Wise words from both The Godfather and recruiters everywhere: Give them an offer they can’t refuse.
One of the most exhilarating parts of the hiring process is telling your new hire you want them to join your journey. To make that part happen, you should send them something called a job offer letter.
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A job offer letter is a written document employers send to candidates that contain the offer, or what they’ll get if they decide to accept the role.
It’s important to note that offer letters aren’t technically required when you bring new people on board.
Despite that, most employers send them anyway because it’s a good way to reinforce what was discussed in the verbal offer. And yes, it is recommended that you make a verbal offer first. No one should find out they got a job by finding a letter or email in their mailbox.
A job offer letter also helps to serve as a paper trail in case candidates want to negotiate offer details such as compensation.
Now, let’s seal the deal with a snazzy offer letter that gets the newest member of your dream team to sign on the dotted line.
What to cover in the offer letter
You should include any details that help define the role. Here are some of the elements you should consider when crafting the ideal job offer letter:
Include the title of the role and a brief description of what’s expected. Are there things that need to be part of their role? Be sure to write those down so that you can always refer back to it if there are any questions in the future.
Outline how much they’ll be making, any equity being offered, potential bonuses, what the commission structure is like, and any other compensation structure information that’s important for them to understand.
For hourly employees, it’s best practice to use the hourly rate rather than an annualized version of it in your job offer letter. For salaried employees, it’s best practice to show their annual salary and how much they’re paid during each pay period.
Use this space to really explain what their pay will look like. It’s no good if employees feel like they were unclear about what they were being offered.
Courts view an offer letter as a contract, and employees have been known to sue if their actual gross wage doesn’t add up to what was stated in the offer letter.
Weekly, biweekly, or bimonthly? Explain how often they’ll get paid. It’s often helpful to include an employee’s annual salary along with the exact amount they’ll be paid during each pay period.
So if someone is earning $75,000 a year, you would write that they’d earn $2,884.62 every biweekly pay period. Be sure to include any bonus cycles if bonuses are part of their compensation.
List out any benefits they’ll be able to take advantage of, like health insurance or a 401(k) plan. Do you offer smaller benefits, like paying for employee lunches or cell phone bills? Wrap those in as well.
Don’t forget the important details: start date, office location, and work schedule. Also, include any logistics specific to your workplace.
When does the offer expire? And who should they reach out to if they have any questions? Break it all down here.
This is an important one: write down who their manager will be as well as the title of their manager. If your new team member will also be managing others, write down who they’ll be managing.
Contingencies (if any)
If your new hire has to sign a non-disclosure agreement or pass a drug test or background check (credit, criminal, driving record, employment, or otherwise) in order for the offer to be valid, make sure that’s clearly stated. Also, include that hiring is contingent upon the new employee completing all of the new hire paperwork.
You’ll need to add a space where the employee can sign to agree to the terms outlined and to accept your offer. You can do this by having them print and sign a copy or by sending them a secure version through an e-signature tool such as DocuSign or HelloSign.
Side note: Take the 10 percent rule to heart. According to recruiter Jorg Stegemann, most candidates expect a 10 percent pay bump whenever they switch jobs.
Sure, you want to make sure all the basics are inside your letter. But it’s also important to celebrate the moment that you’re really talking about. Don’t be afraid to be excited and cheerful in your tone — this is a happy occasion after all, and you want to convey that to your candidate.
Reiterate your vision and how that person’s role plays a part in bringing that dream to reality.
You want to make the person you’re writing this for feel wanted. Don’t just cross off the basics — include specifics on how important they will be to your team.
And finally, make sure you cross your t’s and dot your
Do you want your offer letter to be seen as a binding contract? If not, make sure you include your employee’s at-will status. Unless you live in Montana, you probably live in an at-will state. (If you’re unsure, check with your local state employment agency.) This means that in these states, companies can end their employee relationships at any time without having a clear reason. If your employee is at-will, make sure you include this in the offer letter.
Exempt or nonexempt status
Your employee will also either be stamped with exempt or nonexempt status, which you’ll want to add in their offer letter. Exempt folks are typically salaried and therefore don’t receive overtime pay and may not be eligible for minimum wage. On the flip side, nonexempt employees are eligible for these things and are often hourly.
Remember what you loved about the candidate you interviewed, break out your laptop, and start hashing out your job offer letter. With these tips up your sleeve, you’ll be ready to write a note that down to the letter, your employees will be elated to receive.