'Retention strategy': How to reduce offer dropouts in the war of talent
Dropouts at the last minute are every recruiter's nightmare and more so in the present ‘war of talent’ that the companies are engaged in.
Candidates refusing to join after accepting an offer represent a tremendous loss of valuable productive time spent in interviewing applicants for the same position due to multiple offer declines. This has an impact on cost, quality, schedule of business work as well as HR/recruitment work - especially when the role to be filled is a crucial role for projects that are chasing deadlines, and an offer dropout at the last minute translates into a huge revenue loss for the organisation.
While there is no hard and fast rule book that can eliminate offer rejects, there can be a few strategies that the organisations can implement to minimise the percentage of offer dropouts and rejects.
Rethinking compensation strategy
Offer dropouts are mostly due to compensation but also due to enriched job roles such as in a product company versus a services company.
On an immediate basis, companies have/are applying all possible band-aid strategies to retain talent. This includes compensation increases and counteroffers, among others.
Companies have both ends of the problem to solve. They have a real business to deliver today and with the ever-increasing problem of attracting new talent, coupled with massive offer dropouts, organisations have very little option but to retain talent that is known, that is good and most importantly, may only be leaving for compensation.
The fact is that if compensation is the only factor, then the talent will stay back. If it isn't, it will not help.
“But if this is what the organisation is having to do consistently, it may need to think of its compensation strategy to realise if that's the biggest broken link in their employee value proposition. While this talent war can't be won on compensation, it's also not something you can ignore and not have it at an equalising level in the marketplace. The important thing to bear in mind is who are we pegging our talent with if we believe we are paying at par with who we compete with. In light of the market conditions and the changing definition of talent which is now driven more by value than experience levels, and creativity than skills, it may be critical to redefine the company's talent map and perhaps redefine the value of the talent,” says Chaitali Mukherjee, partner and leader, People and Organisation, PwC India and India Upskilling Leader
Keeping candidates engaged
Mukherjee says that hiring not just for skills match but for values and culture alignment will enable a higher 'stickiness' in the organisation. “Also putting in place a more involved hiring process that includes constant and individualised engagement may actually help,” she adds.
Improved candidate experience
Vijay Sivaram, CEO, Quess IT Staffing, Recruitment, and Search, says talent acquisitions (TA) heads across organisations today are under severe pressure because of uncertainty on this front.
“We have had offer declines and dropouts at CEO levels - that too, at the last minute. When you recruit, you not dealing with a product that comes in a shape and a size, you are dealing with a human mind. Organisations today are trying to stay away from the old school - from just select to offer process and moving to a more employee experience process because of an increasing number of offer declines that are happening in present times,” he says.
Sharing a few elements that organisations are significantly focussing on, Sivaram says: “First is the overall speed of process that you need to close out on. From the time a candidate is confirmed as a select till the candidate joins, there are very strict timelines organisations are putting in to ensure that the documentation is in place and the candidate is engaged periodically with various stakeholders. For example, customers have bi-weekly calls with candidates from the business, human resources, and leadership. Emails are being sent on the quality and culture of the organisation. Basically, the time period between selecting and joining is very engaging for the candidate, and has both email and voice level engagement, which then also kind of throws out any red flags, if any.”
Candidates with offers are invited for special webinars happening within the organisation or pre-joining meets. Sivaram says all this used to happen for the leadership candidates earlier too, but recently, organisations have been inviting candidates, at all levels, to catch up with leadership and colleagues among others.
“It is about creating an employee experience for the person who is to join,” he adds.
The second is communication. “To avoid offer declines, organisations are constantly checking on whether the candidates are actively still looking out for job opportunities. This can be found by various methods like if the candidate has updated his/her profile post receiving the offer on job portals and probing the candidate or a ‘to be employee’ a little deeper,” adds Sivaram.
Organisations also engage large recruiting/ staffing firms to help them hire. “Recruiting/ staffing firms make sure that there is a double/ triple check that happens for the candidate. Still, there is no tool or system that will guarantee you that there are no offer declines. It is all about checks, balances, communications, and speed,” he adds.
Role of a hiring manager
The candidate attraction process is no more just a TA team process, but a company process, says Sivaram.
“The vision of the role, the career path of the role has to come also from the hiring managers. Hiring managers are not only there to interview on a technical framework, or on an assessment framework. A hiring manager is also doing a job of a salesman, showing the career path for that employee, which makes it more relevant for the employee because sometimes TA teams tend to be a little process-driven. The business lead, however, can actually show a larger picture of growth to the candidate. Hence it is an organisation attraction requirement and not just a TA team role to attract talent,” he adds.
Shonalie Gupta, principal consultant, People Consulting Practice, ANSR, agrees that meaningful pre-joining connections with the hiring manager have an extremely positive impact. “We also have a regular set of candidate engagement on a continuous basis, that has a combination of HR and hiring manager calls along with social media outreach and senior leadership round tables,” she says.
Gupta adds that companies today provide a written overview of the compensation offer as the primary basis for comparing one offer against the other. “If companies begin to provide a written overview of the career prospects and the company culture, then job aspirants will take a broader view of the role rather than just the compensation,” she adds.
The backup plan
Industry experts say companies are working with a percentage of drop-outs that they anticipate. Hence the backup plan is to source candidates to fill the pipeline anticipating an X per cent will not make it despite the final offer.
Are companies setting a bad precedent with counter-offers?
Earlier, a counter-offer by a company to an already offered candidate might have been a one-off case and companies could refuse to negotiate with a candidate who is already holding an offer. But today, that has become the norm rather than the exception.
“Due to the shortage of skilled aspirants, companies have to choose within a very limited talent pool. But, yes companies are setting a bad precedent and this is not a sustainable practice,” says Gupta.
Sivaram calls the trend “an operational supply chain problem”.
“Organisations need people to achieve their outcomes and as supply becomes tougher, you have to become more aggressive in attracting that product and so, therefore, either that can be done through compensation which is the easiest and that is what most organisations follow. Also, professionals today have increasingly become brand-agnostic; and benefits are offered to them like a bouquet of choices,” he says.
“Almost all companies are doing it. If a candidate comes to a company and says he or she has another offer, no company is going to say that since you have another offer, we are not going to offer (better). They will always want to better it. So, it is the obligation that is fuelling the trend and candidates are also taking advantage,” he adds.
Is the trend short-lived?
Industry experts say the trend will steady out for sure.
As per Sivaram, for the tech industry, this will continue for the next 12 months for two reasons. First, there is huge hiring of fresher talent happening currently, and they will take around six to eight months to start eventually performing (project deliverables). Once that happens, it is going to be a steady downsizing of what is the actual demand.
“Also, if the pandemic subsides, borders will open and there will be an exodus of talent. So some churn will happen then,” he says.