If you’re reading this, chances are you want to make an offer to a job applicant. To do this, you’ll need to write an offer letter that officially clinches the deal with your potential new hire. The purpose of the offer letter is to convince the candidate to leave their current role and come work for you. In this article, we will provide a free offer letter template, explain what should be included in a good offer letter, and also address what to do before and after sending your offer letter.
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Free Offer Letter Template
(insert company letterhead/ logo)
COMPANY OWNER/ ROLE
NAME OF CANDIDATE
Dear (first name of candidate),
[Introduce what your company does].
On behalf of COMPANY NAME, I am pleased to offer you a chance to be a part of our team. I would like to offer you the position of JOB TITLE. You will be part of our NAME OF TEAM team and will report to HIRING MANAGER. This is a (part time/ full time/1099) role and more information will come in your employment agreement.
The offered compensation for this role is COMPENSATION. Upon success in your role, we pride ourselves in taking care of those who help us as company along, and bonuses and pay increases shall be evaluated on a TIME FRAME basis. You will also be eligible for our benefits program, which includes BENEFIT OFFERINGS, after a XX probationary period.
Please note that this offer is contingent upon your ability to pass a (insert background test, drug test, etc…). More information on this will come under separate cover.
We would ask that you accept or reject this offer by DATE. Please let me know by email or phone. My email is (insert email), and my phone number is (insert phone number).
Should you have any questions, please contact me as soon as possible.
This is an exciting time; welcome to our team!
COMPANY OWNER NAME, POSITION
What to Include in An Offer Letter
The offer letter should have the following components:
- Be on official company letterhead
- Be written in the proper letter format (business name and address, date, and proper salutation and closing should be included)
- Have the candidate’s full legal name & address
- Job title, schedule, (i.e. full time, part time), and who the position reports to
- Broad overview of compensation, such as the salary amount (or the 1099 hourly rate)
- If you’ll be offering health insurance or other benefits like dental, vision, or a 401K, mention this in the offer letter but don’t describe them in detail (more specifics can be detailed in the employment agreement)
- Provide any contingencies for revoking the offer, like passing a drug test, credit check, and/or a background check.
- Provide the date that the offer should be accepted or rejected by (1 week is the usual standard unless the candidate requests more)
- Tell the candidate how to accept the offer – by email? By phone? Either?
- Include an official signature from either the company owner or the hiring manager
Nitty gritty details about compensation and perks, like bonus structure, the amount of paid time off, and health insurance details should go into the employment agreement.
Same goes for at-will employment. Under at-will employment, which is the law in all states except Montana, employers can terminate an employee at any time without notice and without reason (as long as it is not discriminatory). Vice versa, an employee can leave a position at any time without notice and without reason. At-will employment is best mentioned in an employment agreement, if you have one. The employment agreement will serve to be a much more legally binding, detailed document, which is why the details needs to go in there instead of an offer letter.
Keep in mind, the offer letter is a jumping off point – your candidate might say no, yes, or come back with a counter offer. So, keep it short and sweet. There is no need to divulge all of your company secrets, like commission structures and insurance details, until you are further into the process with your potential new hire.
What to Do Before Sending the Offer Letter
Make a Verbal Offer
In many cases, a business owner will make a verbal offer to a candidate before sending a written offer letter. While this isn’t necessary, in a competitive job market, giving a candidate a verbal offer over the phone can be a nice way to ensure that you stay top of mind in case they are considering other job openings. It also can show your excitement for the candidate.
You can say something like, “Mike, our team loved meeting you so much that I wanted to call to say that we will be providing an offer to you as soon as possible. I don’t have details yet, but you can consider this phone call an official notice that an offer is coming.”
Then, you need to make it properly official with a written offer. In terms of sending the offer letter, email is king. You can send the letter as a PDF attachment to the email, or better yet, use an electronic signing system like RightSignature.
As an HR consultant and recruiter, I can assure you that I would never place a candidate of mine with a company who did not provide an official offer letter–it’s too risky and it looks unprofessional and lazy. If you don’t have time to use our free template or to write one, what does that say to the candidate about what it will be like to work for you? Not much.
What to Do After Sending the Offer Letter
Discuss the Offer Over the Phone
You don’t need to call a candidate to review the details of an offer letter, but it is the classy thing to do. A candidate might be more introverted (e.g. a developer), and if they have questions, they might just say “no” over risking confrontation. Giving the candidate a call and asking if they need anything or have any questions is a classy, friendly, showing-them-you-care thing to do.
Negotiating compensation is a touchy subject but also fairly normal practice. You should not be offended if a candidate wants to negotiate. If you do your research ahead of time on what is fair compensation for the industry and role and the going market rate, you will greatly lower your need to negotiate. Websites like Glassdoor and PayScale can help you determine fair compensation.
Even if you do your research, you may still get someone who would like to negotiate. If the person wants to talk about salary or even about an hourly wage, expect the person to counter about 10% more than what you offered. A classic way to deal with this is to meet them halfway–but only do that if you can afford it and if you think the candidate is worth it.
Remember, negotiating does not mean a candidate isn’t excited to work for you! That being said, we recommend that you don’t mention in the offer letter that an offer can be negotiated–this invites negotiation even if an offer is fair. If you do need to negotiate, it’s best to do so in person (or over video if the candidate is remote) in order to have the best level of communication.
What do I do if I can’t meet what the candidate wants?
If you cannot give a candidate the salary they want, get creative. Can you offer more paid time off? Or what about a performance-based commission structure? What about a structured goal setting system that can get them to the compensation they want within a year? (This can be really great if you are hiring someone for sales or to clean up a technical mess of some kind).
If all else fails, ask a candidate, “What can I do to make you happy in this role if I cannot come up to your compensation level?” Maybe they want to manage other employees. Maybe they want to report to you directly.
But then, ask yourself–Will this candidate keep looking for more money always? Feel out if the candidate’s requests are genuine or if you can create a true win-win. Otherwise, find a candidate in your price range.
Consider Writing an Employment Agreement
Not all businesses use employment agreements, but it is best practice to have one. Compared to an offer letter, the employment agreement is a much more legal agreement and is usually drawn up by a lawyer or a law-compliant service like an HR consultant. The employment agreement will also touch on non-compete clauses and other legal jargon that should be left out of a cover letter. You can get a template employment agreement on Rocket Lawyer, but we suggest having it reviewed by an attorney.
The employment agreement should be signed and dated by both the candidate/new hire and by the CEO or business owner. The offer letter is only signed by the company, so it’s not a legal agreement between parties.
The Bottom Line
Offer letters still have a purpose for both the business making the offer and the candidate receiving it. Take the time to create an offer letter for a candidate to not just make it official, but to show a level of professionalism that will only strengthen your company’s culture as your business keeps growing.