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This chapter is from the book

Making the Right Offer to a Programmer

Making the right offer to a programmer starts with timeliness. Every day lost is an opportunity for your candidate to discover, interview with, and receive an offer from another shop. During the dot-com hiring frenzy, every hour lost was an hour risked.

Don’t be hasty but be quick.

But how do you know what offer to make? Determining the right offer starts early in the interview process with the question, “What are your compensation expectations?”

Even if it’s legal where you live to ask candidates for their last salary— and it’s not legal in a rapidly growing number of places—that information is less useful than it looks at first glance. Past salary equates with neither present value to you and your team nor market expectations. A candidate’s last salary might have been exorbitant; salaries required to lure top programmers at the peak of the dot-com boom were downright unrealistic just a few months later, after the bust. Or it might be drastically below market; a programmer hired just before boom times probably didn’t get raises to match the salaries of developers hired later. A programmer working for a struggling start-up may not have had a raise for years. Or a female or minority programmer may have suffered from recent—or even long-ago—wage gaps.

Most programmers know if their last salary was out of line. In the postboom-time case, they may respond to the question of expectations with a number or a range considerably lower than their last salary. In the second, third, and fourth examples, their expectations may justifiably be a big increment from what their previous company got away with paying.

You need to be prepared, from the moment you begin recruiting, to know what range you can afford to pay. Be prepared, when you ask a candidate for their expectations, to get a reply that is a request for the range you expect to pay. You need to know the answer to that question.

You may hear expectations that are out of your range. Or in sharing your range, you may hear back that your candidate was expecting more. Be frank: “Our base salary ranges just don’t go that high. We can offer <options, bonus opportunity, special benefits>, but not that kind of base salary.” If you end up cutting the phone screening short, you’ll have saved your interviewing team a lot of time, trouble, and false hopes and given yourself back a little time you can use to scout for other candidates.

Be aware, though, that while you’ll run across an occasional candidate with an inflated sense of self-worth, more often you’re getting a signal. It may be that you’ve overshot and are interviewing a candidate much more qualified than you need. On the other hand, you may be hearing a signal that salaries have moved. If the latter is the case, as you hear high expectations from subsequent candidates, you may kick yourself for dismissing the first.

Compensation is not just a salary number but a package. While some candidates won’t lower their base salary expectations even for a great package that includes outstanding options, exceptional bonus potential, unusual and special benefits, or the like, some will. If you’re excited about hiring them, then sell them on the company, the position, your team, and your package.

If candidates are wary about telling you their compensation expectations, give them some time to think about it. Let it go during the interview, but follow up afterward if you’re interested in pursuing them for your position. If you don’t, you could end up negotiating with yourself by putting an offer on the table that is inappropriate—either too low or too high. In either case, you’re now at a disadvantage in formulating the right offer for the candidate. Make sure you get wary candidates to clearly state their compensation expectations and consciously decide they are acceptable before moving forward in the hiring process.

Once you know what they expect and that it’s a match for your range— and once all the feedback from interviewers and references has led you to want to hire—you need to think through a specific number and package. If the candidate’s expectations are low, you may be tempted to make a lowball offer. We think you’ll regret it.

We think your salary number has to be in line with the going rate in the market. The last thing you want is for a candidate—realizing, just after arriving, that many if not most companies are paying a lot more—to keep their pipeline of job opportunities open, leading to a departure for a better one after only a short time on your team. If possible, work with your HR department to verify your target number with an industry standard salary survey service such as Radford Surveys.14 Radford, and other similar services, provide benchmark data comparing companies situated similarly to your own. This will help you determine if you are paying competitive market rates for the new hire and provide the ammunition you may need to help convince your management to hire someone for more than what is budgeted for the position.

We think your salary number also has to be in line with salaries you’re already paying comparable programmers on your team and across your company. You can exhort your team all you want to keep their salary numbers to themselves, but sooner or later they’ll all know what the others are making. Bad inequities will lead, at that point, to carping, bitterness, disgust, and an exodus of your best people.

However, sometimes you need to bring in a programmer who doesn’t fit your current internal equity. You hate to do it, but you may choose to because you need the programmer desperately, or because your programming staff, in general, is paid below market rates. By bringing someone in above your internal equity rankings, you have ammunition to bring to HR and your management to try to increase the salaries of the top performers on the staff you already have. This is a painful tactic, but it’s sometimes necessary to satisfy your short-term hiring needs.

The one exception where equity can be less of an issue is with geographically dispersed teams, since salary decisions may have been made based on geographical differences in both market and cost of living. You can get an idea of how to derive geographical equity—how to come up with a salary number for the same person in different locales—by using the research data at www.salary.com.

At some point you may find yourself hounded by management or HR to bring contractors on board as employees, a challenge made especially difficult by compensation numbers. Contractors’ hourly net is almost always higher than the salary you could equitably pay them, and often more than the salary and benefits put together. And if they have figured out a way to make their benefits work (e.g., getting benefits through their spouse’s employer), such that they don’t need those that come with an employee offer, converting them to employeehood becomes monetarily nearly impossible. On the other hand, contractors often face corporate policies, put in place to avoid tax and legal problems, that decree they can consult for only a limited period (e.g., six months or a year), then must be gone for six months to reestablish eligibility. If they like you and your team and your work, they may be willing to talk, at that point, about conversion.

Ron had one contractor who wanted $10,000 in salary above the rest of the company’s programmers at his level. The company’s pay system required breadth to qualify for the next software development grade, but like many contractors his skill set was narrow and vertical. Ron created a win-win by formulating a package (which required his getting sign-off all the way to the general manager) including

  • A salary at grade level

  • A guaranteed $10,000 in training over the next 12 months that could be used only for coursework in related technologies that the company needed and would also broaden the contractor’s narrow skill set to a much more versatile and valuable one

  • A promise to provide him with mentoring support from one of the team’s most senior architects

  • A promise to evaluate him, in 12 months, for possible promotion to the higher grade and a possible $10,000 raise to go with it

Complicated as that was (and hard as it was to get HR to go along, which was where selling it to the general manager came in), it reduced Ron’s personnel budget, extended the programmer’s tenure, motivated the new employee both to deliver and to expand his skills, and gave Ron a productive, valuable resource on the team who was gratified at the investment being made in him and on his behalf—for less than he would have cost as a contractor.

Once he has a salary number, Ron will sometimes test it: “I need someone to start Monday. It’s difficult adjusting an offer later—I need to have an offer that I know you would accept before I go to get it approved. If I were able to get you an offer by Thursday of $xx,000 in base salary, along with n-thousand options and the opportunity to make a 20 percent increment over your base in bonuses, would you accept it and start Monday?”

Questions like that will help you understand what a winning offer looks like, typically clue you in about competing interviews and offers, and often begin to build commitment on the part of the candidate—get them practiced in saying yes.

Before making and writing up the offer, you’ll want to think about a start date. If the candidate is working, it will almost certainly be at least two weeks after giving notice. If you have flexibility, you may want to give candidates an opportunity to take a week or two between jobs. They’ll come to you fresher, happier, and less needy.

Ready to make the offer? You’ll actually make it in two ways: first verbally, followed by a written offer.

Staffing and HR organizations are often in the habit of making the verbal offer themselves, but we suggest you volunteer to present it. In our experience, managers who ask for the task are seldom refused. From the standpoint of selling the candidate on taking the offer, unless your staffing person is an exceptional salesperson, we think the implied relationship of having the hiring manager present the offer makes the stronger sell. (There is also an argument to be made for having your boss make the offer, if your boss is willing; candidates are, in general, impressed that someone senior would know who they are and call to urge them to take your company’s offer.)

Your goal, the moment you have the offer approved and have mentally rehearsed your pitch at least once, is to reach the candidate voice to voice. “I have exciting news. I’m calling to make you an offer to join <our company> as a Senior Software Engineer for Database Development. The salary is the one we discussed, $xx,000 annually. You’ll have an n percent bonus potential. And you will be awarded n-thousand stock options, 25 percent of which will vest after the first year, with vesting monthly thereafter. In addition, you’ll get <a few great/unexpected/unusual benefits>. Will you accept? Can we set your start date for <date>?”

If you hear hesitation, try to find out what the objection is and resolve it.

If you’ve done your homework well and have a good read on what really motivates the candidate and have made that part of the offer, you should get an acceptance without hesitation. However, some candidates always want to push the envelope by asking for more—even if you’ve met the compensation requirements they asked for when you had that discussion. When they hesitate or ask for more, don’t get flustered. It is part of the hiring process. Take your time and determine what their objections to your offer really are and how deeply seated they are. Rarely, if ever, should you counter immediately with more than your standing offer. Mickey says: “Rarely is the hesitation really about money at this point. Often it is about the job title, or another desire that the candidate has surfaced since you verbally sounded out the offer. Title, office space, additional training, ability to attend technical conferences, and permission to work at home (at least occasionally) have all come up as I’ve presented offers over the years. The key is to stop and get the person to fully articulate these concerns; then you can see if you can address them.”

Ron has promised unofficial days off (provided he is not reorg’d away from being the candidate’s manager) when a candidate asked for vacation days that had already been set aside at the candidate’s current employer. He has gone back through the approval process with a changed offer due to a just-arrived competing offer. He has clarified that telecommuting two or three days per week was absolutely acceptable (with the proviso of good communication, availability, and productivity). He has clarified to a known stellar candidate that starting at a later hour to accommodate a combined train/bike commute was perfectly acceptable. He has responded to questions about child care and flexibility for sick kids. He has reassured candidates that the job was not a dead end and has explained the opportunities for transfer and promotion that it could afford.

Many candidates will ask for a few days or even a week or more to consider your offer. It’s seldom the answer you want to hear, but it is reasonable. Know beforehand how long you’re willing to give them. Once you’ve arrived at a date, enter it into the written offer as the candidate’s deadline to respond. And then stay in touch during that time.

Invite candidates with pending offers to team events, connect them to people on your team, and make them feel welcome and like they’re already team members. Have someone senior—CEO, CTO, VP of Engineering— make a special call to the candidates to sell them on the position and the company and really connect with them, if possible. Often these calls are an opportunity to paint a more strategic picture of positions and how they fit into the organization and the company’s goals. Help candidates understand why each position you offer is the best they could ever encounter!

We recommend that you try all of these things before considering sweetening the offer in any way. If you can do creative things that do not add to inequities for your staff, do that. One-time hire-on bonuses are often the easiest. Such one-time actions can be effective at handling salary issues without causing internal inequity problems, but they may not address the fundamental issue (too low a starting salary). In such cases you may reach an impasse and the candidate may not, in the end, accept the offer. You have to know how far you can and will go to make the hire and stick by that, even at the risk of losing a potential new hire. Sometimes you’ve just got to let go.

Benefits questions will likely come up. Let your staffing or HR organization answer them. Those people are far more versed in the intricacies (and the questions candidates ask about them) than you will ever be. Make sure your benefits package includes links to all online benefits information that is available externally.

The written offer will be drafted by HR and will include salary and benefits information, a limit on how long the offer is good, and a proposed start date. Make sure you get a copy, preferably to quickly review and approve before it is FedExed to the candidate. With the offer should go a confidentiality agreement (which should include a nondisclosure agreement, along with the caveat that the company will own any inventions created at work), forms, and collateral that portrays the company as the terrific place to work that it is.

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