Managing Expectations & Sealing the Deal

We believe that continuity is important in any search. Because we've resisted the temptation to build layers of consultants in our practice, our partners are the ones to communicate directly with candidates who ultimately make the final cut, even in the earliest stages. As a result, our partners have a real relationship with each finalist candidate when it comes time to "seal the deal." Sealing the deal in this sense has nothing whatsoever to do with coercion of any kind. Rather it has to do with having developed a relationship with each candidate and having acquired specific knowledge about what constitutes a good move on the part of the candidate and his or her family. By the conclusion of each search, we've accumulated a rather lengthy list of reasons why this move is ideal for both candidate and client. This kind of philosophy usually results in a win-win situation for our clients and candidates; or as we say, a win-win-win. We like to win, too!

During this period when we are developing a relationship and a list of "reasons why," we are also assessing the candidate's expectations with regard to compensation, title, benefits, moving packages, contracts and the like. Executed properly, there should be no surprises at the end of the search. If expectations have been managed properly from the outset, our consultant should have a crystal clear picture of what our client is willing to offer and what our candidate is reasonably willing to accept. The operative term here is reasonably. If the move in question is all about compensation, it's not a good match.

We are consultants with a specialization in executive search. Our clients and our candidates depend on us to negotiate and mediate in such a manner that we create win-win scenarios. Here are some of our thoughts you may apply to your search. Most of this is coming from our perspective, but the principles still apply.

Negotiation of compensation must start in the early phases of the search. This process takes skill, intuition and probing. This process must start with a clear understanding of each candidate's motivation to make a move. Recall from the chapter on opportunity positioning that, in the ideal scenario, you are selling the opportunity and not the candidate.

We recommend concluding recruiting calls with an open-ended question such as "Are you aware of anyone I could or should be speaking with?" We ask the question in this manner in hopes that appropriate candidates will volunteer themselves as perfect candidates. Once we have established interest on the part of a particular candidate, we are then in perfect position to begin to ask, rather than answer, important questions. Once interest has been established, we respond by asking why the candidate him/herself may be interested.

This is the time to start listening actively and carefully. If you are to be successful in negotiating the compensation piece of the puzzle, you had better understand the candidate's motivation to move from the outset. After having asked the pivotal question, regarding the candidate's willingness to entertain the move, we could either qualify or disqualify the candidate based on his or her responses. Let's face it. Most candidates we approach would be willing to make a move for an unbelievable increase in compensation. The fact of the matter is that the average increase to make a lateral move, in terms of responsibility, even cases in which relocation is required, is 10-15%. There are many legitimate reasons to change employers. An increase in cash compensation, in and of itself, is rarely a legitimate reason.

If someone is to become and remain a legitimate candidate, they must demonstrate to you the willingness to make the move, and willingness to actively and enthusiastically pursue the job in question. Legitimate, primary reasons include:

  • Lack of career opportunity with current employer, resultant of current employer's size, resources, geographic location or reach, reputation, quality of management, etc.
  • Enhanced career opportunity in terms of responsibility, visibility, personal growth or ability to work with a superior team of executives
  • A dislike of a new direction or board of current employer
  • A desire to join our client, who is larger, smaller, more progressive, more prestigious, more visible, more quality focused, more flexible, etc.
  • A strong desire to be in a more desirable area of the county, such as the case in which a candidate wants to move to his or her home town or state, or to move closer to family.
  • A desire to participate in an equity sharing opportunity.

An increase in cash compensation should be a secondary reason for making a change. When we conduct a search, we must establish in the very early stages of our search, the candidate's expectations in terms of cash compensation. Most of our clients, while having a compensation range in mind, want us to surface the best available talent based on our specification and let compensation be driven by the market. Regardless of your flexibility on compensation, it is important that you understand the candidate's expectations and the reasons for them.

This is one of the most complex processes relative to our task of managing expectations. There are cost-of-living issues, market issues, risk factors, reputation factors, and geographic factors, just to name a few. It could be that our client's locale has a cost-of-living substantially higher or lower. It could also be that the nature of the candidate's expertise puts him or her in a legitimate position to command a premium.

Our client could be in start-up or turn-around phase, or in danger of financial challenge; these are cases in which the candidate puts himself or herself at a higher risk relative to remaining with their current employer. In these cases, absent an equity opportunity, a premium cash compensation package possibly inclusive of large contingent bonuses or a lucrative commission schedule could be in order.

The list of variables is endless. The key here is to understand the candidate's rationale for his or her expectations. You must also be able to rationalize the legitimacy of your candidate's expectations in your own mind.

Here is an example of how we get down to the ‘brass tacks' if you will. At the end of the process, we must nail down the candidate's bottom line. Possible questions include:

  • John, assuming this opportunity is presented as we've discussed, what, in terms of cash compensation and incentives, would it take for you to accept an offer from my client?
  • John, we both know there needs to be a cultural match between us. Assuming the fit is right, what are you going to require in terms of compensation to make this move?
  •  John, you and I both know that there are questions left to be answered; assuming your questions are answered satisfactorily, what kind of compensation and relocation package will you require?
  • John, we are moving toward ultimate closure. You are, unless you tell me otherwise, going to be a finalist. Let's talk about compensation. What are your expectations?
  • John, we are both realistic in terms of the risks and opportunities relative to this situation. Have you thought in specific terms what kind of compensation package my client would need to offer in order to procure your services?

The list of questions could go on. Be sure you are prepared with a strategy to address candidate expectations. Lack of skill in this area kills deals.

We are in the ultimate business of negotiating deals that make good business sense for both client and candidate. In addition, it is our job to ensure that, to the greatest extent possible; no offer is ever extended and then subsequently rejected.

Simply stated, we try to set the stage in such a manner that failure is virtually impossible. The textbook perfect scenario is one in which our client is pleased to offer more than the candidate expects; and one in which the candidate is prepared to accept less than our client is willing to offer.

Having set the stage perfectly, we have a very clear notion of both. We know the absolute number our candidate is prepared to accept. We know the parameters on which our client has based his or her expected offer.

In the perfect scenario, you will know the absolute bottom line cash compensation your candidate will accept. In addition, you will have given us latitude to negotiate within a certain range. Your picture-perfect client might have told you they would really like to hire your candidate at $165,000. You would ultimately like your client to say "I would very much like to hire Joe at $165,000. I am also willing to go to $185,000 if necessary. Act in our mutual best interest."

In this case, as in every case, our objective is to deliver an offer that marginally exceeds you candidate's expectations, while staying below you client's top-end offer. In other words, your objective is to deliver the ultimate win-win negotiation.

Let's examine a scenario in which your candidate has revised his expectations. Let's assume there is a substantial cost of living differential to the detriment of your candidate. Let's also assume that you have asked the final pivotal compensation question, to which your candidate's answer is, "I have thought long and hard about the offer and the cost of living in Chicago; I really am going to need $190,000 in order to make the move." You have two reasonable alternatives at this point. The first involves a take away strategy.

You might say, "John, I want to make sure I understand you; are you saying if this offer comes in at $185,000 you are going to turn it down? If he says he definitely would decline, your response should be: Are you also saying that if I could get you $190,000, you would definitively accept? In the event he says "yes," be sure to flush out any remaining issues at this point. Say to John, "I am not at all sure I can get the 190. We'll try. John, are there any other issues we need to discuss, or is this the only dangling issue?" If he responds in the affirmative, you say "John, if I can get the $190,000, when will you start?" We NEVER go back to our client with a counteroffer if there are unresolved issues, or without a start date.

In the absence of a search professional, you or someone in your organization will have to manage the expectations of your potential new executive.