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How to Use Exit Interviews to Improve Employee Retention?

by Arthur Zuckerman

A survey conducted by Burke Incorporated found that 91% of Fortune 500 companies conduct exit interviews and 87% of mid-sized companies do the same. An employee leaving often impacts an organization’s productivity temporarily because it leads to more workload on remaining team members affecting a team’s morale and impacts the release or launch of new products. Mainly it is becoming more expensive to hire new employees than to retain existing ones. 

An exit interview is one of the simplest tools for companies to understand why an increasing number of their employees are leaving. This is because exit interviews are a chance for employees to give honest feedback about their position and company culture. This can help companies ensure that their future hires are more prepared, engaged and satisfied with their job.  

The greater goal for any company would be to retain high-performing employees. A Harvard Business Review quotes that research has shown that high turnover predicts low performance and that organizations with lower turnover have an edge over their counterparts. However, for companies to use exit interviews to achieve better retention, need to collect, analyze and share the data from exit interviews and follow it up with action.  

In this blog, we’ll look at how a meaningful exit interview can disclose why a person leaves, how they can be persuaded to stay, and how the organisation can improve. 

What is an exit interview? 

An exit interview is a discussion between an employee who is leaving, either voluntarily or due to termination, and the organization to exchange information. Typically, it’s an opportunity for an employee to explain “why” they are leaving and provide feedback on their experience working for the organization. In the case of termination, employees are sometimes asked what they liked most and least about their job and organization’s work culture. A face-to-face, online or phone call form of exit interview is recommended.   

Benefits of Exit Interviews

1. Uncover HR-related issues 

Many companies use data from exit interviews in succession planning and the talent management process itself. For example, if the decision to promote someone from a purely technical background into a managerial role is working or not, what issues do employees under a specific manager have with him or her etc can be revealed from data derived from exit interviews. 

Understanding these issues and taking conscious decisions, because an employee does not always leave just for financial reasons. It is almost always accompanied by a deeper reason like not growing, work-life balance, inadequate employee benefits etc.  

2. Understand the employee’s perception of the organization 

This includes understanding the expectations from their role, working conditions, work culture, peers etc. This can help managers improve employee motivation, efficiency and job satisfaction.  

It can also give the management insights on what could be changed within the organization to  benefit the existing employees. They can create a timeline or prioritize what changes can be done, and which of them can be implemented immediately. The same exit interviews in the future can also give the management information on whether the changes are being felt and noticed by employees.  

3. Identify Trends 

The data from exit interviews can often help justify changes implemented within the organization. Though the management has their observations and ways of gathering the employee mood, they often can’t conclude based on one existing employee. However, when multiple people give the same feedback, it becomes data that empowers the management to make and implement changes.

For example, a Harvard Business Review came across a case study where 4 out of 17 employees within a department of an organization quit and five transferred after a particular manager took over. 4 employees’ exit interviews suggested that the manager lacked critical leadership skills, such as showing appreciation, engendering commitment, and communicating vision and strategy. It also revealed a deeper issue with the organization promoting people based on their technical skills rather than managerial capabilities.  

4. Identify Ideas to Improve the organization 

The exit interview has an open-ended question like “I don’t know why the organization just doesn’t …” can give you the most basic ways and suggestions to improve your organization’s work culture and employee growth opportunities. If an employee feels his knowledge, skillset and salary scale growing and trusts the organization’s management to take the company forward, he is likely to not move. Use the answers to find where the gap in the above occurs and why so it can be rectified. 

5. Creates lifelong ambassadors for the organization 

A well-conducted exit interview makes an exiting employee feel like their views and opinions matter. They feel valued and help them leave on a good note. It can help create a lifelong ambassador for organizations, which can lead to them often bringing business from their new organization to their old ones or often referring high performers looking for opportunities to their old organization among others. Some employees who exit on a good note, even return to their old organization with newer skills and experiences. 

Always remember that a candidate is likely to trust an employee’s experience in a company more than any interviewing manager’s promises or even workplace reviews. 

How to conduct an exit interview 

An exit interview can be done in three ways—a face-to-face conversation, a questionnaire or a combination of the methods. If done well, it can reveal what does or doesn’t work inside the organization, highlight challenges, opportunities and generate actionable intelligence. It also signals to the employees that their views matter and can convert them into corporate ambassadors for years to come.  

Designing the Questions 

The questions should be formulated in a way that quality data can be obtained. Ensuring confidentiality also helps an employee answer questions in a forthright manner without him or her having to worry about losing out on references or burning bridges. 

The questions should be standardized in every company after a discussion with HR and the management. Some sample questions can include 

  • What made you take the decision to quit? 
  • Were you satisfied with the promotions and hikes you have received so far? 
  • Did a delay in promotions prompt you to consider exiting? 
  • Are you leaving for a better job, new venture or to take a break? 

Make sure the questions don’t second guess the answers. Make the questions open-ended, ensuring it does not lead the employee in a certain direction. Ideally, staff who are empowered to conduct exit interviews should have an advisory, probable questions, dos and don’ts in an employee handbook they can refer to on and off.

Creating the right atmosphere 

The interview should be conducted when the existing employee’s relatively free and has enough time to think before answering the questions. This is especially important when it’s designed to be a face-to-face interview or questionnaire, because the employee needs to be relaxed. If an employee’s last day is filled with processes, involves them being anxious while bidding farewell, it’s probably not the ideal time. Choose a day earlier in their notice period.  

Make sure the questions don’t second guess the answers. Make the questions open-ended, ensuring it does not lead the employee in a certain direction. Ideally, staff who are empowered to conduct exit interviews should have an advisory, probable questions, dos and don’ts in an employee handbook they can refer to on and off.  

It should be a positive experience at the end of the day.  

Decide the Interviewer 

Organizations have to decide who will conduct the interview—it can be HR, an immediate supervisor, a manager a level or two above or an external agency. Consider who of the above will make the employee most comfortable, so he or she can be as frank and truthful as possible.  

An HR professional is probably the recommended option, so they can focus on role-specific issues, complaints, or suggestions for the organization. They are also unlikely to take any feedback against their team, role, appraisal or supervisor personally. Employees are also not left wondering if this will affect their references in future. 

Wrapping Up

While exit interviews may be made mandatory in most companies, only those where it leads to specific action enjoy the benefits. Countries with extremely tight labour markets are the least likely to take action because finding labour itself is difficult and companies often become defensive. Developed countries and competitive markets, especially in a knowledge-based economy are more likely to take action because acquiring and retaining high performers is crucial for organizations to forge forward. 

While an exit interview is unlikely to make an exciting interview that changes their mind,it can help companies retain their existing and future employees with insights on salary packages, work-life balance, work culture, job satisfaction, feedback on managers, employee benefits etc. 

The action taken on data collected can often make or break an organization.

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