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Exit Interviews: An Underused Tool for Protecting Your Company

exit interviewHR professionals are frequently asked to do more with less. Moreover, these are challenging times, with companies facing increased employment litigation but having fewer resources for programs to strengthen the quality and longevity of the workforce. Exit interviews represent an effective and inexpensive, albeit little-used, tool for spotting and fixing problems before they turn into litigation.

Mastering HR Report: Firing, including a section on exit interviews

Living with and learning from job mobility
The degree of job mobility in the United States is unequaled in the world. While employees in many countries can expect to work for the same employer for their entire working lives, that type of long-term relationship is practically unheard of here. We live in a society where the legal norm is employment at will, which creates freedom both for the employee to change jobs frequently and for the employer to change the people who fill its jobs whenever necessary.

The economy benefits from that mobility, but it comes with some costs to employers. Whenever an employee quits a job, the employer loses the cost of her recruitment and training plus her institutional memory and the skills he has gained on the job. A replacement employee will have to be trained. In some cases, an employee who departs represents a threat that the company’s trade secrets will be disclosed or misused or that customer relationships the employer paid him to develop will be exploited unfairly.

Exit interviews are structured discussions an employer routinely has with employees who voluntarily leave the company. They serve several important functions: They provide a way for the employee to gain some closure and for you to ensure a better relationship with the employee in the future. They provide a critical problem-spotting device for you. They provide a way to discuss the employee’s future plans — where he plans to work, in what capacity, and for what pay and benefits. Finally, they provide a way to remind the employee of his obligations to protect the confidentiality of your information and comply with any restrictive covenants.

Audio Conference: Maximize Your Exit Interviews to Avoid Lawsuits and Reduce Turnover

Who should be interviewed?
The normal target group for exit interviews is employees who voluntarily resign. Some employers limit exit interviews to departing management, supervisory, sales, and technical employees. The value of exit interviews with those employees is perhaps higher, but much can be learned from exit interviews with employees at all levels.

A policy of interviewing departing employees from lower-skilled and lower-paid positions often turns up problems in the quality of supervision or communications and in the competitiveness of the company’s pay and benefits. You also need to impart certain information to employees who are involuntarily terminated, so some form of discussion with them is important even if it isn’t a full-blown exit interview.

HR Guide to Employment Law, a comprehensive guide for human resources including terminations

Preparing for the exit interview
It should be your general policy to conduct exit interviews. Each interview should be scheduled promptly after the employee gives notice of her departure. When the employee expects an interview, she can prepare what comments to make and what questions to ask.

Likewise, the interviewer can prepare in advance a general outline of the topics to be covered. Before the interview, the interviewer should review the employee’s job functions, work history, compensation history, and any applicable employment contract or noncompetition agreement. The interviewer also should be ready to discuss payment of accrued benefits, insurance issues, and COBRA.

Last chance to connect with employee
An employee who departs voluntarily may return someday, refer your company to other potential employees or customers, become employed by a customer, or become a customer himself. Consequently, a departing employee should be regarded as a business asset. The exit interview may be your last chance to create a positive bond with the employee.

A departing employee often just wants someone to listen, while in other cases he needs to vent. The exit interviewer needs to perform the role of fact gatherer and objective listener. In a surprising number of cases, it’s possible to persuade an employee not to leave once it becomes clear why he has decided to move on.

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What to ask and listen for
Here are some useful exit interview questions:

  • Why have you decided to leave?
  • What could we have done early on to prevent this situation?
  • What could we have done to make the company a better place to work?
  • How would you rate supervision at our company?
  • How would you rate communications and feedback at our company?
  • Did you have everything you needed to do a good job?
  • Do you plan to continue working?
  • If so, where? In what job?
  • What will your duties and responsibilities be?
  • What will your compensation and benefits be?
  • What are they offering that we aren’t?
  • While you were here, were you treated with respect?
  • Would you consider returning to work for us if the situation were right?

A careful interviewer will focus on comments and suggestions that should be followed up on. Comments about supervisory treatment and respect are particularly important. In some cases, employees will depart because of discrimination or harassment by supervisors or coworkers that can present legal liability for the employer unless it’s addressed. Comments about compensation and benefits with the new employer will provide insight into your company’s competitive position in the marketplace.

If an employee intends to jump ship for a competitor in the same line of work, his departure may trigger a number of responses from management. For example, it may be necessary to send a written reminder of the employee’s obligation to maintain confidentiality or respect boundaries created by noncompete and nonsolicitation agreements.

Reporting to management and other follow-ups
Larger employers probably won’t find it necessary to report to management after each exit interview. Instead, you might prepare a quarterly summary of the information gathered through exit interviews. For smaller employers or when employees with sensitive information or critical customer relationships are departing, individual reports might be appropriate. Management may need to consult with counsel on noncompetition and trade secret issues. In some cases, you may want to prepare a letter bringing the employee’s noncompetition obligations to the attention of the new employer.

Whenever information suggesting harassment, ethical violations, or unlawful activity is developed in an exit interview, you must immediately report the situation to management and conduct a follow-up inquiry. Even if an employee wants her comments about harassment to remain confidential, the company has a legal obligation to investigate and take prompt remedial action.

Exit interviews are an inexpensive, effective way to collect useful business information. In many cases, the information gathered from a departing employee will protect your company from litigation. In most cases, the information collected from an exit interview will be useful for self-evaluation and benchmarking against other employers in the marketplace. In addition, the exit interview may be just the right opportunity to establish a positive relationship with a departing employee.