Don’t Accept the Offer

Asking a recruiter if a candidate should accept a job offer is like asking a barber if you need a haircut. The answer is always “Yes.” When candidates receive an offer, they need to evaluate their current conditions versus those offered at the new company. Most people ask family members and colleagues for advice. However, the advice they receive may not be evidence-based and could possibly be biased and devoid of all the facts. At the end of the day, it’s up to candidates to make the best decision for their career and their family.  

When should a candidate reject the offer? What are the red flags? In 1979, Daniel Kahneman and Amos Tversky wrote “Prospect Theory: An Analysis of Decision Under Risk.” They suggest that behavioral economics offers insights. When evaluating offers, candidates have a “reference level.” The offer is compared to the reference point. This may be their current job, but it also may be other people they know in similar roles in the industry or people they know at the prospective company. They compare the offer to the reference point and classify it as “gains” if greater than the reference point and “losses” if less than the reference point. This is known as reference dependence. Sometimes candidates can minimize more important aspects of building their career. What is the future prospective of the position at the new company? How strong is the pipeline of products? Does the company have strong leadership? The candidate needs to look at both quantitative and qualitative factors. Have all the aspects of the positon, company, and pipeline been given the appropriate value in the evaluation process? Candidates should ask themselves if they would accept the offer if money was not an issue (positive or neutral gain)?  

Candidates can fall into the trap of loss aversion, which refers to people’s tendency to strongly prefer avoiding losses to acquiring gains. Candidates need to remain objective and businesslike and be willing to walk away. Fear can play its part here, too. If candidates have a strong motivation to change companies from a variety of push factors, they may lose impartiality. The red flag here is impatience. Candidates can fall into the trap of thinking that this is their only opportunity. Anecdotally, if a candidate is offered a job by one company, there will be other suitors. Candidates may want to ask themselves, “What advice would I give a friend with this offer?”  

Changing companies can be an emotionally charged time for candidates. It can be easy for candidates to give certain reference points a higher weighting. Behavioral economists refer to this as nonlinear probability weighting. Candidates can overweight small probabilities. Candidates may be convinced that a promised promotion is just around the corner now that they have indicated they may leave the company, or the opportunity at hand is the only one they will receive. They may also underweight larger probabilities, thinking that if they are patient, they will get the right opportunity or the state of the pipeline at their current company, which in the end will determine the number of career opportunities no matter who the employee is. 

Reference 

Kahneman, D., & Tversky, A. (1979). Prospect theory: An analysis of decision under risk. Retrieved from

 http://www.its.caltech.edu/~camerer/Ec101/ProspectTheory.pdf

2019-01-30T08:27:19+00:00

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