Matt Vaadi explains why small-business owners need written offer letters and what to include: job title, supervisor, location, employment type, start date, responsibilities, contingencies, compensation, benefits, at-will statement, and acceptance instructions. Offer letters protect both sides by creating a record and clarifying expectations.
Should you use an offer letter? Well, that depends. Are you trying to maintain compliance, attract better top talent, and make things easier for you and your employees? Well, then yeah, maybe you might want to consider it. In this video, we're going to break down whether or not you should use an offer letter, what an offer letter should look like, and some best practices you can consider when thinking about how you want your small business to run when it comes to hiring and offering new employees. Thank you for joining the Guru Channel. Please please smash that like button and subscribe if you're liking any of the content that we put out. All right, so let's dive into it. As a small business owner, you know that hiring the right people is essential to see your success. It's a critical component of the employee life cycle. It's not only sourcing, recruiting, and finding the right people but onboarding them in the right way. And that starts with an offer letter. An offer letter is a formal document that outlines the terms of employment and is a valuable tool for both the employee and the employer. It typically includes information about the position, salary, benefits, start date, responsibilities, and other important details about your employment relationship. So why is it important to use an offer letter as a small business owner? Well, there are a few reasons. First, it provides a written record of the terms of employment. This can be helpful if there are any disputes down the road. Second, an offer letter can protect you from being taken advantage of. For example, if you promise a candidate a certain salary in the offer letter, certain PTO policy, now there can be no disputes. You have everything in writing. Both sides are on the same page and there's no need to worry about either of you trying to renegotiate a deal after the fact. Third, an offer letter can help you to avoid misunderstandings. If you don't have everything in writing, it's really easy for misunderstandings to arise about the terms of employment. We also recommend this when it comes to an employee handbook. We're creating another great video right now on should you have an employee handbook as a small business owner. Make sure you follow our YouTube page so you get an alert when we publish that video as well. Fourth, an offer letter can help you to attract and retain top talent. Let's face it, candidates are more likely to accept a job offer if it's in writing and they know exactly what they're getting into. As a matter of fact, nearly every candidate I talk to that I verbally offer a job to says, "When can I expect the offer letter?" And this is before they even make their decision. So they're gonna review this document with their spouse, with their friends, with their family, just to chew on the offer and determine if it's the right fit for them ultimately before they sign on that dotted line and join you and the dream team at Guru if we hire them here. So should you use an offer letter as a small business? I would say the answer is a resounding yes. It's an easy and simple way to protect yourself and ensure that you're getting the best possible deal with your new hire for both parties. The offer letter should outline the expectations and benefits of the job and provide explicit details about compensation. Let's talk about that a little bit deeper. What should be in this offer letter? Ideally, it provides a candidate with all the information they need to make an informed decision about whether to accept the job or not. Going back to my comment earlier about the candidate's gonna wanna see this before they accept the job. A standard offer letter generally includes job details, including the job title, who the supervisor is, who their supervisor's title is, what their start date is, where they're working from. Are they working at one of your office locations? Are they remote? Are they hybrid? Again, when I define this in the offer letter, remove some of the disputes potential down the road. Are they full or part-time? Expected number of hours per week if they're full or part-time. I've also seen people where they will put in here, you know, you're exempt, the ex— your salary exempt, you qualify as an exempt employee. But the expectation is you work 40 to 50 hours a week. That way everybody's on the same page with what the expectations are right from the start. You could include a full description as an attachment for their review, so they also have those responsibilities, or you could simply put the bullets of the responsibilities of the role into the offer letter. Contingencies such as passing a drug screening and background check prior to the start date should also be included in an offer letter. Compensation, including your base pay, what the pay periods are, is it biweekly, is it semi-monthly, what's a sample start and end date for a period so they know when they're going to get paid. And sometimes you may even want to add any bonuses or commissions that they're eligible for if that's already formalized and in place. A brief overview of the benefits and a timeline of when they become effective. You can include an attachment with additional details including the coverage and cost of benefits, but it's nice to let folks know that they are eligible for your benefits plan in the offer letter if you offer benefits. An at-will statement if you're in an at-will state and if it's an at-will employment offer, and instructions on how to accept the offer and any deadlines if applicable. It's important for me to note that this is not legal advice, and sometimes this could be considered a legal document, so it's important to either consult an HR professional or attorney when drafting an offer letter. One of the things that I really like is that when we work with our clients on the HR outsourcing side is not only do we draft an offer letter for them, but we set those templates up in our HR system so that they, with a click of a button, can send an offer letter to new candidates, have them accept it in a professional way with an electronic signature, and begin onboarding right in the same place where they accepted the offer letter from. To improve that employee experience. So there you have it. That's everything that should be included in an offer letter. If you're interested in learning more about how we can help you to write offer letters, improve, improve your employment processes, do more with less, and really become an extension of your HR team, don't hesitate to drop us a note. And thank you for watching this video. If you enjoyed it, please hit those like and subscribe buttons. It really helps us a ton. Keep putting out more valuable content for you. Thank you so much for your time. Have an awesome day.
