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November 16, 2022
The Swarm

Plan for Offers and Negotiation

Once you’ve found the perfect fit, don’t let them slip through the cracks.

1. Decide on compensation

Compensation is the cornerstone of your job offers, so make sure you’re building offers that candidates can’t refuse:

  • Benchmark compensation to other companies in your industry and/or city. Bearhug Recruiting recommends aiming for salaries in the 75% percentile or higher, since you want to ensure candidates don’t join your company only to jump ship at the next highest offer.
  • Startups shouldn’t be shy about asking candidates whether they prefer short-term cash or long-term equity. The Holloway Guide to Technical Recruiting suggests offering candidates the base salary that they would need to live comfortably, and then adding in enough equity that their total salary would be comparable to a large company’s all-cash offer.

2. Time your offer delivery

After you come up with an offer package, it can be easy to think that all that’s left is crossing Ts and dotting Is. However, candidates may be interviewing with other companies, talking the decision through with their significant other, or have lingering questions about the role.

To be mindful of candidates’ timelines, let the candidate know as soon as possible that you’re preparing an offer. Ask how ready they would feel to accept an offer on a scale from 1 - 10. If they aren’t enthusiastic about it, this is the time to answer any additional questions or iron out details.

3. Extend the offer

This is the fun part! To extend an offer to a candidate, have the hiring manager deliver the good news by phone before sending a written offer letter. During the conversation, they should:

  • Bring up personal, positive feedback from the interview process. Make sure the candidate feels appreciated, welcomed, and celebrated — you want to ensure they’re excited about joining your team.
  • Offer to answer any questions they have now or after they’ve reviewed the compensation letter. Make sure they know exactly who they can go to with any questions or feedback.
  • Ask if they have any competing offers or if anything might delay their decision-making. This can help you understand where the candidate is in the process.
  • Let them know a written offer will follow the call.
  • Go over any deadline expectations. You can ask the candidate how long they’ll need to think about the offer, but it’s also okay to let them know if your team needs an answer by a certain date (so that you don’t lose momentum with other candidates if this offer falls through).

4. Send the offer letter

An offer letter should contain all the details about the job being offered, including the job title, manager, compensation information, benefits, and start date. It’s good practice to have a standard template that you use for job offers, and to have it looked over by a lawyer to ensure you’ve presented everything properly.

This job offer example from Carta is a great example of how to present candidates with all the information they need in a fun and engaging way. Some recruiting tools like Applicant Tracking Systems will also provide you with templates to create a standard offer letter.

5. Have (internal) guardrails around negotiation

Ideally, you’ve already spoken to candidates about salary and you both have a good understanding of what they’re expecting and what you can provide. However, negotiation is a fairly standard part of the offer process, so you should have guardrails set around the process before it starts.

  • Some startups refuse to negotiate at all. This can help keep pay equitable across the board, but if you set out a “no negotiation” rule, you have to stick to it (or risk unfair salaries).
  • Consider allowing candidates to trade between cash and equity. This allows for variance in compensation while still keeping offers fair and equal.
  • If you do increase compensation during a negotiation, have a strategy in place for maintaining fair compensation among your team after. Will you be increasing other employees’ salaries in the same role to match?

6. Have a backup candidate in mind

This can help you ensure that you don’t overcompensate your first-choice candidate and that you’re not stuck going back to square one if they decline your offer. 

Additional resources

  • The Buffer Salary Calculator can be a helpful place to start when determining compensation.
  • Not sure what larger companies are paying their employees? Levels.fyi lets you access a database of employee-submitted salary data. Glassdoor can also be a good source.