Don't Accept The Job Offer

By Philip Carrigan, representative director, Morunda Japan

Asking a recruiter if a candidate should accept a job offer is a lot like asking a barber if you need a haircut. The answer is “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 is 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, Kahneman and Tversky wrote Prospect Theory: An Analysis of Decision Under Risk. When evaluating offers, candidates have a “reference level”. The offer they receive is then compared to this reference point (it may be their current job or it could also be other people they know in similar roles or at the prospective client 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 and can lead to candidates minimizing important aspects of the offer (such as career building, the future prospects of the position, the pipeline and the strength of the leadership team).  The candidate should look at both quantitative and qualitative factors and give appropriate values in their evaluation. Candidates should ask, if money was not an issue (positive or neutral gain), would they accept the offer?

Candidates can also 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 the only opportunity they may receive. 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 non-linear probability weighting. Candidates can overweight small probabilities.  They may assume that if they are patient the right opportunity will present itself. Some may even overestimate the strength of their current company’s pipeline, thinking that a strong pipeline will equate to more job opportunities no matter who the employee is. Successful business people are able to practice detachment and make tough decisions in their work and in managing their careers.

*Kahneman, Daniel; Tversky, Amos (1979). "Prospect Theory: An Analysis of Decision Under Risk"