Mary didn’t know what to do. Employee turnover was at an all-time high. For every employee hired, two resigned. Mary assumed there was something that could be done but she just wasn’t sure what.
This felt similar to last year when customer retention was tanking and the entire company worked hard to keep them from streaming out. To get a handle on what was happening then, her company implemented a customer survey to find out why. Maybe something similar would work with employees. She had heard that there was a tool called an Exit Interview but wasn’t sure what it was or how it worked.
What is an Exit Interview?
An exit interview is a meeting with an employee leaving the company. It provides an opportunity for the former employer to gather honest feedback about what the employee enjoyed about their job, what they didn’t, and why they decided to leave. The information can be gathered in a variety of ways from written surveys to face-to-face meetings.
Why is an Exit Interview Process Important?
Skilled employees drive organizational success. Thus, companies must learn from them—why they stay or leave, and how the organization can change to meet their needs and expectations. A thoughtful, multi-layered Exit Interview process creates a constant flow of feedback in each of these areas.
There are many reasons why a company should integrate an effective exit interview process into its employee engagement and retention strategy. A company’s ultimate goal is to maximize profit, and one of the main components to that is cost containment. Turnover costs include separation, vacancy, replacement, training, and impacts on productivity. All of which eat into a company’s overall profitability.
When turnover is high, looking for patterns helps identify potential weaknesses in your business. For example, employees leaving from the same department or working for the same leader might highlight a manager’s poor leadership skills (such as recognition, fostering commitment, and communicating both vision and strategy). More importantly, the exit interviews can illuminate if there are deeper, more systemic problems such as promoting managers on the basis of technical rather than leadership skills or if there are breaches in protocol or ethics going undetected.
The greater goal for any company, of course, is to retain valued employees. Research has shown that high turnover predicts low performance and that an organization with turnover lower than its competitors can be at a considerable advantage—particularly if it retains its top performers. If people are leaving an organization in growing numbers, figuring out why is crucial.
When Exit Interviews Don’t Work
According to research by Harvard Business Review, many companies don’t even conduct these interviews. Some collect exit interview data but don’t analyze it. Some analyze it but don’t share it with the senior line leaders who can act on it. The majority of the reasons why exit interviews don’t work is they are not accessed for any change or organizational learning. Only a few companies collect, analyze, and share the data and follow up with action.
Who Conducts Exit Interviews?
One of the reasons that the data gathered from an exit interview may not provide the insight sought is due to who is collecting the information.
One school of thought says that the person(s) conducting the interviews should be the most senior employee possible. The thinking here is that those that have the most ability to initiate change in an organization are the ones who should hear first-hand what the employees have to say. By placing the importance of genuinely gathering the feedback, the message being sent is that it is of core importance to the company.
Another school of thought is to have a centralized source gather the information and disseminate it back once the data has been analyzed, allowing the feedback to drive strategy. The central source is usually Human Resources in order to preserve the objectivity of the interviewer and to ensure that there will be no repercussions for being wholly forthcoming.
A third alternative is to take the exit interview process out of the organization and have an external third party collecting the data and information. Through this approach, the employee is encouraged to speak as frankly and openly as is desired to get fulsome information that will assist the organization going forward. An external consultant typically has several advantages over an internal interviewer, including expertise in exit interviewing and a complete lack of bias.
A fourth alternative is a hybrid combination of the first three. As an example, some organizations utilize first-line managers to conduct the first interview, HR to coordinate the process, and an external consultant to gather more detailed, objective feedback.
So, for Mary, there are two decisions: a) whether to implement an exit interview process and b) how to really create a process that moves it from being an exercise to being a value-added process. And to make those decisions, she first needs to examine the goals for implementing a process that could have ripple effects right through the organization.
Organizational Goals for Exit Interview Process
A strategic Exit Interview program provides insight into what employees are thinking, reveals problems in the organization, and sheds light on the competitive landscape. In shaping their programs, Mary and the company should focus on seven goals:
- Uncover issues relating to HR
Companies that conduct exit interviews almost always pursue this goal but often focus too narrowly on salary and benefits. To be sure, people need a certain level of financial compensation to remain with an organization, but unless their salary is out of alignment with their peers, money alone doesn’t usually drive them out the door. Plenty of other HR practices can play into an employee’s decision to leave.
- Understand employees’ perceptions of the job
This includes job design, job evaluation, working conditions, culture, and peers. Feedback in these areas can help managers improve employee motivation, efficiency, coordination, and effectiveness and help them understand how employees’ needs are evolving.
- Gain insight into managers’ leadership styles and effectiveness
This equips the organization to reinforce positive managers and identify toxic ones. The conversations can lead to some very tangible outcomes, such as establishing training and development initiatives to create better managers who are in turn more solidly aligned with current needs.
- Learn about HR benchmarks at competing organizations
Taking the opportunity to see what is being offered to exiting employees can be a soft way to conduct marketplace surveys to benchmark competitiveness against other employers: time off, ability to advance, variety of benefits, non-traditional non-cash compensation, and pay packages.
- Foster innovation by soliciting ideas for improving the organization
Exit Interviews should go beyond the individual’s immediate experience to cover broader areas, such as company strategy, values, marketing, operations, systems, competition, and the structure of his or her department.
- Ensure the organization fulfills its obligations as a sound corporate citizen
Employers are responsible and accountable should the organization be in contravention of legislation. Ignorance is not a legal justification to avoid being held accountable. Exit interviews assist in gathering information ensuring the organization is meeting societal and legal expectations.
- Create lifelong advocates for the organization
Treat departing employees with respect and gratitude and they may leave to become an ambassador and customer even though they are no longer an employee. It may also encourage them to recommend their former company to people in their network, to use and recommend the companies’ products and services, and to create business alliances between their former and new employers.
With these goals in mind, Mary is much more confident that not only will she be able to identify why employees are leaving but how to make the company that much stronger for current and future employees, thanks in part to the insight provided by exit interviews.
Source: Harvard Business Review, https://hbr.org/2016/04/making-exit-interviews-count
Source: BambooHR, https://www.bamboohr.com/blog/definitive-guide-exit-interview/