Starting a business or working for a small business requires the acquisition of a lot of new skills and knowledge especially when tasked with human resource and admin functions. Hiring staff is critical to all businesses, so you will be tasked to develop or update offer letters for new employees. In this article, we will look at the purpose of offer letters, outline some important information to include in your offer letter and provide some tips for creating quality offer letters.
An offer letter is a document given to a prospective employee after they successfully pass your organization’s interview/testing process. The offer letter informs the individual of the terms and conditions of employment at your organization. Though the offer itself, not the letter, will determine whether the individual accepts the job or not, a good offer letter ensures that there are no misconceptions or misunderstandings. The offer letter protects your organization and the individual from liability as it clearly states what each party's duties and responsibilities.
Essential Content Of An Offer Letter
A good offer letter should be appropriately branded with relevant information about your organization and provide the following minimum information:
- The job title/role: The offer letter should state the designation of the new employee within your organization and provide a brief summary of the position. You may also wish to include reporting lines such as the name and designation of the new staff’s supervisor. Here's a sample job role summary for a sales representative:
“The Sales Representative position is an entry level role in the Marketing Department of ABC Inc. The Sales Rep is responsible for promoting ABC Inc. to relevant potential customers, developing sales and marketing reports and generating revenue for ABC Inc. The Sales Representative will report directly to the Sales Manager.”
- Start/resumption date: The date the new employee is expected to start work or when the offer takes effect are critical information to include in the offer letter.
- Salary/Compensation: Perhaps the most important information for the receiver – the salary and compensation plan offered must be clearly detailed in a way that is simple to understand. Sarah Kessler of Inc.com recommends stating salary in terms of monthly, weekly or daily pay rather than as yearly pay as the latter gives the impression that the organization guarantees a yearlong engagement. None monetary benefits such as pension contributions, health and insurance may be included in the compensation section.
- Tasks/ Responsibilities: An important function of the offer letter is to explain the job requirements. This outline of the tasks and responsibilities of the employee also acts as a basis for performance management and evaluating the employee’s contribution to your organization. The duties stated in the employment letter are merely a summary of the full job description for the role, be mindful to make this clear in the offer letter.
- Benefits: Extra perks or benefits that may make the job offer or your organization look more attractive should be included in the offer letter. Benefits such as health insurance or stock options may be the deciding factor for a candidate to pick your offer over that of another organization.
Above are the bare minimum that should be included in the offer letter. The addition of more details and information is sorely dependent on the culture of the organization, HR policy and legal requirements of the region. Some organizations may include such information as resumption time, leave allowance, sick days and other HR policies in the offer letter, while others may leave this information out and refer the individual to the staff handbook. It is advisable to keep the offer letter simple so as not to overwhelm the reader.
Tips for Developing Offer Letters
Now that you have an idea of the information that should be part of the offer letter, here are some tips to help you write good offer letters:
- Know the law: Countries and regions have specific labour laws and employment requirements. Organizations and their human resource management personnel should be aware of such laws and guided by them when preparing offer letters and other HR policies. Review the law in your region or consult your company lawyer or a legal practitioner to ensure that the terms and conditions of your offer are within the provisions of your local laws.
- Let your culture show: Your offer letter is the candidates first welcome to the organization. Communicate your pleasure to have the candidate join your team and the positive contribution you expect them to be to your organization. This is an excellent opportunity to introduce your organizational culture to the candidate.
- Make it easy to read and understand: Avoid the temptation to put every information that comes to mind in the offer letter, that’s what your other HR policy documents, such as the Staff handbook, are for. Make use of bullets or tables to present information in a way that is visually appealing and easy to read.
- Simplify the acceptance process: You expect your offer to be accepted so make the acceptance process easy by including information on how to accept the offer and timeline for acceptance.
It is important to remember that your ideal candidate has probably applied for other jobs and may be considering other offers. Organizations that understand that quality employees contribute significantly to the overall success of the organization do not make offers halfheartedly, they ensure that their offers are competitive and attractive. They use their culture and vision to attract quality employees if they cannot offer high pay.
Here's a sample of a simple offer letter to help you put it all together:
Company Letterhead Inc.
August 27, 2017
Ms. Mary Louis
No. 3 Alexander Street
OFFER LETTER: ACCOUNTING OFFICER
We are delighted to offer you the position of Accounting Officer at Company Letterhead Inc. Based on your experience and performance in our screening activities, we believe you will be a great addition to our Accounting team at Company Letterhead Inc. The Accounting Officer is an entry level position in the Accounting Department at Company Letterhead and reports directly to the Head of Accounting, Mr. Smith.
As Accounting Officer, you will be responsible for the day-to-day operations of the accounting unit and liaising with the various business units to synchronize company expenditures. You will also be responsible for maintaining and balancing the various financial documents in addition to other tasks assigned by your supervising officer.
The Accounting officer salary is $xxx monthly (after tax and regulatory contributions such as insurance and pension). This salary amount will be paid by direct debit into your designated account at the end of every month.
Kindly refer to the attached staff handbook for other employee benefits and policies.
If you chose to accept this offer, kindly sign and date the two copies of this offer letter provided and return to the HR department within the next 2 days. This offer will be effective on your resumption at work on the 1st day of the new month.
Please contact the HR department for any questions or clarifications in relation to this offer or the terms of employment. Our door is always open!
We believe you are a great fit for our team and look forward to working with you.
Head, Human Resources
Company Letterhead Inc.
An understanding of the purpose of the job offer letter, like with other HR policy documents, makes writing a job offer letter very easy. Several samples and templates for job offer letters can be found on the internet. An in-depth understanding ensures that your final document is effective and relevant to your organization, industry and country. By starting with an understanding of necessary labor laws, outlining all relevant employment details and making a compelling case for your organization – your job offer letter will be a fitting conclusion to your recruitment activities.