Link to the HBR Article:
This underused practice can be a powerful tool for retention. by
From the Magazine (April 2016)
An international financial services company hired a midlevel manager to oversee a department of 17 employees. A year later only eight remained: Four had resigned and five had transferred. To understand what led to the exodus, an executive looked at the exit interviews of the four employees who had resigned and discovered that they had all told the same story: The manager lacked critical leadership skills, such as showing appreciation, engendering commitment, and communicating vision and strategy. More important, the interviews suggested a deeper, systemic problem: The organization was promoting managers on the basis of technical rather than managerial skill. The executive committee adjusted the company’s promotion process accordingly.
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 ever-increasing numbers, figuring out why is crucial. And the most useful tool for doing so is one that too few leaders pay attention to: exit interviews. According to our research, 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. Only a few collect, analyze, and share the data and follow up with action. The company mentioned above is in this final group, and it’s undoubtedly better for it.
In today’s knowledge economy, skilled employees are the asset that drives organizational success. Thus companies must learn from them—why they stay, why they leave, and how the organization needs to change. A thoughtful exit-interview (EI) process can create a constant flow of feedback on all three fronts.
Though we are unaware of research showing that EIs reduce turnover, we do know that engaged and appreciated employees are more likely to contribute and less likely to leave. If done well, an EI—whether it be a face-to-face conversation, a questionnaire, a survey, or some combination of those methods—can catalyze leaders’ listening skills, reveal what does or doesn’t work inside the organization, highlight hidden challenges and opportunities, and generate essential competitive intelligence. It can promote engagement and enhance retention by signaling to employees that their views matter. And it can turn departing employees into corporate ambassadors for years to come. Indeed, of all talent-management processes, a strategic EI program—one that is designed to yield ongoing, long-term benefits—may be one of the most powerful yet least understood.
Too often EI programs fail to either improve retention or produce useful information. We’ve identified two reasons why. The first is data quality. The usefulness of an EI depends utterly on the honesty and forthrightness of the departing employee. People may be less than candid on their way out the door for many reasons. Some feel pressed for time or unmotivated to explore their feelings. They may not want to say anything negative about a supervisor they like, or anything at all about a supervisor they don’t like. As one HR leader at a European mining company puts it, “Are they really going to tell you they’re leaving because they don’t like their boss? Probably not, because they want references.”
The second reason is a lack of consensus on best practices. The goals, strategies, and execution of EI programs vary widely, and the findings and recommendations from empirical studies are often vague or conflicting. But in our view, the deepest problem is that many organizations use EI programs as an excuse not to have meaningful retention conversations with current employees.
To get a clearer sense of the state of EI processes and outcomes, in 2012 and 2013 we surveyed 188 executives and interviewed 32 senior leaders. They represented 210 organizations in 33 industries, headquartered in more than 35 countries. Many interviewees were personally responsible for leading the exit process at their companies, and some reported on their own experience of leaving an organization.
Three-quarters of the companies in our study conducted some type of an EI for at least some departing employees. Of those, 70.9% had their HR departments handle the process; 19% had the departing employees’ direct supervisors do it; 8.9% delegated the job to the direct supervisor’s manager; and 1% turned to external consultants. About 8.2% of organizations used more than one interviewer. Only 4.4% used questionnaires; 1.9% used a questionnaire accompanied by a face-to-face or a telephone interview, and 2.5% used questionnaires as the sole form of EI.
Regardless of method, the effectiveness of an EI program should be measured by the positive change it generates. We asked the executives whose companies had programs to name a specific action taken as the result of an EI (a policy change or an intervention in HR, operations, marketing, or some other function). Fewer than a third could cite an example. Thus two-thirds of existing programs appear to be mostly talk with little productive follow-up. It’s not surprising that many people we spoke with believe that exit interviews have a negative return on investment.
To better understand why so many programs fail to prompt action, we asked a subset of executives what happened to the data collected from exit interviews. Most said their companies consolidated the data, but fewer than a third of those organizations regularly shared it with senior decision makers. In other words, most companies ignore the strategic value of exit interviews.