Making exit interviews count

An international financial services company hired a mid level 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 organisation 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 organisation 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. 

In today’s knowledge economy, skilled employees are the asset that drives organisational success. Thus, companies must learn from them—why they stay, why they leave, and how the organisation 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 organisation, highlight hidden challenges and opportunities, and generate essential competitive intelligence. 

It can promote engagement and enhance retention by signalling 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 programme—one that is designed to yield ongoing, long term benefits—may be one of the most powerful yet least understood.

State of exit interviews

Too often EI programmes 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 programmes 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 organisations use EI programmes 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 organisations 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 organisation.

Regardless of method, the effectiveness of an EI programme should be measured by the positive change it generates. We asked the executives whose companies had programmes 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 programmes appear to be mostly talk with little productive follow-up. It is not surprising that many people we spoke with believe that exit interviews have a negative return on investment.

To better understand why so many programmes 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 organisations regularly shared it with senior decision makers. In other words, most companies ignore the strategic value of exit interviews.

Overall goals

A strategic EI programme provides insight into what employees are thinking, reveals problems in the organisation, and sheds light on the competitive landscape. In shaping their programmes, companies should focus on six goals:

1. 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 organisation, but unless their salary is out of alignment with their peers, money doesn’t usually drive them out the door. Plenty of other HR practices can play into an employee’s decision to leave. One leader from a food and beverage company told us that exit interviews inform his company’s succession planning and talent management process.

2. Understand employees’ perceptions of the work itself.

This includes job design, working conditions, culture, and peers. This can help managers improve employee motivation, efficiency, coordination, and effectiveness.

3. Gain insight into managers’ leadership styles and effectiveness.

This equips the organisation to reinforce positive managers and identify toxic ones. One executive at a major restaurant chain told us that several exit interviews she recently conducted revealed that micromanagement was a big problem. The conversations, she said, “led to some very tangible outcomes,” such as establishing training and development initiatives to create better managers.

4. Learn about HR benchmarks (salary, benefits) at competing organisations.

“We use exit interviews to see how competitive we are against other employers: time off, ability to advance, different benefits, and pay packages,” an HR executive at a global food and beverage company told us. “And we want to see who is poaching our people.”

5. Foster innovation by soliciting ideas for improving the organisation.

EIs should go beyond the individual’s immediate experience to cover broader areas such as company strategy, marketing, operations, systems, competition, and the structure of his or her division. One emerging best practice is to ask every departing employee something along the lines of “Please complete the sentence ‘I don’t know why the company doesn’t just.’” This approach may reveal trends.

6. Create lifelong advocates for the organisation.

Treat departing employees with respect and gratitude. That may encourage them to recommend their former companies to potential employees, to use and recommend the companies’ products and services, and to create business alliances between their former and new employers. “You want [a departing employee] to leave as an ambassador and customer,” said one North American financial services executive. — HBR/GB