Employee Disengagement Starts With the Job Offer
Putting tight deadlines on job offers may seem like a good way to grab desirable talent, but doing so carelessly damages firms in the long term.
Among
the hindrances to global economic recovery is an epidemic of
indifference that has apparently swept through the workforce. Up to
70 percent of employees are disengaged, i.e. alienated from
organisational goals, a phenomenon responsible for USD$500 billion in
annual lost productivity for U.S. companies,acording to Gallup. Many
leaders have tried to address this by making changes to their
organisational culture, but the overall level of disengagement hasn’t
budged since the turn of the millennium.
One
reason for this might be that the conversation around employee
disengagement has largely ignored the all-important first point of
contact between firms and employees: recruitment. Our recent paper in
Decision
Analysis,
“Exploding
Offers Can Blow Up in More Than One Way”
(co-authored
with Nelson Lau of KCG Asia Pacific), underscores how managers, by
using shortsighted tactics to pursue potential employees, are sowing
the seeds of disengagement, or worse.
Here’s Your Contract, Now Punish Me
Our
research explored the knock-on effects of “exploding job offers”
– offers that must be accepted soon, sometimes within one day, or
else vaporise. In the battle for top talent, exploding offers are a
particularly blunt weapon designed to forestall negotiations and
comparison-shopping among the most desirable candidates. We
hypothesised that hiring candidates via such offers would negatively
influence their behaviour as employees. In other words, once
installed as staff members, they would be more likely to do the bare
minimum than go the extra mile to bring value to their employer.
We
involved two groups of people -- INSEAD MBAs as well as participants
found through Amazon’s Mechanical Turk platform – in a series of
behavioural experiments whereby participants played either the firm
or the job candidate. The “hiring managers” had the option of
making either open-ended or exploding offers. If an exploding offer
was made, the “candidate” was told that if he rejected it there
was a 50 percent chance of a better offer coming along. This was a
basic way of testing whether exploding offers are successful at
capturing talent in the first place. We also gave candidates the
choice to reciprocate by reducing or increasing a payment to the firm
upon acceptance of the offer. In their effects upon the employer,
these options roughly correspond to a new hire developing either
disengaged or diligent work habits.
Across
several variations of the study, we found that not only were
exploding offers punished far more often than extended ones, but they
also were not appreciably more effective at capturing candidates. As
we write in the paper, “The proportion of the responders that would
accept an exploding offer was close to 50 percent in three out of
four studies (and never significantly higher than 50 percent), but
responders reciprocated much less positively to the proposer after
accepting an exploding offer than when accepting an extended offer.
In other words, the proposers issuing an exploding offer suffered
from what we call the reciprocation
curse.”
Behavioural
Consistency
When
participants switched roles, things got even more interesting. We
found that participants who had accepted exploding offers as
candidates were much more likely to make such offers when they moved
behind the desk, and those who had rejected exploding offers tended
not to make them. This raises the possibility that adherence to the
Golden Rule may help account for the enduring popularity of exploding
offers: Managers who make such offers are thinking about what they
themselves would find acceptable, rather than how their actions would
be received by candidates.
Changing
Perspectives
If
a certain lack of self-awareness characterises the blanket usage of
exploding job offers, it follows that considering the situation from
the candidate’s perspective may cause a hiring manager to think
twice. In the final study covered in the paper, we randomly assigned
participants, prior to the offer stage, to write short essays from
the perspective of either the firm or the candidate. After analysing
the word choices in the essays for intensity of emotion, we spotted a
correlation: Those who had written feelingly from the firm’s
perspective were more likely to make exploding offers, and vice
versa. Essays with a low emotional intensity were statistically
insignificant.
Taken
together, the findings indicate that reliance on exploding offers may
be based more in emotional bias than in a thoughtful consideration of
the facts. But they also suggest that these biases are not
irreversible, as long as managers are willing to step outside their
own perspectives and try to anticipate how their decisions may affect
candidates.
Don’t
Lose Your Detonator
None
of this is to argue that exploding offers are always the wrong way to
go. Sometimes they’re reasonable: for example, in longer interview
processes involving high levels of commitment from both parties.
After several rounds of interviews spanning weeks or even months, it
may be fair to assume that the candidate has had sufficient time to
gather information and deliberate, and should be ready to make a
quick decision. And, of course, sometimes a position simply needs to
be filled right away, in which case a signing bonus may help to make
the candidate feel he or she has been dealt with fairly. (But a
signing bonus so small as to be perceived as insulting by the
candidate may only make things worse.)
The
most important thing to remember is not to underestimate the
reciprocation curse. Don’t assume that a candidate’s signature on
an employment contract constitutes an endorsement of the recruitment
practices used to get it there. If a working relationship starts off
badly, it will likely continue on that note. Sometimes it’s better
to risk losing a star candidate to a rival firm than to welcome a
disengaged or resentful version of that candidate into the fold.
Yakov Bart, INSEAD Assistant Professor of Marketing, Neil Bearden, INSEAD Associate Professor of Decision Sciences, and Ilia Tsetlin, INSEAD Associate Professor of Decision Sciences http://knowledge.insead.edu/talent-management/employee-disengagement-starts-with-the-job-offer-3656#xYrY9VGtFSrRKBE7.99
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