Hiring Advice for Employers: Avoid Aggressive Job Negotiations

It’s no secret that some companies resort to aggressive negotiation tactics as they seek to hire the best and brightest job candidates in the “war for talent.” Among the more common examples of aggressive negotiation is the so-called exploding job offer, where an applicant might receive an offer of a $100,000 salary with a $15,000 signing bonus that shrinks by $3,000 for every day that the applicant waits to accept the job. In another example, companies might phone candidates late at night with an offer and give them only 12 hours to respond.

Clearly, employers resort to such aggressive tactics because they believe they work. But are they achieving short-term gain at the expense of longer-term problems by utilizing these tactics?

Ray Friedman, Brownlee O. Currey Professor of Management at the Vanderbilt Owen Graduate School of Management, set out to answer this question in a first-of-its kind study. His findings, recently published in Negotiation and Conflict Management Research, should make recruiters think twice about turning up the heat on potential hires.

“The goal in aggressive recruitment is to reduce the bargaining power of the job candidate,” said Friedman. “Upping the pressure might secure the candidate—though the opposite can be true as well. But even if they get their employee, our research shows that the longer-term relationship between employer and employee can be irrevocably impaired. In fact, candidates who have experienced the heavy hand during job negotiations are much more likely to be on the lookout for other job opportunities during their first five years on the job. The lost investment in terms of training and dollars ends up burying the initial gain of winning the talent war.”


A reality check for recruiters

To better understand the impact of aggressive negotiation tactics, Friedman (along with co-authors Neta Moye at Vanderbilt and Merideth Ferguson at Baylor University) conducted two surveys with MBA students and alumni of a southeastern university about their recruitment experience. In the first survey, 68 graduate business alumni who graduated between 1998 and 2002 were asked to recall the recruitment process for their current job—including the employer’s negotiation tactics—and detail the employee’s current turnover experience. The second survey posed the same questions over a six-month period to 135 graduating MBAs from the same university who had just accepted a post graduation job offer, yielding a final sample of 33 participants who responded throughout. Survey participants represented a wide variety of industries, including manufacturing, consulting, technology, health care, entertainment, investment banking, government, accounting, nonprofit and education.

According to Friedman, the results clearly indicate that perceived mistreatment of potential employees during the recruitment process has a significant and lasting impact on workers’ long-term relationships with employers. “Aggressive recruitment tactics are often perceived as an injustice and signal a lack of consideration and respect,” he said. “We have discovered that such a perception can poison the outlook of new employees for years, and that abusing the power you have as a recruiter can really come back to bite you.”

Employees are concerned with respect in both up and down job markets

One might think that employees would be less concerned about employer hiring tactics in a tightening job market—as now—but this is not so. According to Friedman, the implications of the study apply to good and bad hiring markets. “When jobs are plentiful, organizations that pressure recruits lose potentially valuable employees who decide not to take the position because of the perceived injustice. In tighter recruitment markets, applicants who feel they are mistreated might still accept the job from the offending organization but the impact of the hostility lingers, and they look for ways to right the wrong they feel has been done.” Further, this lingering resentment can possibly manifest itself beyond being less committed to the organization or keeping an eye out for other jobs. “Many other research studies in this field have pinpointed a link between this type of perceived injustice and retaliatory behavior on the job, such as petty thievery, withholding effort or even verbally abusing colleagues,” said Friedman.

On a broader scale, Friedman believes his research underscores how important it is that recruiters and human resource professionals think beyond just compensation and promotion when it comes to issues of employee satisfaction. “It’s clear that less tangible employment benefits, such as respect and consideration, are just as important for employees and need to be demonstrated throughout the entirety of a worker’s experience with a company—starting with recruitment.” 


Published Apr 1, 2009 in Vanderbilt Business Intelligence
Contact: vbintelligence@owen.vanderbilt.edu
Copyright 2009 Vanderbilt Owen Graduate School of Management