Debating ETHICS in Job Offer Withdrawal

Job Offer Withdrawal

– SENSITIVE & “SIN”SIBLE –

A leading player in the FMCG industry acquired FOUR mid-sized companies in South-East Asia
worth 700 Million USD over the past five years for the purpose of expanding its business into a
new market in the region. The company is having a headcount of slightly over 3,000 employees.
It also has a very strong R&D team, which is keeping them ahead of the competition by
introducing new products periodically to the market. Mr. Mahesh Kulkarni is the VP – Human
Resources. Mr. Mahesh and his team have played an important role in completing due diligence
and execution of M&A deals in the past.

22 August 2013 – Toughest Day of Mr. Mahesh’s career

Management is worried as the last FIVE Quarterly results are showing a steep decline in
revenues and profit margins. Mr. Mahesh received a communication from the CEO of the
company asking him to defer all the hiring with immediate effect till further notification. Mahesh
needs to plan & roll out a sensitive yet sensible communication without denting the image and
brand of the company. For Mahesh, this is not going to be an easy task as the 34 candidates
hired from open job market are expected to join on 1st September. Further, 45 candidates who
were hired from various campuses (campus recruitment) are expected to join on 1st October.
Given the context, Mr. Mahesh has to either –

 Withdraw the offer letters/ communicate appropriately to the candidates who were
hired from the open job market (or) Extend their date of joining by SIX months (or)
 Withdraw offer letters from all the students hired from management schools (or)
 Propose a new tentative joining date to students & also be told to explore career
opportunities elsewhere.

Challenges Unfolded

Campus Hiring
Mr. Mahesh called upon the Placement Managers of all the concerned campuses from where
they hired the 45 students. He openly discussed the development and sought their suggestions
on the future course of action & placed the above-said proposal. This did not go well with the
campuses & they all decided to boycott this Company for the next THREE years.

Open Job Market Hires

Out of the 35 candidates, some were to join at Managerial /Senior levels in the hierarchy. Few of
them had already resigned from their current organizations to join this Company. Mahesh called
each one of them and explained about the existing situation. He apologized to each one of
them in writing. He also assured them of his best support in finding them a new job
elsewhere. No matter what he did, he couldn’t save himself from the angst & abuses of the
candidates. Many of them took upon social media to abuse the company, its management as
well as Mr. Mahesh, the VP – HR for playing with the careers & emotions of so many lives.

Why did the Company take such a decision?

The decision was taken by keeping in mind the bigger picture of saving the careers of 200
employees who might have to get terminated three months later as against the decision of
letting go these 79 offers at that point in time.

Common (or) an Uncommon Situation – What does the history say

This situation is not very common in the corporate world. Yet it is not something that can never
happen (or) happened. Biggies like Satyam, Kingfisher, Infosys, and Wipro (to name few) had
gone through a similar experience [as happened in 2000 -2001 and 2008-2009]. Companies
withdraw offer letters when they pass through certain markets challenges, internal restructuring
(especially when an M & A happens) and also in those cases where they receive negative
feedback on doing the background verification/reference checks of the candidates to whom
they proposed/extended the offer. Similarly, there are other situations (like unfavorable market
conditions or loss of business from bigger clients) wherein companies terminate / lay-off
hundreds & thousands of employees within a span of one or two weeks. Of course, professional
companies do roll out such separations duly taking care of the notice pay/lay-off compensation.

Lessons to the Prospect

1. It is always suggested that candidates should complete their exit formalities before
leaving the company rather than trying to abscond to avoid the notice period terms.
2. It is always good to maintain healthy relations with their former employers as there is no
guarantee that the company you are going to join will be better than your existing
company.

Lessons to the Corporate World

Generally, in such situations, things will never be the same again when they meet the same
candidates (or) future talent from the market. However, organizations gain from such
experiences in the following ways:
1. It is in such sensible & sensitive times, the organizations will be able to identify the
‘heights of abilities & the hard weathers’ of its senior management team.
2. While such situations will have a bad impact on the image of the organization, the
transparency with which such situations are handled will also help in quickly regaining
the trust & confidence.

A Third Eye’s View

I am of the view that It would have been better if the CEO would have taken the entire
management team into confidence to send across this message rather than passing it through
HR. However, I welcome your views on the following:
 How differently you could have managed the situation?
 What you could have done had you been one of the candidates?
 What are the learning’s?