February 2003
In the November 2002 An Ethics Moment column, “When is a deal a deal?” a city manager had negotiated a better paying job with a neighboring community and had agreed to accept the job except for one small matter–no one had signed on the dotted line! In the meantime, the city where the manager was currently employed made a substantial counter-offer. Thus the question became:
“Did the city manager violate his profession’s ethics when he reneged on the verbal agreement?”
“Yes,” says Henry Marcy (hmarcy@detma.org), “but there are a number of issues at play here. Is the verbal acceptance of the offer a contract? I believe that the verbal acceptance does constitute a contract. However, my argument is not from a legal perspective; it’s from the ethical context. In other words, the manager who has verbally accepted the neighboring community’s offer has entered into an ethical contract or relationship. One can argue that the neighboring community’s hiring manager should follow-up the verbal offer with an offer letter and require the manager’s signature on the offer letter. (Indeed, this letter may be in the mail.) Yet, the notion of a formal offer letter following a verbal offer suggests that the neighboring community can renege on the verbal offer. Would the manager feel that the verbal offer, in that case, was not a contract? No. At the least, the manager would consider the verbal offer to be an ethical contract and expect the neighboring community to honor that ethical contract.
“Furthermore, if either the manager or the neighboring community reneges on the ethical contract, that manager or that community government may become open to ridicule, damage to reputation, censure, etc., both in the short term and, potentially, in the long term. The city manager world, at least in Massachusetts, is a very small world. Everyone knows everyone else. The damage could be considerable, even resulting in the manager or the community government being characterized as unemployable or unworthy as an employer, respectively, by the Municipal Management Association (as it is called in Massachusetts).
“If the manager in this case seriously considers reneging on the verbal offer, s/he should first, outside of the strictly ethical context, carefully analyze the two offers. It is easy to jump to the conclusion that the promised stay-where-you-are increase to $156,000 in three years is more money than the offer of $125,000. Yet, that may not be the case. At the very least, I would want to know what the $125,000 had the potential of becoming in three years. More to the point is the question of whether the difference in the money is worth the risk of alienating others (especially the neighboring community). Even more critical, despite the emphasis on money as the decision-making factor, is the careful assessment of all the factors (e.g. the ability to continue to contribute meaningfully to the current community versus the ability to contribute meaningfully in the neighboring community, the particular challenges in the respective communities, the opportunity to learn new things from new people versus continuing to develop staff in the current community, etc.) that ought to go into a change in employment decision.
“Finally, if the manager reneges on his acceptance of the offer, is he required (ethically) to recompense the employer for damages incurred by the employer? Such damages might include the cost of communications (letters, e-mails, etc.) sent by the neighboring community employer to the other (unsuccessful) candidates telling them that the position has been filled, the cost of a new hiring process if one should be necessary, the cost of the additional time lost (prior to the filling of the position) that might transpire, etc. I believe that he should offer to do so.”