Traditionally, exit interviews are conducted with employees leaving an organization. The purpose of the interview is to provide feedback on why employees are leaving, what they liked or disliked about their employment and what areas of the organization they fell need improvement. More recently, the concept of exit interview has been revisited and expanded as a knowledge management tool rather than simply as HR information. Many companies struggle with getting useful information from EIS to develop effective retention strategies, that maybe the reason why cost of turnover is a nightmare for many companies.
In this paper, I have analyzed data from various industries. And have tried to compare on the turnover between different organizations and the processes in which EIS is used.
Exit interviews, as said by many, is largely a waste of time. Therefore it was necessary to critically analyze EIS processes and turnover.
The time we live in today is an era of new economic paradigm where gaining a competitive advantage in characterized by speed, innovativeness, short-cycle times, quality and customer satisfaction. Recent decades have witnessed dramatic shifts in the role of human resource (HR). Traditionally managers saw that human resources functions as primarily administrative and professional (Becker, Huselid & Ulrich, 2001). The above mentioned were the highlights of the importance of intangible assets. In our view, the actions HR managers take to ensure the strategic contributions is to develop a measurement system that focuses on how human resource can play a central part in implementing a firm’s strategy (refer to diagram 1 in appendix).
Hiring good people is tough, but every senior executive manager knows that keeping them is even tougher. Many theorists have said and agreed to that. The professional streaming out of MBA programs are so well educated and achievement oriented that they could do well in virtually any job. But the question is will they stay? The answer to that question is that only if it fits their deeply embedded life interests – that is, their long-held, emotionally driven passions (Butler ; Waldroop, 2001).
This section reviews the literature available on employee turnover and related human resource practices.
Turnover is the rotation of workers around the labor market; between firms, jobs and occupation; and between the states of employment and unemployment (Abbasi ; Hoffman, 2000). This segment into two categories, involuntary turnover refers to the dismissal of employees, whereas voluntary occurs when employees resigns1. Theorists have added, functional turnover (i.e. bad performers leave, good performers stay) that can help reduce suboptimal organizational performance (Johnson, 2000); executive turnover can be detrimental to firms productivity2.
Dysfunctional turnover (i.e. good performers leave, bad performers stay) damages the organization through decreased innovation, delayed services, lethargic implementations of new programs and de-generated production (Abbasi ; Hoffman, 2000). However, eroding employee loyalty is highlighting the importance of attracting and maintaining good people as the key to strategic staffing in a modern workplace. Contradicting, turnover can be combated through the implementation of ‘high performance work practices3’.
Some studies (Arthur, 1994; Huselid, 1995; Kochan ; Osterman, 1994; Lawler, 1992; Levine, 1995; Guthrine, 2001) have proven that utilizing ‘high involvement work practices’ can enhance competitiveness among others. However, they involve significant amount of time and money devoted to training4, thus, amplifying the loss when an employee leaves the company. Due to the high magnitude senior managers must effectively plan and utilize training and development practices to ensure that their investments are yielding high returns. The unique attribute of human capital highlights why US industry spends over $62 million annually on employee development (Fitzenz, 2000).
Exit interview survey (EIS) is a reactive approach to succession planning, they at least enable an organizational to gather information about relationships and responsibilities associated with the job that are not otherwise noted in formal description. Ultimately, the goal for EIS is to determine the reasons for company turnover, help to identify those areas in which changes need to be made. Another reason addressed is that it helps organizations reach public relation goals5. However, the most common sought EIS information is employee attitudes towards topics such as leadership and supervision, job satisfaction, compensation and policies.
There has been a long tradition in organizational behavior and HRM, of studying exit (voluntary turnover) with perhaps the single most important concept, which is relevant to all aspects of the interview process, is the level of accuracy or honesty of the awareness provided by those participating in the interview6. However such doubts would reduce the chances that what was learned in the EIS process would have significant effects on recruitment human resources planning and organizational development and change.
The EIS can be a powerful tool for identifying a variety of personnel- related company ills, ranging from undesirable turnover rates to poor supervision (Woods ; Macaulay, 1987). According to HR researchers, employees who are leaving a firm can provide considerate insights into the problems they encounter while in the company’s services – problems that apparently became unbearable enough o encourage them to leave.
This section of the report is based on the study of the frequency and applications of exit interviews in various industries. Wanting to determine the extent to which various industries use exit interviews and compare them to others. Secondly, this paper determines what data is collected in exit interviews and how the data is used. The first research is based on seven voluntary, short-term, general hospitals. Using Becker and Newhausens (1975) classification scheme, six of the seven are medium sized and one is slightly larger, with a sample consisting of 1091 non-supervisory registered nurses7 8.
Then again, between the span of a year 221 nurses (20 percent) had left the employment of the hospital. Price and Mueller (1981) used the procedure that involves using a series of regression models to estimate the effect of determinants on job satisfaction, the effect of determinants and job satisfaction on intent to stay and finally, the effects of determinants, job satisfaction and intent to stay on turnover. The result found what to have a statistical significance influence on job satisfaction9, with the strongest influence is for routinization, with instrumental communication and promotional opportunity also being relatively important.
From these findings, one learns that how low routinization, high instrumental communication, high promotional opportunity and high participation in decision making all contribute to greater job satisfaction. In contrast, unexpected net effects indicated a greater opportunity, a lesser level of job satisfaction; the older the nurse the greater the job satisfaction; and full time nurses are less satisfied than the part time nurses. Since job satisfaction had the strongest influence: the more satisfied the nurses are the ones who intent to stay. Although pay has been expected to have an influence only indirectly through job satisfaction, it was found that nurses with the highest pay are more likely to express intent to stay, regardless of their level of job satisfaction. Opportunity10 and promotional opportunity also have significant influence on intent.
However, the examination of these direct effects is only part of the information available from a path model and by itself can be misleading. As already discussed in the turnover literature, major arguments appearing in the organizational characteristics producing varying levels of job satisfaction, which, in turn, influences the person’s intent to stay in the organization, which, in turn, is the major direct determinant of turnover (Price ; Mueller, 1981).
In view, the fact is that this research by Price and Mueller is dated 1981, exit interviews was not part of this research. But what are shows is the fact that on what factors were most important, when considering the profession of nurses, to retain employees. Price ; Mueller concluded with these suggestions.
1. Intent to stay should be replaced by ‘commitment’ conceptualized as ‘loyalty towards the organization’. Loyalty is a more abstract line of attack when referring to commitment and thus, is a more parsimonious technique to conceptualize commitment.
2. Size of the organization should be included in the model. Often researches have indicated that increased size reduces turnover because it results in more pay, provides a window of opportunity for promotion and increases intent to participation.
3. Some organizations studies should be located in large urban areas where turnover rates are considerably high. Certain variables for instance opportunity, for example, might have a stronger influence in these large communities.
4. Males and females should be included in future research. Some of the variables – integration, pay, promotional opportunity, professionalism, and kinship responsibilities are promising examples – may have effect on turnover that differs by sex.
5. Occupations that differ considerably in the extent to professionalism should be selected for study11.
6. Further research should shorten the time period between data collection for the independent variables and the data collection for turnover12. Quite a few changes can transpire relating to the elapsed period.
7. It is possible to make turnover, a continuous variable by recording the amount of time spent with the organizations after the independent variables are measured.
Another study in which companies13 based on the ‘expert informer’ (from colleagues, friends and so on) theory were selected. Companies surveyed varied in sizes from the Fortune 500 firms to the small companies. Nevertheless, each selected firm were either established leaders in their fields or had exhibited a pattern of recent rapid growth, also they represent a diverse group, both in terms of their size and geographic location. Seeing that, Woods and Macaulay (1987) were interested in collecting specific information, each participant responded to a semi-structured interview format with the same set of open end questions for all, with chances to elaborate or explain on their responses.
It was found that exit interviews are far from universal in the hospitality firms. Some appear to be quite consistent in exit interviewing but others used them rarely14. There were also remarkable consistency in both the type of information that is collected and in the manner the data collection among firms who employ the procedures. It was observed that virtually all the firms asked questions about such matters as the reason for leaving, salary experience (past and prospective), quality and supervision, and the quality of training.
On the other hand, few companies managed to find the courage and ask departing employees questions relating to attitudinal causes for turnover or whether the cultural values and beliefs of the organization caused the employee to leave. In no case were the question concerning whether the individual and the organization fit each other. It was also detected that there was great consistency in how companies conducted the exit interview. Convincingly, the methodology the company used to collect data had a bearing value of the information collected15.
It was noticed that very few relied on formal written documents for data collection, and no firms used computer-based data collection. It could therefore be concluded that many organizations primarily collected exit interview information for the purpose of completing an employee’s file and for the purpose of protecting any potential liability caused by the turnover (refer to exhibit 1 in appendix).
Voluntary turnover in many fields, especially IT, is reaching epidemic proportions. It is expected that 40% of the IT staff members currently employed plan on switching jobs within the next 12 months (Watson, 2000). Articles published by ComputerWorld and PC Computing report money as the primary factor for turnover. Other reasons include the need for new challenges, more competent bosses, and greater training opportunities (Gerencher, 1999; Watson, 2000). In an attempt to retain professionals organizations are offering this group of professionals some of the most aggressive salaries ever seen16.
Despite this many IT personnel’s are unsatisfied with respect to compensation, especially the entry level people (i.e. 25 years or younger). Mobley (1977) determined that a significant and consistent, yet weak, relationship between job satisfaction and turnover does exist. It’s assumed that the rational actor (employee) follows a sequential process when deciding to terminate employment with a particular organization. As mentioned this process begins with an employee experiencing dissatisfaction. Many items influence the degree of job satisfaction, including the job itself, management beliefs, future opportunity, work environment, pay, benefits, rewards and company-worker relationships (Locke, 1976). As the level of dissatisfaction increases, he/she contemplates the option of quitting.
In spite of this, one interesting thing in Mobley’s model is that once an individual thinks of quitting, the next step involves an evaluation of the expected utility17 of searching for another job versus the cost of associated with quitting the present job. From a modular perspective, Steers ; Mowday (1981) described voluntary turnover as a 3-step sequential process with each step containing 2 constructs (refer to figure 1 in appendix).
Step 1 involves the manner in which job expectations influence ones attitudes regarding the job18. Step 2 involves the affective responses elicited from step 1, which includes the construct of job satisfaction and how those responses influence ones desire to leave the organization. These decisions could be based on non-working factors – such as family, hobbies, religion ; political influences (Cohen, 1995). Here there are organizations-focused factors that influence employee’s attitudes and therefore their intentions to leave.
The more an organization perpetuates the interaction of non-working factors along with organization-focused factors, the more one becomes socially and professionally ‘tied’ to the organization, and there, the greater the likelihood of retaining IT professionals. The final step highlights, one’s intent to leaving and actually quitting or remaining with the organization. As one expects, if favorable alternatives exist, intent to leave leads to actual turnover. Even though there may be nothing dissatisfying about their current positions, the new offer may be too good to forego.
CRITICAL ANALYSIS ON EXIT
A fruitful trend in recent researches has been linking job satisfaction and its rich research tradition to specific work behaviors. It is now documented that low job satisfaction is related to high turnover. In addition, low job satisfaction is a major correlate of low commitment. Low commitment has been recently linked to high absenteeism. Others behaviors that have been tentatively linked to job dissatisfaction includes: request for transfers; lateness; error rates; and internal political activity. Recognition, of the wide range of options or possible responses, is linked also to job dissatisfaction.
The theory of exit, voice and loyalty suggests three possible options as response to job discontent. The first being exit, which is equivalent to voluntary separations or turnover from the job. However, the exit option is regarded as uniquely powerful and expected to produce a ‘wonderful concentration of the mind’ for the abandoned employer (Hirschman, 1970). Another factor contributed to the organization behavior is the ‘voice option’ defined as ‘any attempt at all to change rather than to escape from an objectable state of affairs’ (Hirschman, 1970). The third category is loyalty. When confronted with the deteriorating conditions in the organization some members choose neither to exit nor voice. They ‘suffer in silence, confident that things will get better soon’.
This final portion of this paper is devoted for critically analyzing exit interview as a valuable management tool. As indicated most of the companies used some form of exit interview or determined reasons for turnover in some form, some companies never did or did but in an isolated pattern when specific problems had been previously brought to their attention. Yet some companies have limited their interviews to managerial-level employees. When considering line-employees, interviews were done sometimes by the manager or an intermediate supervisor; varying in duration and topics and the methodology used was inconsistent.
The basic purpose for collecting the data is to assist management in detecting employees’ problems or organizational events that may either foster or reduce employee turnover. An inherent assumption in the part of the organization is that exit surveys can discover what causes employee dissatisfaction so changes can be made and costs (example unwanted turnover) can be reduced. Reducing turnover is not the only advantage on exit surveys, information gathered can be complied into database organization diagnostic information for problems. For example, information can used to detect unfair business practices (i.e. sexual harassment, discrimination), to uncover competitive compensation issues, to locate faulty supervision procedures, to understand ineffective training practices, to identify inconsistencies is appraisal systems and to discover problems in general working conditions (Bruce, 1988; Drost et al, 1987).
In short exit interviews have potential to improve the overall quality of the workplace by providing information that can be translated for the HRM.
Despite the potential advantages, there can be problems with data. The validity and reliability of the processes have been questioned because of biased responses that may occur. Theorist and practioners noted that although many organizations use EIS, the process and data gathered have been criticized, both from administrative and methodological standpoints. The administrative criticisms of EIS has generally been emphasized that the data are seldom used, the process is poorly administered (Woods & Macaulay, 1987) and often feedback to management is erroneous. One can conclude that many organizations don’t use EIS effectively.
Conversely, the methodological aspects on exists argue the underlying techniques used in EIS processes are fundamentally flawed, leading to low reliability and validity. These deficiencies include poor conceptualization, testing and implementation. At the heart, methodological criticism is a basic concern that existing personnel may not provide the organization with appropriate and accurate feedback, either because the interviewer’s attitudinal approach is not always completely objective or because the responses of the existing personnel may be driven by personal or professional concerns that may make their responses defensive (Giacalone, Knouse & Ashworth, 1991)19.
One major factor that has an impact on an individuals’ willingness to honestly discuss information processes is attitude towards authority. An underlying theme in EIS literature is that feelings/attitudes towards the person gathering the information may raise or lower the potential for distortion. For example, there is a fear that information provided to management may hurt fellow employees – perhaps in the eyes of a new employer. Those whose attitude towards authority is positive may be willing to discuss issues that would impress authority figures, whereas those who do not hold a positive thought may discuss other issues and agendas. The question, however, remains whether these attitudes are targeted at the exiting individual’s manager (who is collecting the data) or towards authority figures in general.
The EIS process in HRM is of particular importance given the rapid and massive restructuring and reengineering that is underway among many organizations. Yet little attention is given to the process from a rigorous theoretical and methodological stance. However, different types of interviews are appropriate for different organizational environments. Perhaps most importantly, while the ‘real reason’ employees leave may never be under the control of management, exit questionnaires can be designed to facilitate direct, straight forward responses which will be useful both in terms of diagnosing ongoing organizational problems and in-framing references for departing employees.
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1 Voluntary turnover often results in departing employees migrating to competing firms, creating an even more critical situation, since this knowledge can now be used against the organization. Voluntary turnover has in fact been accelerating over the past decade, as recent studies have shown that employees on average switch employers every 6 years (Kransdroff, 1996). This situation demands senior management to consider the repercussions on voluntary turnover and immediately create contingency plans. Otherwise senior management maybe caught unprepared if (or when) their best performers leave.
2 This can result in the loss of business and relationships and can even jeopardize the realization of the firm’s objectives. To compound on negative side effects, not all departing employees are considered sub-optimal performers.
3 These HR practices include internal promotions, performance (versus seniority) based promotions, skill based pay, group-based (gain sharing, profit sharing) pay, employees stock ownership, employee participatory programs, information sharing, attitude surveys, teams, cross-training or cross-utilization, and training focused on future skill requirements (Guthrine, 2001).
4 Continuous training of the workforce is necessary to ensure that the employees are continuously updating their skills. Employee training can be conducted wither through on-the-job or off-the-job practices. On-the-job training allows employees to work within the firm, while learning about their job and the company. Off-the-job training and external training conducted by suppliers or formal educational institution.
5 Employees who are leaving the organization, either voluntary or involuntary are encouraged to raise important issues that can help HR managers diagnose an organizations weakness and confirm its strengths.
6 Because the EIS process is predicted on honest responses, failure to receive consistently truthful feedback from employees would cast considerable doubt on the validity of the responses, thereby raising questions about the utility of the process.
7 Nurses with three types of training are employed by the hospitals: associate, diploma and baccalaureate-graduate. This includes both full time and part time nurses.
8 Although this sample is not a random one, significance tests primarily will be relied in order to avoid making arbitrary decisions about the importance of the variables in the model.
9 Regression model: turnover, intent to stay and job satisfaction as dependent variables for the total sample. Opportunity, routinization, participation, integration, distributive justice, time worked, age, instrumental communication, promotional opportunity were all accounted as independent variables.
10 Three comments about opportunity are pertinent (Price, 1977):
1. The 2 most widely supported determinants probably are opportunity and pay; opportunity being almost 4 times as important as pay.
2. The importance of the opportunity derives from the fact that it has been both indirect (unexpected) and direct (expected) effects on turnover.
3. Opportunity is an environmental determinant.
11 Nurses in the present study turned out to be low in professionalism – thus there was no expected result.
12 The data for independent variables (job satisfaction ; intent to stay) were collected in August 1976, and data for turnover was collected in October 1977.
13 Companies selected were the non-hospitality firms, hotels, institutional food-services, and chain of restaurants operators.
14 All of the hotels used EIS extensively but the food-service firms conducted the process of EIS without any regularity at all.
15 Almost all of the hospitality companies in that conducted interviews are in one-on-one format, despite the criticisms this method received on biased results. In addition most of the companies conducted interviews on the final day of work and some even conditioned to release the employees final pay check on completion of the interview. This resulted in a very hurried work.
16 It was reported in 1999, IT professionals received an average salary increase of 11%
17 The expected utility is tempered by factors such as age, job tenure, and labor-market factors.
18 Job expectations are influenced by 3 stimuli: job satisfaction, organizational commitment and job involvement.
19 First, interviewees often make personal considerations a priority. Therefore before providing the interviewer with any insights, interviewees may consider whether the information they provide will result in conflict, they may choose to withhold or mitigate with the severity of the information. Second, interviewees who have been forced to exit (i.e. fired, sacked) may resent the organization, thereby subtly retaliating with erroneous or withheld information. Third, because the insights interviewees provide could have a direct impact on the other in the organization. Fourth, interviewees may attempt to protect their long-term interests (example recommendations, possible return to the company) by not providing information they deem threatening to these interests. Finally, interviewees may provide erroneous information because they don’t have the time or the incentive to think on how they feel.