The Renege Phenomenon – A Recruiter’s Perspective – Part 1

Recently, I overheard one of the team leads repeat “reneging on job… reneged” over the phone with a client. Though, I knew what it meant, I wondered why the team lead used ‘renege’ in this context!

I learnt that “reneging on job offers” is a subject widely discussed by HR managers and recruiters in an agency. It is something that most organisations dread.

What does ‘renege’ mean anyway?

According to Merriam Webster Dictionary, renege (re-nig) refers to go back on a promise or commitment.

In the industry, ‘renege’ refers to a candidate who initially accepts an offer letter but ‘backs out’ or does not join the organisation. This act has posed a serious problem in the Indian job market.

The renege phenomenon has been plaguing the Indian IT industry for quite some time now. Known for its active recruitment, the Indian IT industry spends enough resources in screening, identifying and shortlisting talent across the country.

After innumerable rounds of interviews, checks, interactions and other miscellaneous hiring related activities, employment offers are made. But the cycle is not yet finished. Recruiters and HR professionals cannot heave a sigh of relief until the candidate turns up on the first day. The recruiters are on the lookout for reneges; an unending danger in recruitment.

Due to the constant threat of reneges, recruiters are forced to find 10 additional resources to support a single requirement. Recruiters in both agencies and large enterprises are locked in this unending cycle of sourcing, shortlisting and interviewing potential talent.

According to an internal study conducted by Han Digital, it is learnt that renege phenomenon has started recently. Prior to the Great Recession 2008 in India, the number of reneges was to the nadir, but significantly rose after 2012. The reasons to this were myriad. Besides, individual differences in candidate response made it extremely difficult to ascertain the actual reason for renege.

However, the renege phenomenon has drastically affected recruiters and HR professionals. Dealing with reneges has proved to be a significant blow to the overall generation of revenue and recruitment business.

Firstly, recruitment agencies invest a significant amount of resources in finding, screening and interviewing the right talent. Once, the candidate confirms their employment and turns up on the first day, only then will recruiters receive credit for their efforts.

Secondly, reneges earn a bad reputation to agency and its recruiters. Their inability to join the company reflects on the efforts of recruiters.

Thirdly, reneging by candidates affects the morale and motivation of the entire recruitment team. Whenever an offer happens, a recruiter is appreciated by not just their managers but their fellow colleagues. Candidate reneging can lead to recruiters doubting their own efforts. Besides, the promising efforts of recruiters are gone in vain only to begin the recruitment cycle all over again. 

Fourthly, reneging derails normal pre-employment and post-employment activities. Pre-employment activities involve freezing of hiring activities, on-boarding formalities and other logistics, whereas post-recruitment activities involves business strategies/promises taken in anticipation of candidate joining.

The reneging phenomenon is rife across the Indian job market and has been increasing since the last few years. The Indian legislature is yet to pass a law on reneging. Whereas other countries in the West have a steady law to deal with such a situation. Job offers in the West are bound by law and if a candidate reneges an employment offer, they are forced to pay a penalty which is usually a percentage on the offered CTC to the company as per court orders.

Do you think India should also come up with such a law?