At Unicru, they're perfecting the art of saying goodbye. Turnover at the employment-services firm, based in Beaverton, Oregon, isn't rampant; it's about 15 percent a year, consistent with the industry average. Still, that's high enough to be a concern. Unicru's work force has been growing fast--from 136 in 2002 to 271 in 2005--and the market for tech and management talent in the Pacific Northwest has been tightening. So when employees decide to leave, Unicru does everything it can to understand why--and whether the company could have done anything to keep them.
A two-person team has been assigned to exit interview duty. Each departing employee goes through the same 15-question, 90-minute process. The interview is friendly but probing, and the HR department keeps a close eye on the results, looking for trends that might otherwise have gone unnoticed. Many departing employees, Unicru has learned, were put off by a lack of opportunities for professional development and career advancement. (Unicru now invests heavily in those areas.) "We find most employees are eager to be honest because they feel their opinion might help us improve," says Elaine Lees, the company's vice president of human resources.
Nearly all companies conduct some kind of exit interview with employees who leave the fold. But many treat it more as a perfunctory rite of passage than a strategic management tool. That's a mistake. Exit interviews give managers a key opportunity to get an accurate read on the pulse of the organization, providing insights that can be used to stem further turnover. "It used to be the main point of an exit interview was to find out why people were leaving," says Richard Harding, director of research at Kenexa, a consulting firm in Wayne, Pennsylvania. "The new thinking is to turn it around and figure out why good people want to stay."
That's especially important in today's labor market, which is characterized by low unemployment and a new generation of employees who no longer expect to remain with the same company for long. According to a recent study by Monster Intelligence, 40 percent of companies said turnover had increased over the past 18 months. Meanwhile, the voluntary unemployment rate--what economists call the "quit rate"--has risen to about 2 percent, the highest level since November 2001, according to the Bureau of Labor Statistics.
Mining your departing employees for insights into your company can reduce some of turnover's sting. At Unicru, HR execs meet with employees a few days before they leave--delving into each worker's motives, attitude, and insights. In the hopes of eliciting candid responses, the HR staffers promise to keep all comments confidential. And they make a point of telling employees that feedback during exit interviews can lead to concrete action plans. "For the most part, even dissatisfied employees who are leaving the company have a feeling of connection with most of their co-workers and genuinely want to see the company improve and succeed," Lees says.
Of course, the success of exit interviews rises and falls with the candor of those being interviewed. It's no secret that some employees simply tell employers what they want to hear in hopes of getting the interview over with or not burning a bridge. And it's hard to blame them. That's why business decisions should never be made based on the comments of any single exiting employee; instead, decisions should arise from trends and patterns that emerge from a number of conversations, says Les McKeown, president and CEO of Deliver the Promise, a consulting firm in Marblehead, Massachusetts, and author of the book Retaining Top Employees. The key to getting useful information, he says, is to treat the departing employee as a trusted adviser rather than a traitor and to keep the session relaxed and conversational. "A lot of companies send in the likes of Bill O'Reilly when who you really want is Charlie Rose," McKeown says.
There's some debate among HR pros about the best time to hold exit interviews. McKeown and many others suggest waiting at least a couple of weeks after an employee has left before doing the exit interview. Their reasoning: Employees are likely to be more relaxed, forthcoming, and introspective after they have grown more comfortable in the new job. Not everyone agrees. David Lewis, president of OperationsInc, a human resources consulting firm in Stamford, Connecticut, argues that the best information--indeed, the best shot at getting employees to agree to the exit interview in the first place--is right after they've announced their resignation. "After you leave, you're engaged with your new job and trying to impress your new boss. Why would you want a distraction from your old employer?" Lewis says. "Another reason to do it before the employee leaves is an exit interview can be the catalyst for a successful counteroffer. You may find out an employee won't leave if he gets some level of salary or a new title."
Whatever the timing, exit interview programs get more powerful the more interviews you do. Over time, you develop a database of insights that can help inform future hiring decisions. For example, Vertrue, a Stamford, Connecticut, company that operates seven call centers in North America, uses exit interview data to create profiles of candidates with the best potential for staying with the company for an extended period of time. As a result, Vertrue, which has 2,000 employees, now boasts a turnover rate less than half of the industry average (which has been estimated to be as high as 300 percent a year), according to Doug Weiss, a senior vice president. The interview results also have sparked changes in supervisor training, incentive programs, and pay packages. The biggest surprise to come out of the interviews? The degree to which employees want steady contact, coaching, and feedback from their managers. "Without the exit interviews we might have missed those details," Weiss says.
Of course, the ultimate ROI from exit interviews is the so-called boomerang effect--HR jargon for employees who return to their former companies after learning that the grass isn't necessarily greener elsewhere. "What we've found is that people typically don't leave a company--they leave a manager," Kenexa's Richard Harding says. "They say, 'I'd be happy to come back as long as I don't have to work for Freddy.' Those are the cheapest recruits you'll ever find." Indeed, at Unicru, Lees makes a special effort to stay in touch with former top performers who have moved on, especially when the company has implemented changes they might have suggested during their exit interviews. In February, for example, the company rehired a salesperson five months after he left. Several other former workers have contacted Unicru, expressing interest in returning. "They had heard of the changes taking place," says Lees.