It's Time to Eliminate Exploding Job Offers
Every year, some of my students receive the worst good news that can come during a job search. “We’d like to hire you,” the recruiter begins, “but we need a decision very quickly.” It’s often less than a week, sometimes as short as a day, and the offer always expires before the students have a chance to finish their interviews.
Each time, I’ve resisted the urge to contact the offending recruiters and give them a piece of my mind. After years of teaching negotiations and consulting to employers that do the right thing, I can stay silent no longer. Here’s an open letter to employers about why they should abolish exploding offers, along with suggestions on how to respond if they don’t.
I noticed that you’ve decided to give exploding offers to our students. As an organizational psychologist, I want to congratulate you on designing a surefire lose-lose strategy.
First, you’re hiring the wrong people. Exploding offers don’t lure in candidates who are the best fit; they attract people who are risk-averse. In experiments comparing the effects of short and long deadlines on job offers, negotiation experts Harris Sondak and Max Bazerman found that “exploding offers lower the quality of matching outcomes.” They measured whether recruiters landed their top-choice candidates and applicants ended up with their ideal firms, and exploding offers reduced efficiency by 8 percent to 13 percent. Similarly, economists Muriel Niederle and Al Roth demonstrated “inefficient early contracting when firms can make exploding offers.”
Even if you get lucky and sign the right candidates, you’re overlooking the fact that what goes around comes around. Exploding offers might give you a better shot at hiring star applicants, but they respond with lower commitment—which means less effort and loyalty. In a series of experiments at INSEAD, when MBA students received exploding offers, they reciprocated by penalizing the employer.
“Exploding offers were punished at a rate of five to six times that of extended offers,” the researchers explain. “Firms should not be myopic and focus only on whether they will successfully hire the applicant or not . . . If the relationship does not end well because it did not start well, then the firm will have to start all over—and that can be very costly.”
When you use an exploding offer to pressure candidates into signing, you can count on them to always have one foot out the door. As soon as a better opportunity comes their way, they’ll jump ship.
Since exploding offers make job candidates and employers worse off, I hope you’ll have the good sense to abandon them altogether. Here’s how the dialogue unfolds when students seek advice on how to respond.
My Conversation with Applicants
I like to start by asking students a simple question: Why do you think employers would issue an exploding offer?
Students typically generate four reasons: the employer . . .
(a) Tends to have a really hard time recruiting candidates
(b) Is desperate to fill the position immediately
(c) Knows you’ll never choose them if you have the chance to consider other offers
(d) Sees candidates as virtually identical, and is perfectly happy moving quickly to someone else
Would you want to work for a company where even one of these factors is at play? When candidates receive an exploding offer, they’re caught between a rock and a hard place to work.
As negotiation researcher Rob Robinson explains, “Negotiators who use exploding offers may perceive themselves to be at a disadvantage relative to their competitors . . . Or they may have severe time or budget constraints . . . the function of the exploding offer can be either to force a quick acceptance by ending the negotiation (and thus avoiding the necessity of sweetening the deal to an unacceptably high level) or to restrict the ability of the recipient to comparison-shop.”
The Far-Point Gambit
If applicants don’t reject your exploding offer outright, watch out for them to follow one of Robinson’s clever tips. He points out that fundamentally, exploding offers involve a power imbalance: the recruiter has many applicants, whereas the candidate has only one offer. To level the playing field, Robinson recommends hoisting recruiters by their own petard with a far-point gambit. The idea is to accept the offer conditionally, with the contingency being something that takes time to investigate and is at least partially under the candidate’s control. Here are some examples:
- I accept, provided that my spouse finds a satisfactory job in this city
- I accept pending satisfactory resolution of my concerns about repaying my student loans
- I will take the offer if onsite daycare is available for my children
- I will take the offer if you can address my reservations about the cost of living and relocation
“The key is to make requests that are completely reasonable,” Robinson writes, “but which will eventually result in the deadline being violated.” Of course, this doesn’t always work. Sometimes the recruiter says no, and the candidate is forced to either accept or reject outright. And it’s not always comfortable to do it. Robinson argues that the far-point gambit is useful when the employer is being unreasonable or operating in bad faith, and the candidate is interested but needs more time and information.
Exploding offers are outdated and unfair to job candidates. They’re also counterproductive for employers: they don’t succeed in landing, motivating or retaining high performers. If you want to demonstrate your commitment to good employment practices, you can start by announcing a company policy prohibiting offers that expire before your industry’s typical recruiting cycle is finished. At minimum, you might want to promise candidates that they’ll be able to finish the interviews they’ve already started.