Best Practices for Achieving Talent Success Maturity
Best Practices for Offer Letters: Why They Matter, What You Should Know
With insight from
Former CHRO, Professional Board Member
Libby Sartain is an independent advisor, working with companies on human resource issues. With more than 30 years of experience in human resources, she is also an author and frequent speaker, using her HR leadership and management experience at companies in technology, transportation, and manufacturing. She led human resources at Yahoo! and Southwest Airlines during transformative periods. Both companies were among Fortune magazine’s “Best Places to Work” during her tenure. She is the former board chair of the Society for Human Resource Management and is on the board of Manpower Group and is the Vice Chair of the Board of AARP.
Who it’s for:
Hiring managers, HR managers, recruiters
What you’ll get:
A customizable template for creating effective job offer letters
Why you need it:
The offer letter is a legal and binding document between with the candidate and also provides for brand awareness and employee engagement
When it applies in the talent success process:
The last stage of recruiting and the first step of onboarding
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.
At any company, an offer letter can be daunting, especially with all of the legal language about intellectual property, non-disclosure, non-compete, and other documents that need to be signed. As the Chief People Officer of Yahoo, I wanted our offer letters to be special, to show our personality, to make someone really want to join us. But instead, they were some 30 pages of legal stuff. I met with the lawyers to see if we could streamline it…. nope! So we got creative. We did an offer letter with a sense of humor, referring to all the stuff our lawyers made us include that was attached. We designed a purple packet that upon opening, actually yodeled the Yahoo Yodel and the inside was filled with photos of fellow Yahoos smiling. That was a big hit and unlike any offer a Silicon Valley type worker would have received at the time.
— Libby Sartain, Former CHRO, Professional Board Member
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.
- Date of Offer Letter *
Candidate Identification Information *
- First and last name
- Street address
- ZIP code
Employment Offer Details
- Job title *
Position goals *
- Broad statement of how this job contributes to the goals of the business unit and company’s strategic goals
- General statement of how this job supports the company’s values, vision, or mission
- Specific goals, if any were discussed with the hiring manager or team leader *
- Employment start date
Full-time or part-time classification:
- Full time
- Part time
Term of employment:
- Temporary with a specific end date
- Temporary with no specific end date
- Do not specify
- Yearly salary
- Monthly salary
- Hourly wage
- Do not specify
Additional compensation: *
- Performance bonuses
- Other compensation
- Do not specify
- Every two weeks
- Twice per month
- Do not specify
- Relocation allowance given pursuant to the employer's policy
- Provide details of the relocation allowance
- Stock options given at the discretion of the employer
- Stock options given pursuant to the employer's stock option plan
- Provide details of the stock option plan
- Pension provided pursuant to the employer's pension plan
- Provide details of the pension plan
- Benefits plan provided pursuant to the employer’s benefits plan
- Provide details of the benefits plan
- Relocation allowance:
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
- No additional terms or conditions are required.
- Additional clauses in your own words are needed.
Employee Response *
Does the candidate need to sign and return this offer letter?
- Yes: By what date must the candidate respond to this offer letter?
- Does the candidate need to sign and return this offer letter?
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.
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.
1234 Main St.
Centerville, CA 12345
I am very pleased to offer you the position of HR generalist at Acme Hospitality Services Inc. This is a full-time, permanent position. Your role is critical in supporting the employees of Acme Hospitality Services to enjoy a better, more productive work experience by helping them take full advantage of their valuable company benefits through enhanced HR practices and performance. Ultimately, you’ll be supporting Acme Hospitality Services to improve the way our clients get their work done and create success for all of us.
Your first day will be May 1, 2016.
Your position will have a starting salary of $52,000 per year. Your salary will be paid once a month.
You also may qualify for additional compensation in the form of performance bonuses and commissions.
You will receive two weeks of paid time off (PTO) every year (prorated for your first year, if applicable). Other standard — or “core” — benefits that make Acme Hospitality Services a great workplace include company-subsidized health, dental, and vision insurance; a 401(k) plan with company-matching contributions; basic life, long-term, and short-term disability insurance at no cost to you; the availability of increased insurance coverage; and voluntary benefits such as critical care insurance and legal protection.
As a valued member of our organization, you will also receive:
- A relocation allowance in accordance with the company’s policy
- Stock options in accordance with the company’s plan
- Participation in the company’s standard pension plan
Please remember that this offer is contingent upon your completion of the following conditions:
- Satisfactory medical assessment
- Agreeing to the terms of your employment contract
- Passing a drug and alcohol screening test
- Satisfactory criminal record check
- Receipt of satisfactory work references
- Proof-of-work eligibility
- Receipt of the signed noncompete statement
Please also note that as a salaried employee, you may be required to work flexible schedules and/or additional hours to perform your duties, for which you will receive no additional payment.
Please indicate your acceptance of this offer by signing and dating it where indicated below, and return it to me by close of business on April 10, 2016.
We look forward to having you join our team and await your response. If you have any questions at all, please don’t hesitate to contact me at 817-456-1234.
I accept the offer of employment outlined above, on this 24th day of January, 2016.