Feb 16, 2023

How to Design An Offer Process

by Tina Tian
image

By: Tina Tian and John Dip

Contributors: Josh Hernández and Anthony Kline

Background 

Designing an offer process is one of the most critical parts of recruiting top candidates. Sadly, it’s also usually an afterthought. In an ideal recruitment journey, candidates should feel that their interview and offer experience were thoughtfully curated, making it clear that the opportunity at hand is worth investing their career in. 

We know from experience that the offer process should be just as organized as the interview process. Our team of recruiters and talent experts—who have scaled teams at Stripe, Robinhood, Databricks, Uber, and Coinbase—put together this guide on how startup founders and early-stage recruiters can run an offer process like the best tech companies in the world.

There are five key milestones you should always be thinking about when designing an offer process. They are: 

1. Closing candidates throughout interviews 

2. Strategically preparing an offer

3. Delivering an offer while maintaining negotiating power

4. Delivering the final offer 

5. Keeping a candidate engaged before they onboard 

Outlining these milestones upfront (and sticking to them) will force you to be more thoughtful about your overall process at the early stage, and eventually, at scale. We know that conversations with candidates can be emotional, and this guide is designed to give you more control over how and who you hire.

The 5 Milestones for Designing an Offer Process

1. Closing candidates throughout interviews 

Getting to know a candidate’s needs and interests throughout each stage of the interview process will quickly indicate whether you’ll be able to hire that person or not. It will also help determine if the candidate is genuinely a good fit for your company. 

Each interviewer should not only note interview performance but specific motivations that the candidate has, so that at the end of the interview process you understand:

  • What the candidate wants to learn in their next role

  • The candidate’s working style

  • The candidate’s long-term career goals

  • The size and stage of the companies the candidate is interested in working for

  • The candidate’s location preferences (now and in the future)

  • Ideally, the candidate’s compensation expectations 

If you can weave these points into your interview process, you will both filter for the best final candidate and be able to give that person a compelling offer. 

What does this look like in practice? 

Here are example questions you can ask throughout interviews to help you close a candidate before the offer stage. As a general rule: documenting a candidate’s response is just as important as asking them questions in the first place, so remember to take notes.

Questions to ask during the initial phone screen

  • Are you actively interviewing?

  • What’s important to you as you consider a new role?

  • What do you value in the work you do?

  • What do you want to learn in your new role?

  • What's important to you with regard to level/title?

  • Why is our industry/size/stage interesting to you?

  • Do you have expectations/specific requirements for compensation or benefits?

  • What is your timeline for interviewing and making a decision? When would you be able to start a new position? (Some candidates may have personal factors that impact start dates, such as family commitments, immigration needs, or major equity vesting dates)

Questions to ask during the hiring manager screen

  • How do you want to grow in your career? How is your next role preparing you for your longer-term goals?

  • What’s important to you in a team dynamic?

  • How would you or your peers describe your working style?

  • Who is the best manager you’ve ever had and why?

For the onsite interview, ensure the interviewer establishes a warm and reciprocal tone at the beginning of the interview, and give time for the candidate to ask their questions at the end of the interview. What does the candidate ask their potential peers about? This will give you, as the hiring manager, insight into what they’re prioritizing in their search. 

At the end of the onsite interview process, the hiring manager should ask: 

  • What was your impression of the team? 

  • How do you see yourself working with this team?

  • What are you optimizing for your next role? Has this changed since we spoke at the start of your interviews? How has this changed since you started your job search? How does our company fit into your current criteria?

  • How do you feel about us compared to the other opportunities you’re considering?

  • How are you evaluating offers?

  • What concerns do you have? 

2. Strategically preparing offers 

We’ve found that it’s helpful to think of offer preparation as a “discovery phase.” At this point, the candidate performed well in their interviews and you would be excited to have them on your team. You should reach out to the candidate and let them know that you want to talk through your specific offer process and how that lines up with their timeline. 

Keep in mind that you aren’t discussing the raw details of the offer just yet. Instead, you’re prepping the candidate to be in the right mindset to receive an offer (as well as making sure that they’re even ready to receive an offer). At this point, you’re only looking for information that will set you up for a successful offer delivery. 

Start the offer prep call by telling the candidate that you’re excited by the possibility of them joining the team. Ask them how they’re feeling about it. 

Listen carefully to their response and document both what they’re most excited about and any concerns they have. Other questions you can ask during this call include: 

  • What companies are you continuing to engage with? Compensation aside, how would you stack rank those opportunities - from most to least excited?

  • Do you have any offers?

  • Discuss offer timing that works with their other offers

  • Are there any red flags or concerns that arose for you during our interview process??

  • What framework are you using to determine if this is the right place for you?

  • What is your gut telling you?

Other things you can dig into during the offer prep call: 

  • You can ask the candidate if they have any definitive compensation expectations. If a candidate responds with uncertainty, try breaking down this question into cash expectations and equity expectations. Oftentimes, candidates may not have equity expectations but may have a ‘minimum’ and ‘ideal’ cash number in mind. Note: It is outdated and oftentimes illegal to ask candidates to share their current compensation. 

  • To get a sense of their priorities, you can ask if they value cash or equity more, and if there are any other benefits they weigh more heavily than others. If they are coming from a public company, make sure that they have a strong understanding of stock options vs. RSUs at a startup. 

  • You can ask how they’re prioritizing different factors (compensation, size, funding, culture, projects, team dynamics, location, etc.). 

  • Listen for cues that offer insights into how they’re making their decision; this is an ideal time to make sure you’re both aligned about what the opportunity looks like on your team. 

Keep in mind that your focus here is gathering information. Do not make promises about what you can offer and do not (at any point in the process) attack or sell against other companies that the candidate is considering. It reflects poorly on your company and it rarely works out.

3. Delivering an offer while maintaining negotiating power 

There are varying philosophies around who should extend the offer to a candidate. At TheGP, we believe that, in most cases, the hiring manager should extend the offer to a candidate. A potential employee’s relationship with a manager is far more intimate than with a recruiter, and managers can speak to team dynamics, projects, and the candidate’s trajectory in more depth. Your business is dependent on trust and strong working relationships, so this is a good way to anchor, persuade, and reassure the candidate that they are making the right decision. If the candidate joins, they will also likely be discussing future raises and promotions with their manager, so it makes the most sense to start those conversations with that person as well. 

The recruiter should be responsible for gathering requirements and delivering them to the hiring manager to reduce any back and forth. When a hiring manager delivers an initial offer, it’s often helpful to explicitly have the recruiter act as a “candidate confidante” to get raw feedback on comp. Recruiters have the unique position of being a trusted confidant for both parties.

To deliver the offer, schedule a 30-minute call. To set aside time for follow-ups, block time following the call should it run over. Here’s how the call should go: 

The recruiter/hiring manager/founder will kick off the call. Start with a positive tone. 

An example: “It’s great to speak with you today! We have an update to share on our end but would first love to hear how things have gone in your mind. How are you feeling about the conversations so far and the overall opportunity at X company?”

This may feel repetitive from the offer prep call if you are the person doing both, but it’s designed so you can validate that the candidate is still interested in the role and ready to receive an offer. At this point, the candidate typically has positive things to say. Expect them to recap their interview experience and listen for signals that you can sell towards. Note: In our experience, one in 100 of these calls will veer negative. If this happens, speak with the candidate about their concerns and confirm whether or not they’re still interested. 

The recruiter/hiring manager/founder can continue with this: “As you know, we’ve debriefed as a team and are thumbs up across the board. [Give real feedback as to why the candidate is a ‘yes’ here.] We’d be thrilled to have you join us.If you’re interested and the timing is still right, we’d like to make you an offer.” 

Pause to make sure their timeline is still on track to receive an offer, and if so, celebrate the moment!

Then, set the agenda: “To get us aligned, for this call we’ll review your role, compensation, potential start dates, and answer any questions or last items you may have. Does that sound good?”

From there: 

  • Speak to the specifics of the role—call back to why the role is interesting/exciting for this candidate, what their title will be, and how they will fit into the current team structure 

  • Point to what they’ve shared throughout the process. What are they looking for in their next team, manager, values, tech, etc.? 

  • Discuss team dynamics and growth opportunities

  • Ask the candidate if they have any questions about the team or the larger company

If the candidate has any questions that you cannot confidently answer, make a note of it and schedule a follow-up call for them with someone who can speak to it.

Now it’s time to talk about a compensation package, which includes salary, equity, benefits, and bonuses. Each part of the offer should be prepared in advance and then discussed in the offer delivery. While candidates generally understand the value of the cash components, if they don’t understand the value of their equity or benefits, they can’t fully evaluate the merits of your offer. 

Salary

Prepare to tell the candidate your target percentile, variables for the market data you’re using, and where the candidate sits within the bands for their level. Candidates want to know how their offer compares to their prospective peers—it helps them understand the potential upward trajectory within your compensation bands. Your ability to articulate this establishes trust and also minimizes back and forth in negotiations.

When you discuss salary: 

  • Present datasets for your compensation plans that include industry data for companies that have raised comparable amounts of money

  • Explain whether you do or do not localize cash comp (give reasoning)

  • Give context on where the candidate will sit within the company, and why they’re positioned at the lower/mid/higher end of a compensation band 

  • State their starting salary, and why that positions them well within their peer set at your company (you can also speak to any other variables influencing their cash comp here)

  • Share any details on refreshing comp based on performance review cycles, fundraising events, etc.

Equity

Whoever ultimately extends the offer should be a subject matter expert in the value of your company’s stock today and in the future (without making lofty promises). Equity doesn’t exist in a vacuum—it represents a portion of the company. Don’t just provide an equity number and a valuation; legitimize this information by providing credible information about the company’s financial health. Instead of saying things like “our share price has gone up” or “we have more customers now,” contextualize every number, so the candidate understands the growth of the company and the potential value of any equity. If a candidate is leaning in but has further questions about the stability of the company—especially with early-stage startups—a timeline model of cash and equity is a great way to clear up questions regarding runway and potential fundraising events. 

When you discuss equity: 

  • Explain the datasets used and where they’re positioned within the candidate’s level

  • Explain your process for evaluating employees for refresh grants and the company’s philosophy around tender offers for equity

  • Be sure to drive home the value of equity—the candidate should believe in the company’s potential growth and understand what it means within their overall compensation package

Benefits

You should have a one-page benefits summary for candidates to review. This page should outline any eligibility requirements for benefits, list all benefits that you offer, and include any required monthly contributions for employees and their families.

When you discuss benefits: 

  • Share the details of your healthcare plans (medical, dental, vision) and send a one-page summary after the call

  • Share the details on PTO and leave policies

  • Include any other benefits (work from home stipend, 401k, commuter benefits, meals, etc.)

Bonus

Be prepared to talk through your compensation philosophy around bonuses, both for sign-on and performance-based bonuses. When you discuss a signing bonus, bing up any stipulations and/or the possibility of a performance bonus (include your factors for calculating this.)

At this point, ask the candidate if they have any questions on their offer. Again, if you cannot confidently answer the questions be sure to connect the candidate with someone who can. If the candidate begins to ask questions about the offer, they are testing whether it’s final or open to negotiation. Here are some things you can say in the negotiation process: 

“We write strong offers upfront, considering peer data sets and the impact you will have on the team as you grow. While we sometimes adjust, it’s usually due to something unexpected. Our evaluation process is designed to understand how you compare to your potential peers here, and what you’d be bringing to our company. We are thoughtful about peer equity and compensation and work hard to ensure we are competitive in the market.”

That said, here are some legitimate reasons to adjust the offer: 

  • The candidate’s location changes

  • The candidate wants to swap equity for cash

  • A sign-on bonus if that will get candidates over the line

  • If the candidate receives several substantially higher offers from other companies, that is the market saying that you have miscalculated in some respect and need to revisit both your evaluation process, offer, and potentially the team’s compensation as a whole 

Some helpful tips while negotiating: 

  • If you’re open to trading equity for cash (or vice versa), offer that now and ask what they are considering

  • If they keep pushing it, ask the candidate what their goal is in negotiating—is it an extra $5-10K, matching other offers, their position within the range for their level? Something else?

  • Never agree to revisions during the offer call (aside from cash/equity swaps)—you need to consider the impact on changing their offer and can follow up with them later

  • Going back and forth is rarely productive. Ask what it will take for them to sign and tell them you’ll see what you can do. If you discuss internally and know this is outside of what you can offer, give your “best and final'' offer and let them know that it’s the upward bound of what you can offer. Don’t repeat this process.

Next, ask the candidate if they have any other questions about their offer. If not, the next step is to check in on timing. The timing of accepting a role and selecting a start date depends on any number of factors but is often underestimated by both sides. When engaging with a candidate, we recommend getting a sense of when they want to make a decision and what other opportunities weigh on that timeline. Do they have a vacation planned or need time to decompress before starting a new role? Paying attention to their personal needs in addition to competing opportunities is a way to build trust:

“We want to give you some time to think through this so you can be confident about your decision. And if that decision is a yes, when would you be interested in starting? Include any details/signals that they’ve mentioned throughout the process.”

When touching on other offers and timing, it’s important to be collaborative with the candidate. Remind them that you’re ultimately on their side to get them hired, and that you can only be as helpful from this point forward if they’re forthcoming with the details of their search. 

Remind them that your ultimate goal is to facilitate a smooth hiring process for both the hiring manager and the candidate. The more forthcoming the candidate is with their search details, the easier it will be to advocate on their behalf and facilitate an efficient process.

If they have questions that you don’t have the answers to or you think someone else is better positioned to answer, offer to help set up follow-up calls. These can range from a CEO talking through strategy, a future manager discussing the team, marketing and positioning work for relevant products, inclusion and diversity efforts, etc. Schedule these calls as soon as possible following your offer delivery and make sure team members know exactly what they’re being brought in to discuss.

4. Delivering the final offer 

Final offers should be given with a lot of enthusiasm and follow-up, regardless of whether you think the candidate will accept. Depending on the size of your company, the importance of the role, and the level of convincing required, have a few options available to further sell candidates: 

  • Have interviewers and potential team members reach out to share their enthusiasm for the candidate possibly joining

  • Have a key executive email or call the candidate to congratulate them on the offer and include positive feedback they heard from interviewers throughout the interview process

  • Send the candidate a gift, whether that’s company swag or a restaurant gift card (“Great conversations happen over great meals - please enjoy dinner on us”)

Generally, the longer the process takes, the lower the hiring chances. It’s important to build a strong relationship with your candidate so you know what offers they’re expecting, the different timelines, and what they’re looking for in each offer. 

We typically recommend a one-week offer deadline. We do not recommend discussing offer details until they are ready to start making decisions, so one week should be enough time for them to compare other offers, ask any necessary questions, and confidently make a decision. If they are truly a special candidate, you can let them know that you can place their offer on a short hold while they see their other processes through so they can confidently make their decision and thoroughly evaluate each offer. 

You can also use timing as a lever in the signing process if you’re really interested in hiring the candidate. If a candidate is able to make a decision quickly and is willing to stop their process with other companies, you could offer them an additional sign-on bonus. 

5. Keeping a candidate engaged before they onboard 

After your candidate signs, be sure to let the team know so they can send congratulatory emails. The candidate is likely turning down other offers and resigning from their current role, so these emails provide a vote of confidence that they made the right decision. 

Stay in communication with the candidate until their first day, whether through emails, phone calls, coffee, or team events. The hiring manager should connect with them to discuss their first few weeks of onboarding, ongoing projects, and upcoming events. Consider sending links to industry news, blogs, or videos that are shared knowledge on the team. Depending on their role and level, you may also want to send company planning or strategy docs.

Even though the candidate is set to join the team, staying in touch with them reduces the chances of any cold feet. If your candidate goes dark and doesn’t respond, you’ve lost them. While this was limited to edge cases for years, it’s become more common and really drives home why your interview process, offer discussions, and follow-ups are so critical.

Conclusion

We’ve seen these offer milestones help companies succeed over and over again. Designing your offer process upfront with create a more thoughtful hiring machine, which is crucial to early-stage culture building and scaling world-class teams that win.

Edited by Taylor Majewski

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