The Signing Game
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One day, my American classmate Edward Owen received a call from Morgan Stanley: “We are not impressed with your level of commitment.”
Obviously, Edward panicked a bit. He had interviewed with Morgan Stanley for a summer internship position, and had just received an offer from them a few days ago. Technically, he had another week and a half to decide, but the bank was clearly not satisfied with his tardiness in signing the contract.
The problem was that the Morgan Stanley position was not Edward’s preferred option. It was a great job, all things considered, but he was also speaking to Goldman Sachs about an internship position where he would get to try a whole range of different tasks. With the recently arrived Morgan Stanley offer, though, it looked like he had good cards on his hands. The same Friday, he had a meeting with Goldman Sachs in New York. Edward planned to tell them about the Morgan Stanley offer, hoping that this would induce Goldman Sachs to give him a counteroffer at once. (Banks take it as a sign of quality when their rivals want to hire you, so his chances of getting the Goldman Sachs position looked good.)
However, the investment banks are old hands at the signing game, and the recruiters at Morgan Stanley were no exception. They know that all applicants, regardless of their true preferences, will say that their bank is their first priority. That’s how the game is played. But when one of their offers is not signed at once, they know that the applicant is likely holding out for something better. This is bad for the recruiters. Similar to the MBA Admissions offices, the performance of corporate recruiters is often measured by how many applicants sign their contracts once the offer is given – a measure that is sometimes called the yield. Also, losing an applicant means that they have to start all over again with their recruitment efforts.
This is when they give a call to the applicant, as they did with Edward. “You told us that working with us was your dream job. Why haven’t you signed the contract yet? You are really not sending a good signal about your dedication to Morgan Stanley.” In subtle or not so subtle ways, they let you know that anything less than an instantaneous acceptance will hurt your chances of future employment with the bank. And that the managing partners have taken offense at your lack of commitment. Managing partners have been known to make life unpleasant for interns who weren’t really committed.
During their conversation, Edward felt forced to tell Morgan Stanley about the Goldman Sachs interview Friday.
“So, you are flying into New York on Friday morning. What time is the Goldman Sachs interview?”
“At four in the afternoon.”
“Great. Why don’t you come by the Morgan Stanley office before that? We’d like to talk you to about your decision. How does noon sound?”
Of course, this wasn’t just a conversation. It was a signing meeting. Morgan Stanley knew they were about to be robbed of a candidate they wanted, so they had a copy of the contract ready for signing when Edward arrived at their offices. Edward, as most MBA students, was not a trained negotiator. Recruiters, however, do this kind of thing for a living, and the investment banks tend to hire the best there is.
An hour later, three hours before he knew if he would receive an offer from Goldman Sachs, Edward had signed the contract.
~
Edward had, it should be mentioned, a good summer working at Morgan Stanley, and ended up getting a job with them after the MBA.
Edward’s real name has been disguised.
~
