Many small business owners may not be aware of the hidden costs of employee turnover. While the causes of employee turnover may be unavoidable in certain small business (constraining salary budgets, lack of career track progression) many other factors may be in play. The exit interview is not a forum for changing a departing employee's mind, but it may be the forum for finding out how you can prevent any future losses.
In November 2012, the Center for American Progress published a study in which they estimated that:
"• For workers earning less than $50,000 annually.... Business Costs to Replacing Employees = 20 percent of salary, the same as across positions earning $75,000 a year or less..."
• Among positions earning $30,000 or less... The typical cost of turnover ... is 16 percent of an employee’s annual salary"
So what should you ask, and who should do the asking? Exit interviews can be done in-person or after the departure of an employee via computerized survey. In my experience, the most useful knowledge is gleaned in person to person interviews and carried out either by Human Resources, or an independent third party. This is because many people may not want to open up as to the real factors behind their departure especially to someone they report to, or feel they may need a reference from in the future. Especially if they are departing due to a negative experience with a particular person or direct supervisor, or because they have been asked to leave the company.
Ideally, the exit interview should be an opportunity for the employer to obtain useful information on how well they are doing in relation to business processes which affect employee morale, and to look for areas of opportunity for improvement such as:
In November 2012, the Center for American Progress published a study in which they estimated that:
"• For workers earning less than $50,000 annually.... Business Costs to Replacing Employees = 20 percent of salary, the same as across positions earning $75,000 a year or less..."
• Among positions earning $30,000 or less... The typical cost of turnover ... is 16 percent of an employee’s annual salary"
So what should you ask, and who should do the asking? Exit interviews can be done in-person or after the departure of an employee via computerized survey. In my experience, the most useful knowledge is gleaned in person to person interviews and carried out either by Human Resources, or an independent third party. This is because many people may not want to open up as to the real factors behind their departure especially to someone they report to, or feel they may need a reference from in the future. Especially if they are departing due to a negative experience with a particular person or direct supervisor, or because they have been asked to leave the company.
Ideally, the exit interview should be an opportunity for the employer to obtain useful information on how well they are doing in relation to business processes which affect employee morale, and to look for areas of opportunity for improvement such as:
- Opportunities for advancement
- Organizational culture
- Compensation and benefits
- Training and development opportunities
- How well the recruitment and selection processes met the individual's expectations of the job they actually performed
- The level and kind of direct supervision they received
- What was enjoyable or frustrating about the organization, or their job
- What ideas they have for improving their position or the organization
The exit interview should also be used as an opportunity to review any agreements that were signed upon hiring the employee, and to manage any paperwork or procedures that may need to be completed prior to parting such as the return of company credit cards, business cards, computers or keys.
At Namaqua Consulting, we offer outsourced services which include the option for us to design and conduct Exit Interviews to meet your organizational needs, and provide recommendations based on the information we collate as to how improvements can be implemented to avoid further turnover and hence, further costs.
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