Most companies in manufacturing issue an appointment letter. When the IT sector started the issuing of offer letters and then issuing the appointment letters after joining, some manufacturing sector companies including us, started following this. Issue of ethics came up in some MNC companies. The reason being the offer letter did not have terms of appointment. And the terms given in appointment letter was not revealed in advance. Now, at least in my company, we are very particular about ethics. We sent it to the legal department. The legal opinion was that when the terms of appointment is not revealed fully before the employee joins the company, then none of the terms are valid, except the terms communicated in the offer letter. And the offer letter only contained salary details, designation and grade, apart from validity period of the offer.
We realised, apart from the legal issues, it also violated our ethics policy, since transparency is our core value. And the ethics committee felt that we need to be transparent about our terms of appointment before the employee joins. If he is uncomfortable with our terms, we do not mind looking for someone else.
Hence, we reverted back to issuing of appointment letters and no offer letters. All our terms are transparent and we even send them the forms for insurance, so that they can fill it up and send it across to us before they join. We register them in insurance one month before they join, so that they can avail of the benefit from the date of joining itself. We sustain this engagement with the prospective candidate and it becomes difficult for him to withdraw.
We are a Petrochemical multinational which is based on Oil and Gas. Our competitors are Reliance, Shell, Chevron, AGIP, Total etc. We are listed in the NYSE. Hence, application of ethics policy is mandatory and essential for us, since corporate governance standards are monitored by SEC.
The thought in IT companies are a bit different. They have an issue of the employee taking the appointment letter and negotiating salaries and not joining. But, that could even happen with an offer letter.
In terms of policies, you need to align it with the values of the organisation. Only then will the HR policy and the values become interlinked and HR "feel" will be vibrant. My advise would be to check whether any system that you are creating is in line with your organisational values. And then evolve the system. If It does not, then do not incorporate such a system. The values then just become a Jargon. And Values are essential for an organisation to reach their mission.
All the best.