Dr John Sullivan Talent Management Thought Leadership

When you must fill a key job quickly, expiring/exploding offers will accelerate offer acceptance.

How Expiring And Exploding Offers Will Improve Your Hiring Results

There are two times when you need your offer to a finalist to be accepted quickly. Once when the position vacancy is so impactful, you need the new hire on board immediately. But also when you want your “in demand” finalist to be out of the job market quickly (So they can’t accept another offer or continue to pursue other jobs).

So, to speed up their acceptance of your offer, you provide them with what is known as “an expiring offer,” a traditional offer with a clause that tells the offered candidate that they must accept the offer within X number of days or that offer is automatically withdrawn.

An “exploding offer” adds a monetary acceptance bonus to the offer. It is called an exploding offer or an exploding acceptance bonus. The bonus automatically goes away (i.e., it explodes) after X number of days. These offer factors are most frequently used in executive and professional jobs. As well as on in-demand finalists who will likely get away if you don’t land them quickly.

Expiring Offers have many benefits

They include:

• Expiring offers do reduce decision delays – expiring offers have proven effective in reducing the time managers wait for offer acceptance (often from two weeks to three days).
• Expiring offers may increase your offer acceptance rate – in many cases, expiring offers will also increase your offer acceptance rate. First, the top candidates are almost always decisive, so it doesn’t bother them much when they have to make a quick decision. Also, the chances of you losing a finalist are much lower. These candidates have fewer days in the job market, so they have fewer chances to accept other offers. 
• This type of offer costs nothing – adding an offer expiration clause costs the company or the recruiting function nothing.
• They help your team return to productivity faster – filling the vacant jobs much quicker than normal. So, with this vacancy filled, the team can quickly return to normal productivity. 
• They shorten the company’s recruiting effort – when the offer is accepted quickly. Your company can stop its recruiting effort, saving you both recruiting time and money.
• They provide the candidate with faster closure – which the candidate can also benefit from. By finally accepting your offer, the finalist and their family will gain closure, and they will be able to end their anxiety-producing job search.
• Fortunately, you can expect minimal pushback – if you thoroughly explain to the finalist why such a quick acceptance decision is necessary before they receive the offer. This type of offer generally meets little resistance. 

Exploding Offers have additional benefits

Exploding offers (a.k.a. exploding bonuses) provide hiring managers many benefits. Those benefits include some of the same as expiring offers (reduced decision time, getting the team up to speed quickly, and ending the recruiting effort early). But there are some added benefits, which include:

• Exploding offers raise offer acceptance rates –  the thought of losing a significant bonus puts a great deal more pressure on your offered candidate to accept and accept quickly (Incidentally, this pressure’s effectiveness alarms many critics). So, with the money bonus, you can expect up to a 50% higher acceptance rate than under traditional offers. And, of course, if you have provided the finalist with a compelling argument covering why a fast acceptance decision is necessary. Few will reject your offer simply because it contains an exploding bonus.
• A monetary boost pushes the finalist to say yes – when the bonus is added only because of its impact. Under this approach, the new hire will receive more money overall. And the fact that the bonus is awarded in a lump sum may be attractive to many. The company will have to pay out extra money under this approach, so the cost of this hire will increase. 
• The bonus shows them that their new job is important – your finalists will want to know that this position is important to the organization by adding both a bonus and a time limit. You will ensure that they clearly receive that message.
• Top candidates are accustomed to making fast decisions – because most top performers excel at making fast decisions. They won’t resist making this particular decision fast. They may even assume that because of it, they are about to enter a team that won’t allow itself to become bogged down due to slow decision-making. 
• You will likely attract more top performers – most top performers expect to work in a “pay for performance” environment. So, this bonus for a fast decision will send a message to both applicants and candidates that they are entering a performance culture.”

Action Steps (For those that decide to pursue implementation)

Below, you will find several steps for implementation that you should consider.

• Determine how much time to allow – obviously, the most important element of an expiring offer is how long you give the candidate to decide. I have seen it as short as “at the end of the day” in cases where it had been clear to the candidate for days that they were about to get an offer up to five days. (Because any longer wouldn’t really be an expedited decision). Three days is about the average time for expiring offers. Exploding offers also have set time limits, usually between three and five days.
• Determine how much money is in each exploding bonus –  the amount of the exploding bonus is based on the total compensation in the offer. But usually, it’s at least $5000. And it can range from 10% to 25% of the finalist’s total salary when you’re serious. I have even heard of extreme cases where the exploding bonus was as much as $100,000.
• Consider offering a progressive reduction in the bonus amount – not everyone plans for the total bonus to expire on a single date. In my experience, I have found that as many as half of these exploding bonuses include two explosion dates. After the first date passes (that covers half of the allotted time), 50% of the proposed bonus automatically goes away. After half of the allotted time, the remaining bonus portion automatically disappears.
• Consider combining the two approaches – an exploding offer doesn’t usually need a short expiration date. Because almost everyone decides before the remaining part of the offer explodes. However, if you need lightning-fast acceptance, it is possible to combine the two approaches. The total offer and the acceptance bonus are automatically withdrawn, usually within five business days. This combined approach has the strongest impact on encouraging a fast “yes decision.”
• You must develop a compelling explanation covering why you need fast decisions – because these approaches aren’t common in most industries. Your approach may confuse some of your finalists. So, it’s in your best interest to provide the finalist with the business reasons why you use these practices. You need to pretest this message to ensure it’s compelling and 100% effective.
• Ask new hires what recruiting elements impacted their decision – it should be a standard practice to ask every new hire during onboarding what factors caused them to accept the job. But in this case, you should also ask them if the offer approach had any positive or negative impacts on their decision to say yes when they did. You should also sample a few of the finalists that turned you down. To find out if your offer approach significantly impacted their rejection. You should also check to see if either of these approaches had a negative impact on recruiting diversity.
• Be flexible – even though this process has certain rigid elements when possible. There’s no reason why you can’t be flexible. And when individual finalists give you a compelling reason. Negotiate the expiration dates with the finalist.
• Don’t worry about putting pressure on the finalist – the underlying foundation of both offer approaches is pressure. They work because the offer pressure and losing money pressure have proven to have a powerful positive impact on finalists. Of course, rushing or pressuring finalists could also force them to say no. But that seldom happens in practice because most candidates are eager to accept an offer in hand.
• Consider adding other offer acceptance boosting features – if you really must increase your offer acceptance rate. You should also consider adding other common offer-related features, including sign-on bonuses and a preplanned salary reopening date. They are both powerful. Both tools can be found elsewhere in this handbook.

If you only do one thing – do benchmarking research with recruiters at non-competitor companies. Then, try one or two cases on your own finalist. Afterward, interview each one to learn about the impacts of the process and how to improve it.

Final Thoughts

It’s important to note that these pressure offer options are most needed in a few job areas. They are most often used in executive and professional jobs. And they are most effective when the job market is weak in certain professional areas. That means that they might be less effective in job families like AI, data security, and quantum computing. Where most finalists are fully employed, and when they search, they have multiple job choices. So, they are less likely to succumb to corporate pressure. 

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