How to avoid an offer turndown
“Hire slow, fire fast” has been a popular management mantra for decades. But to attract and land top M&A talent in today’s market, many of our clients are adjusting the tempo of their hiring practices.
Comparing our 2021 Year-End Corporate Development Offer Report to previous versions revealed that turndowns in Q3 and Q4 of 2021 more than doubled over Q1 and Q2, and more than tripled from the same period in 2020. Why? The answer turned out to be quite simple. Every active candidate has multiple offers from other companies, all offering remote work, competitive cash and enticing equity packages.
We sat down to analyze common themes from searches where clients landed their top candidate:
- An expedited interview process: As we reviewed data from 2021, we quickly realized our most successful searches had lean interview processes, and that most candidates seem to prefer it that way. Our most successful anecdote: one client was able to land six director-level candidates on their team over the course of a four-month period by using a simple three-step interview process (intro to hiring authority, hiring authority’s boss, close-out with hiring authority). The exception to this “lean and fast” rule is if the candidate asks to meet with someone explicitly (“it would be really good to talk to the person in charge of integrations”). In that scenario it is best to accommodate their request to further the hiring process.
- Make sure candidates gain exposure to your best people: The decision to join a new company is at least 51% emotional. Connecting with the team / hiring authority is the most common reason candidates ultimately choose one company over another. Our best practice is to ensure the individuals who will be interviewing your candidates are fully prepared and committed to making it a positive interaction for both parties. People who don’t show well or do a good job of selling the company should be deprioritized. Every person who interacts with your candidates should be handpicked in an intentional manner.
- Compensation: Lastly, compensation must be up to market. Most candidates are aware of how hot the M&A talent market is and will have expectations (right or wrong) of garnering an additional 15-20% in annual cash comp over what they’re currently making. Equity is an attractive reason that candidates choose to join a private equity backed business, but cash remains a central consideration. Compensation needs to be on par with the market regardless of what the equity component looks like.
We launched our transaction services business with the guiding philosophy that meaningful conversations lead to successful deals.