Pros and Cons of Rescinding a Job Offer

Rescinding Job Offers: The Pros and Cons

Rescinding job offers can be a difficult subject for all parties involved in the hiring process. In the worst case scenario, an incoming employee has given resignation to their former employee, if relocation is involved, placed nonrefundable deposits on housing, and generally speaking- began the process of mentally preparing for a new life as your employee. The act of rescinding an offer will inevitably leave one person (plus their sphere of influence) with a negative impression of your organization. Of course, no difficult decision exists without financial risk: While employers have free reign of the termination process in most U.S. States under “At-Will Employment”, this doesn’t apply to employees who’ve yet to start work. Many states have legal theories that can offer prospective employees protection against rescinded offers, such as “Promissory Estoppel”. These theories give potential employees the ability to recover damages such as lost wages and expenses paid toward a move. This is difficult stuff, and the process of rescinding an offer can be as hard on HR folks as performing workforce reductions.

All of that said, most employers and employees will agree that in the long run, a wedding that featured a runaway bride is better than a long and miserable marriage. There are times when circumstances change so drastically from the moment of offer that the offer is no longer in the best interest of the company. As HR professionals, we are the company, and must share it’s objectives for health and prosperity, even when the act of doing so is painful.

As an Executive Recruiter, I believe in anticipating and mitigating damage before it’s too late, and have safeguards that must be taken to protect my clients and candidates from the potential disaster that can come from a Rescinded Offer. These include:

Know the facts:
You’ve checked up on references, confirmed collegiate credentials and performed all of your standard diligence and are prepared to make the offer. Leave yourself some time to learn more; talk to your colleagues, if this person is associated with groups and organizations, search their databases and members directories. Be resourceful and investigative prior to extending the offer. The extra work will eliminate the possibilty of potential suprises.
Consider other options: In the event that economic conditions of a particular division creates the need to rescind an offer, look elsewhere within your organization. If the candidate is a superstar, perhaps another division has the budget and the need. Make a few calls to division heads and try to find a win-win.
Address the law: Include language in your offers that protects you in the event of a rescinded offer. A Labor Law attorney or your General Counsel can draft an appropriate statement that will protect you in the event of a lawsuit or adversarial claim. Make no exceptions to the inclusion of this on an offer!
Take it slow: As an executive recruiter, I make certain that my placed candidates protect themselves in all aspects of leaving a position and/ or relocating. This is difficult being an internal HR/ Recruiter, but be creative; make suggestions regarding temporary housing rather than jumping into a massive lease, be transparent about start dates, and when you have knowledge of flighty Hiring Managers who have a track record of pulling offers, give your candidate a word of caution about quitting their position aggressively. Of course, do this without tossing your own team members under the bus, but in the event the worst happens, the candidate will appreciate your forewarning.
Leave Out Clauses/Expirations: Always include expiration dates on your offers and out clauses based on drastic economic changes, uncontrollable circumstances, and similar clauses that give you flexibility to withdraw from an agreement if necessary.
Be concise, professional, and fair: Don’t spend an immense amount of time apologizing and explaining. Make the statement, be sensitive to their frustrations but don’t try too hard to emotionally appease them. The situation is hard, and a hug and pat on the back will only open the door to the candidate feeling awkward and confused. If the person spent a great deal of money to relocate or left their job, offer them fair reimbursement. Do what you can to leave them feeling that your organization is professional and respectful in times of great strife.