must have a complete understanding of all critical offer components (see table).
COMPONENTS OF THE OFFER
- current base salary
- bonus opportunity
- date paid
- potential forfeiture
- stock considerations
- options, grants, RSUs
- amount/potential value
- vesting schedule
- losses incurred when resigning
- automobile program
- other perquisites
- LTIP participation
- vacation eligibility
- pension/401(k) benefits
- relocation complexities
- spouse’s career/impact
- special family needs
- severance/change-of-control benefits
Using this information, how do you design an offer?
As the hiring executive, require your HR team or executive search firm to create an ‘Offer Recommendation Summary.’ This ensures that your recruiting partners are doing their due diligence. By understanding all the entitlements that the successful candidate is provided in his or her compensation structure, the search team can assemble a rough blueprint for successful closure.
What is most important to candidates, and how does the hiring executive know what is the right offer?
Cash compensation is a critical component. There should be a significant increase from the candidate’s current package classically, 10 percent to 20 percent greater. But executives are equally concerned about other tangible and intangible elements.
Creating long-term security for their families is extremely important and underscores the need for detailing the other elements within the offer package. Critical intangibles have probably been validated in the interview process, things like how the candidate will make a difference in the new company, challenging and meaningful work, and a leader who the candidate respects and enjoys personally.
Does that mean the hiring executive should be isolated early in the process?
Absolutely. Ideally, the hiring executive’s involvement should be to engage during the final close, address any major needs, demonstrate fairness and balance, and make the final offer. That is the way to build upon integrity and credibility, and to create a critical bond between the candidate and hiring executive. This process is followed by a formal written offer letter that’s accompanied by a benefits summary, relocation plan, bonus plan description, options policy, etc.
What other helpful hints apply to the offer process based on search firm executives’ experience?
There are many tactics that will work well for the offer team’s members. Be flexible and open to an offer conclusion that may be a little different than originally designed. Sign-on bonuses and assistance with a second career transition are potential closing tools. Don’t hesitate to give an experienced executive the three to four weeks’ vacation benefit he left behind. Remember, these executives are compensated to achieve success requiring 60- to 70-hour weeks, and they often endure global travel. In the big picture, an extra vacation week is negligible.
Lastly, and perhaps most importantly, manage everyone’s expectations and always deliver on time. Nothing can negatively impact an offer process like a disengaged or tardy hiring executive. Do not forget ... the company making an offer is impacting not only the careers of executives, but the lives and futures of their families.
CRAIG C. NEIDHART is a partner with TNS Partners, Inc. Reach him at (214) 369-3565 or firstname.lastname@example.org.