Job Offer Withdrawal – Ethical or Unethical

Job Offer Withdrawal


 Penguin Soaps & Detergents Limited [PSDL]

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

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

 PSDL’s Management is worried as the last FIVE Quarterly results of PSDL are showing 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 ban PSDL from hiring from the effected management schools for the next THREE years.  

Open Job Market Hires

Out of the 35 candidates, some were to join at managerial / other senior levels in the hierarchy. Few of them have already resigned from their current organizations to join PSDL. 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 PSDL 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 this point of time.

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

This situation is not very common in 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 the views of Mr. Mahesh in you 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?
  • What will happen if PSDL will be required to lay-off employees?

Composed By: Sanjeev Himachali

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