Tech talent is scarce — here’s how to beat the competition (Part Three: Closing the Deal)
So you’ve located the needle in the haystack, your ideal candidate. You’ve been through the motions, they smashed the case study and your team is completely sold on them. The hard part is over, right? We hate to be the bearer of bad news, but the process is far from over.
This article is part three of a four-part series on how to beat the competition in the tech hiring stakes — see also parts one and two.
1 — Communicate
It may seem a blindingly obvious point to lead on, but in our experience, it is miscommunication or a lack of communication that most frequently results in the breakdown of the offer process. Indeed, all the points to follow boil down to matters of communication. It is crucial to establish a strong line of communication between candidate and team throughout the process. Which leads to our second point…
2 — Do IOU an MoU?
We hope that you and your candidate are on the same page; however, in many cases, one side is on a whole different chapter.
Throughout the recruitment process, there’s a tendency to dance around ‘hard’ issues such as compensation, contractual obligations and titles in favour of assessing things like capabilities and culture fit. We tend to agree that the latter should be of greater importance initially — as long as the former expectations are roughly aligned, most other things can be negotiated in a mutually beneficial manner.
However, this doesn’t detract from the importance of the hard facts. This is where the MoU comes in to play. The MoU — Memorandum of Understanding — is a framework which expresses a convergence of intention between parties with a common intended line of action.
Items covered by an MoU can include, but are not limited to:
- Salary expectations
- Notice period
- Hours (incl. remote work expectations)
- Pending promotions (employers may attempt to placate the candidate in this manner)
- Plans (eg. upcoming leave)
- Other processes a candidate is engaged in
- Extra considerations (could be anything — “I want to bring my dog to the office” is a popular one, and an unexpected dealbreaker)
- Suggested action
Think of the MoU as a safety precaution before extending your actual offer. It ensures that your company and your candidate are on the same wavelength and that no nasty surprises materialise at the offer stage.
3— Salary negotiations
As we climb the career and salary ladder, we all become accustomed to the comforts bestowed upon us by our status. Unfortunately, few startups are in the funding position to offer salary increases or even parity to individuals from corporate backgrounds. At the same time, under-offering a candidate can be a dealbreaker, even in situations where the numbers are up for negotiation. After all, startled and insulted people rarely behave in a rational way.
If you want to attract top talent, you will need to pay at least on-market, if not above. So, how do you find out what is ‘on-market’? While various sites and surveys claim to offer salary estimates, we often find these to be outdated or just plain incorrect – particularly where startups are concerned and salaries are less uniform. You may find your best source of up-to-date salary intel to be your recruitment partners, for they have recent experience discussing salary with individuals of differing seniority across the tech world.
4— Weighing your options
While nobody wishes to take a pay cut, they may be inclined to consider it if paired with a long-term incentive. It’s common practice in startups to offer share options or equity as a form of compensation. These are often offered in lieu of a salary match or increase, doubling as an incentive for hard work and long-term retention.
While options are ubiquitous in the startup world, there remains a lack of clarity among both candidates and employers about what equity and options actually entail, the differences between the two, and how to issue them in an effective manner. We frequently encounter confused engineers to whom options seem like a “lottery” or a cunning way to sell them short.
Make sure that your candidate understands what they are being offered, the vesting timeline and the potential upside as well as the risks involved. Some people, particularly those earlier in their career trajectory, would rather be paid on-market now than face these risks. Be prepared for this.
5— Slow and steady loses the race
It’s a big decision to make any hire, even more so when your company is composed of a relatively small number of employees. In a team of nine, one new hire will compose a tenth of your workforce — that’s pretty significant. Big or small, the consequences of making a poor hire can be pronounced.
Nonetheless, if you want to beat the market, you cannot shuffle your feet. Just as you have hedged your bets by corresponding with a multitude of candidates, this candidate has almost certainly been in other processes and likely received other offers. This is particularly true if your candidate was an applicant or an individual actively seeking a career move. Most offers have an expiry date, so they’re likely under time pressure to give an answer to other companies.
If you’re pretty certain that this candidate will do the job, you should take the plunge or risk losing them.
6 — Cover the contract
Contracts are confusing — that’s why lawyers with years of training specialise in them. They are also extremely important to protect both employer and employee, so be careful with the content of yours. Make sure that you have the approval of a trusted lawyer before issuing a contract, or pay the price later. If you need help finding legal assistance, reach out to your network for recommendations — again, your recruiters could be a good source of intel here.
*Annex: what to do if your star candidate drops out
Humans are fickle — even if you’ve aced all of the above, you can’t control for a candidate dropping out. So, you’ve lost the candidate your hopes were pinned on — what now?
Review the process that resulted in the offer rejection in as unbiased a manner as possible. Did you move too slowly, enabling a competitor to come up with an offer before you had a chance to? Hell, did you move too fast and neglect to consider an MoU before extending your offer? Was your offer below the market rate (you’d be surprised how quickly the market rate increases)?
Back to the drawing board? Not necessarily — provided that you have a solid pipeline in place, you may find promising candidates whose shine was dulled by that of the other candidate. After all, if that candidate rejected your offer, they weren’t really right for your business anyways. We always recommend keeping options open with ‘backup’ candidates who are also good — you’re not settling for less, just looking through new lenses.
If your pipeline is dry (‘backup’ candidates move fast, too), you may have to restart your search. This is disheartening, but the second time around should be less taxing as the infrastructure (job ad, requirements, process management) is already in place. Indeed, having seen a few candidates at this point, you can run a more streamlined process after a trial period; you know what you want and can go straight for it.
Closing a candidate is the highest-stakes part of the process, where you stand to lose the most.
Do not take it lightly. However ‘sold’ you believe your candidate is on your company, there is always competition, particularly where individual vanity is at stake. Move fast. But try not to break things.