Case Study: Here Today, Gone Tomorrow!
An employer sends the following offer letter on September 30, 2002, to students that she has just interviewed:
"On behalf of the Vice President of Operations and the staff, we want to wish you good luck during the upcoming semester. Everyone who you met at Global Oil Company was very impressed with your potential contribution to the Company. In that regard, we are pleased to offer you a position as a geologist at a starting salary of $60,000. Because we are making this offer well in advance of your start date, which is on or about June 1, 2003, the salary may increase pending market conditions.
If you choose to accept this offer prior to October 15, 2002, you are entitled to a $2,500, taxable signing bonus payable within two weeks of your start date. If you decide to accept this offer after October 15, 2002, but prior to November 15, 2002, you are entitled to a $1,500, taxable signing bonus payable within two weeks of your start date. If you decide to accept after November 15, 2002, but prior to December 1, 2002, you are entitled to a $1,000 taxable, signing bonus payable within two weeks of your start date. You will be required sign our repayment agreement upon receipt of the bonus. If you do not accept by January 1, 2003, the employment offer will expire.
Please note that this offer is contingent upon several matters: (1) the successful completion of your degree and maintenance of your academic standing; (2) the completion of a background investigative report satisfactory to the company; (3) your signing of the employment agreement (4); and your successful passage of our drug and alcohol screen which will be given within three days of your start date."
Questions to consider:
- Does this letter reflect an equal commitment between the company
and the student?
- Does the offer of the bonuses "improperly influence"
the student's job acceptance?
- What are some of the pros and cons of providing signing bonuses?
1. What relevant facts are known?
a) Global Oil is giving the students two weeks to make their first decision about accepting an offer and bonus. The final deadline is three and a half months away.
b) The bonus is contingent on satisfactorily passing four requirements set forth by the company.
c) The starting salary is $60,000, but may increase pending "market conditions."
d) The bonus must be repaid if the student accepts then later decides not to work with Global Oil.
e) If the students accept the offers by the first deadline, then they incur high "opportunity costs" because they will miss all on-campus interviewing and the fall semester is THE recruiting period for geologists-very little or no on-campus interviews are available for them in the spring. Similarly, if they accept by the second deadline, they only have two weeks of on-campus interviews, typically.
However, we do not know the following:
f) Will the bonus be lost if any of the four contingency "matters" are not successfully met?
g) Can the $60,000 salary be reduced if market conditions become worse?
h) What does the "background investigative report" consist of?
2. Identify the NACE Principles in question.
a) Employer Principle #1: "improper influence"
"Employment professionals will refrain from any practice that improperly influences and affects job acceptances. Such practices may include undue time pressure for acceptance of employment offers and encouragement of revocation of another employment offer. Employment professionals will strive to communicate decisions to candidates within the agreed-upon time frame."b) Employer Principle #2: "professional knowledge"
"Employment professionals will know the recruitment and career development field as well as the industry and the employing organization that they represent, and work within a framework of professionally accepted recruiting, interviewing, and selection techniques."c) The three NACE Principles for Professional Conduct precepts that underlie the profession's moral standards are applicable, namely:
- "Maintain an open and free selection of employment opportunities in an atmosphere conducive to objective thought, where job candidates can choose optimum long-term uses of their talents that are consistent with personal objectives and all relevant facts."
- "Maintain a recruitment process that is fair and equitable to candidates and employing organizations."
- "Support informed and responsible decision making by candidates."
3. Discuss practical alternatives that are consistent with NACE Principles.
In accordance with the aforementioned principles and the "Exploding Offers" position paper, the employer should be encouraged to revisit the "sliding scale" bonus reduction approach. According to Spotlight (June 15, 1994), "A student must be given a sufficient opportunity to consider an offer. Certainly, if the student is offered a cash incentive and is also told that he/she must accept the offer within a short time frame, then there is improper influence." That is certainly true of the two-week preemptive first deadline. If a signing bonus is felt to be necessary, make it contingent on accepting the offer to work for the company by a reasonable date. While a minimum of three weeks to return a decision on a job offer is generally recommended, "Exploding Offers" suggests that employers who make job offers at the beginning of fall semester ought to consider keeping their offers open until the end of the semester. Perhaps move this back to December 1, which is totally reasonable. Students who do not accept the December 1 offer could still be considered for positions through January 1, but without a bonus.
Decision
a) First, the career services office needs to get answers to questions f, g, and h in section 1.
b) The career services director should then contact the organization to discuss this offer letter. He/she should point out the ethical problem this presents and refer the employer to the Principles for Professional Conduct and the "Exploding Offers" piece. He/she should present an alternative such as recommended above to the employer for the company's consideration and recommend a new mailing. The director should point out the potential drawback to the company from putting pressure early on students to accept an offer and thus remove themselves from the opportunity to consider other opportunities. In the long run, an early, perhaps premature decision by the students could have negative ramifications for the students and the company. In their urgency to "lock-in" students, they may end up with dissatisfied employees who leave early for another opportunity. The cost of recruiting new candidates will be much greater than the bonus money that had been offered.
c) The director could conclude that this practice is unacceptable and not provide the employer opportunity to recruit on campus, but he/she should explore all options with the company before arriving at that conclusion.
