Dear Negotiation Coach: Dealing with Exploding Offers

By on / Negotiation Skills

Q: I was recently laid off from my longtime job and am back on the market. I received a pretty good offer (Job A) but was being considered for a more interesting, higher-paying job (Job B) at the same time. The recruiter for Job A told me the company needed an answer within two days, and I didn’t expect to know about Job B for about five days. I rejected Job A and ultimately was not offered Job B. Now I’m wishing I’d taken Job A. How could I have handled this situation better?

A: Searching for a job is stressful enough without the added anxiety provoked by employers’ “exploding offers”—those that have a strategically set deadline for acceptance, with the goal of preventing the recruit from having time to explore other options. Although employers sometimes present offers with a short fuse because they are desperate to fill a position, some use the strategy to nab the best candidates and reduce competition with other firms.

An exploding offer might seem like an effective power play for employers, but the gambit is likely to backfire in the long term. It can cause them to miss out on strong candidates, such as yourself, who need more time to decide. And even if someone does accept an exploding offer, if she felt rushed into making a decision, she is likely to continue exploring other opportunities, to be an unmotivated employee, and to quit after a short period of time. Moreover, when exploding offers are widespread in a certain market—for example, in the market for graduating MBA students—they can create widespread inefficiencies by matching employers with the wrong candidates, University of Utah professor Harris Sondak and Harvard Business School professor Max H. Bazerman have found in their research.

The pitfalls of exploding offers were demonstrated in a 2014 laboratory study by Nelson Lau (KCG Holdings) and Yakov Bart, J. Neil Bearden, and Ilia Tsetlin (all of INSEAD). Participants played the role of either a job-offer proposer or a job-offer responder. When given a choice between making an exploding offer and making an extended offer, a substantial percentage of the proposers chose to make an exploding offer. Across experiments, responders were about equally likely to accept exploding and extended offers. After accepting a job, responders then had a chance to divide a sum of money between them and their proposer. As compared to responders given extended offers, those given exploding offers were far less generous to their proposers, keeping more of the funds for themselves. The results suggest that “negative reciprocation” is, indeed, a problem with exploding offers: When someone is stingy toward us (by rushing us into a decision), we are likely to respond by being stingy in turn.

How can you handle exploding offers in the job market? First, you might be able to manage the timing of offers. For example, if you anticipate having a couple of good job prospects around the same time, you might schedule two interviews for jobs that you value similarly for the same day. Or if you anticipate liking one job more than another, you could try to schedule the interview for the more desired job first.

Second, if you receive an exploding offer, you might let your other prospects know about it, without getting into the details. This knowledge would show your other prospects that you’re in demand and might motivate them to speed up the process.

Third, express your enthusiasm for the parts of the exploding offer that you like and then look for a way to extend your decision-making process without indicating disinterest. For example, you might ask to meet with someone in HR to make sure that you understand the specifics of the health-insurance benefits. Or if the job would require a move to a new city and your partner would need to find new work as well, you could ask for time for your partner to find a job before deciding yourself.

If the recruiter continues to be impatient, explain that you hope to stay with your next employer for a good long time and that, as a rule, you make serious decisions carefully. A wise employer will view your need to deliberate as an indication that you would be similarly methodical on the job. Sometimes an exploding offer is a warning sign that the job would be a bad fit. After all, if this is how they treat you when courting you, you might not want to see how they would treat you on the job!

Katherine Shonk
Editor, Negotiation Briefings
Program on Negotiation
Harvard Law School

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