Best Practices for Offer Letters: Why They Matter, What You Should Know

With Great Offer Letters, You Engage From the Start, Ensure Compliance, and Hire More A-Performers

An offer letter represents the final gate in your recruiting process and is the legal document that defines the employment relationship between your company and the candidate. For those reasons, it’s critical to get offer letters right.

Best practices for a well-crafted offer letter ensure that you’ll meet the critical challenges of:

“Having an offer letter protects both employee and employer by making expectations clear. Documenting exactly what the job’s title, salary, tasks, and benefits are from the start can avoid arguments — or even losing that employee who you spent so much energy and time recruiting — later on.” — From the Inc. magazine series, “How to Hire the Best,” February 2010

• Showcasing your company brand and culture
• Complying with employment laws and regulations
• Growing employee engagement from the start of the relationship
• Moving quickly to a final deal

All of this is especially important if you want to hire and retain A-Players — the top performers for whom competition is the greatest.

Great offer letters — letters that meet the challenges listed above — share three overarching characteristics:

• They clearly present all of the legally required details of the job offer.
• They reinforce your company’s culture, values, and the opportunity being offered to the candidate.
• They’re generated and delivered quickly in the recruiting process.

The last item is often the most overlooked. Top candidates won’t wait for you, especially as the job market heats up, when they have other offers on the table, or when they’re an active job applicant — someone who sought out the job you’re offering and wasn’t referred or recruited by someone at your company.

In the last half of 2015, 49 percent of candidates declined job offers because they had accepted an offer from another company, according to CareerBuilder. That percentage was up 16 percent from the first half of the year, which shows the increased speed with which companies are making quick offers to snatch up candidates.

To satisfy all of these needs, a well-organized HR department will create and maintain ready-to-use job-offer templates.

Templates allow you to create and generate an official job offer letter within minutes of learning from the hiring team or manager that they want to extend an offer.

Because offer letters contain a lot of detail on employment structure, compensation, and benefits, you may want to create multiple templates, especially if you have distinct categories of employees (e.g., exempt and non-exempt, or full- and part-time). Having multiple templates will reduce the number of choices the recruiter or HR representative needs to make when they create the letter and will help ensure each candidate gets the right information for their situation and offer.

The Pieces and Parts of a Top-quality, Best-practices Offer Letter

Before you start crafting the letter, you need to know what it must include. Here’s a checklist of all of the “hard data” you’ll need to gather to ensure that everything is covered and that you’re in compliance with employment rules and regulations. The list below serves as a good starting point for review.

1. Date of Offer Letter *
2. Candidate Identification Information *
   • First and last name
   • Street address
   • City
   • State
   • ZIP code
3. Employment Offer Details
   • Job title *
   • Position goals *
     1. Broad statement of how this job contributes to the goals of the business unit and company’s strategic goals
     2. General statement of how this job supports the company’s values, vision, or mission
     3. Specific goals, if any were discussed with the hiring manager or team leader *
   • Employment start date
   • Full-time or part-time classification:
     1. Full time
     2. Part time
   • Term of employment:
     1. Permanent
     2. Temporary with a specific end date
     3. Temporary with no specific end date
     4. Do not specify
   • Basic compensation:
     1. Yearly salary
     2. Monthly salary
     3. Hourly wage
     4. Do not specify
   • Additional compensation: *
     1. Performance bonuses
     2. Commissions
     3. Other compensation
     4. Do not specify
   • Pay frequency:
     1. Weekly
     2. Every two weeks
     3. Monthly
     4. Twice per month
     5. Do not specify
4. Benefits *
   • Relocation allowance:
     1. Relocation allowance given pursuant to the employer's policy
     2. Provide details of the relocation allowance
   • Stock options:
     1. Stock options given at the discretion of the employer
     2. Stock options given pursuant to the employer's stock option plan
     3. Provide details of the stock option plan
   • Pension plan:
     1. Pension provided pursuant to the employer's pension plan
     2. Provide details of the pension plan
   • Benefits plan:
     1. Benefits plan provided pursuant to the employer’s benefits plan
     2. Provide details of the benefits plan
5. Preconditions of Employment *
   • Medical assessment
   • Signed employment contract
   • Passing drug/alcohol screening test
   • Criminal record check
   • Satisfactory work references
   • Proof-of-work eligibility
   • Other: a description of all other conditions that must be met
6. Additional Clauses
   • No additional terms or conditions are required.
   • Additional clauses in your own words are needed.
7. Employee Response *
   • Does the candidate need to sign and return this offer letter?
     1. Yes: By what date must the candidate respond to this offer letter?
     2. No

Gather Your Information

A spreadsheet is a great tool to make sure you’ve gathered all the information for every offer letter and create an easy, efficient, and repeatable process for gathering the data for your offer letters. If you click on the download button below, it will open an Excel spreadsheet already populated with the information for a fictitious offer letter from a company we call Acme Hospitality Services. You can see the final letter in the next section and use it as a template to help you hire and engage more top performers.

Download

Putting It All Together: An Offer Letter Template

Below is template for a sample offer letter that uses the information in the table previously shown. Remember, it’s not only the details of the offer that matter. It’s important to follow your company’s messaging and communication guidelines to ensure that it communicates your brand and speaks authentically to the candidate.

Using a template for an offer letter helps you consistently apply recruiting best practices to be able to hire and engage more top performers more easily and effectively. Variable content for this candidate, gathered from the spreadsheet, is highlighted in yellow.