An offer letter communicates to a potential employee the terms of employment and can head off arguments—or even losing that employee who you spent so much energy and time recruiting—later on. Here's how to write one.
You've combed through a barrage of resumes with a critical eye, conducted several rounds of interviews, and finally selected the perfect candidate. The verbal offer has been made and the salary negotiation has ended. After all of this time, energy, and discussion, you ask yourself, 'Is an offer letter really necessary?'
Although we hate to be bearers of more paperwork, the short answer is yes. Skipping the written offer can lead to confusion later on. Interviews are stressful and emotionally charged occasions, and, even if you've mentioned job details throughout the process, it's easy for either party to misunderstand or forget what has been discussed. Having an offer letter protects both employee and employer by making expectations clear. Documenting exactly what the job's title, salary, tasks, and benefits are from the start can avoid arguments—or even losing that employee who you spent so much energy and time recruiting—later on.
The following guide explain where to start, what to include, and how to personalize your written job offer.
How to Write an Offer Letter: Where to Start
• Research state laws - Every state has different employment laws. Some states, for instance, may require that a new employee complete a drug or background check within a certain amount of time after he or she is hired. State laws like this one may affect what contingencies and deadlines you want to include in your offer letter, and it's important to know them before you write it. You can find more information about the employment laws in your state by checking with your department of labor or department of workforce development.
• Make a verbal offer - 'No candidate should find out they've been offered a position because they've received an offer letter in the mail,' says Dionna Keels, a senior corporate recruiter for one of the largest privately-owned company in the United States. She suggests making a verbal offer either in the interview or by phone first, and then sending a letter to make the details of the offer official. 'It's great if that first verbal offer can come from the hiring manager, the person who they're directly going to be working for,' Keels says. 'It makes it more personal. It makes it seem like the hiring manager cares and is excited about the person joining their team.'
It's also important to let your candidate know that you'd like to offer them a job as soon as you make the decision; waiting for snail mail to make the announcement can be catastrophic. 'The minute I know my hiring manager wants them, I call that person and let them know that we'd like to extend an offer,' says Debbie Hatke, a talent strategy manager at Strategic Human Resources in Ohio. 'If you've got somebody that is maybe considering your job and another job, and you really like them, you don't want them to accept another job before they find out that you want them, too. '
Dig deeper: How to Hire Your First Employee
How to Write an Offer Letter: Writing the Letter
• Start with a template - The easiest way to write a letter is to start with a template, such as Inc.'s offer letter template. The Society for Human Resource Management (SHRM) also has several templates that members can use. Adam Sokoliz, the vice president of operations for National Retirement Partners, an Inc. 500 company that went from 15 to 55 employees within an 18-month period, found his offer letter template googling 'offer letter.' Any template will have to be adapted to your company and reviewed by a lawyer, but it will help you out with the verbiage that you need to get started.
• The long and short - There are two approaches to writing an offer letter. You can either stick to the basics and send a follow-up letter with details about benefits and orientation once your candidate accepts, or you can give them all of the information at once. While there's really no right approach, there are advantages and disadvantages to both.
'I tend to like to keep it short,' Hatke says. 'I don't like to give the candidate too much information that they might not absorb." It might be appropriate, she notes, to send a more detailed two- or three-page letter if you are almost positive that the candidate will accept.
• Legal considerations - If you aren't intending to use the offer letter as a contract, take care to make sure that it can't be misconstrued as one. The easiest way to do this is to include an at-will statement. All states have some variation of at-will employment, which means that an employer is free to terminate employment at any time for any reason (though not for an illegal reason) and that employees are free to resign at any time without notice or cause. Including a reminder that you are an at-will employer in your letter prevents your letter from being used as evidence in misrepresentation claims. Check your state's website for the specifics of its at-will employment. Montana, for instance, only allows at-will employment for a probationary period.
The SHRM also suggests these steps to making sure that your letter doesn't have contractual implications:
• Avoid using phrases that imply an indefinite future of employment, such as 'job security,' 'we're a family company' or 'in the future.'
• Avoid written or oral statements of annual salary amounts; provide salary amounts in hourly, weekly or monthly salary terms. Stating an annual salary could imply that you will employ your candidate for at least a year. It's important to have a lawyer look over your template to make sure that it doesn't have contractual implications and that it clearly states any bonus program is not a guarantee. Sokoliz saved money by having an employment lawyer look over all of his standard documents, such as his employee handbook and offer letter, at the same time.
