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How to Write an Offer Letter

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.
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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.

How to Write an Offer Letter: What to Include

    •    Basic information: In the opening of your letter, include the title of the position, the start date, exempt or non-exempt status, and full- or part-time status.

    •    Salary: Include how the salary will be paid and how often. How many details about benefits that you include in the letter is up to you.

    •    Job details: List supervisor name, expected start date, and primary tasks. Note that these tasks may expand or evolve over time.

    •    Contingencies: State that offer is contingent upon completion of an I-9 form as well as any other background checks, drug screens, physicals, or confidentiality agreements that you require employees to complete.

    •    At-will employment: Depending on the rules in your state, include a phrase that notes the employment will be on an at-will basis.

    •    Closing: Include a contact that can be reached for any questions about the agreement as well as the date by which you would like the letter to be signed and returned. Typically employers give their employees five to seven days to accept an offer. Hatke suggests that this period include a weekend. 'Sometimes it's not just the candidate making the decision, it's other people in the family,' she says. 'Do we want to move? Do we want to make this change? Is the money enough? Are the benefits going to be adequate? I like to give them some time to discuss it.'

Dig Deeper: Legal Hiring Practices FAQ

How to Write an Offer Letter: A Personal Touch

Hatke once hand-delivered an offer letter with a bouquet of flowers. 'Small companies have the ability to be a little bit more hands-on than a Morgan Stanley, so they should use that to their advantage,' she says. 'You're not processing thousands of employees, you're processing maybe two or three, so use that hands-on touch and really make the employees feel like you want them there."

Keels typically includes a packet with extra information about benefits and an employee handbook with her offer letters, but she says that it can be nice to also personalize the offer with a mug or something with the company name on it. 'You can include something to make that person feel like they're part of the company, so that it's more of a welcome packet than just an offer letter,' she says. 'And that's pretty low cost.'

If you're not excited about giving away flowers or mugs, it's easy to include a phrase in the offer letter about how you are excited about the candidate joining your staff. Many small companies don't hire often, and the candidate will be an important addition to the staff. It never hurts to let them know it. 

Dig Deeper: Hiring and Retaining Good Employees…It's Tough!

Resources

Inc.com's sample offer letter: http://www.inc.com/tools/2000/12/21408.html

How to Hire Your First Employee: http://www.inc.com/guides/hr/20710.html

The Society for Human Resource Management: http://www.shrm.org/Pages/default.aspx

Find a local branch of the SHRM here: http://www.shrm.org/Communities/SHRMRegions-StateCouncils-MAC/Pages/default.aspx

The department of labor's guide to hiring employees and contractors: http://www.business.gov/business-law/employment/hiring/


Last updated: Feb 8, 2010




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