Shri Vile Parle Kelvani Mandals

Mithibai College of Arts, Chauhan Institute of

Science &
Amrutben Jivanlal college of Commerce and
Economics
Vile Parle (West) Mumbai 400056
A PROJECT ON

EXIT INTERVIEW

IN THE SUBJECT
Human Resource Management
SUBMITTED BY
NAME: AMULYA BAHETI
ROLL NO.: 03

DIVISION: B

UNDER THE GUIDANCE OF

PROF. Harikrishnan Kurup
TO

UNIVERSITY OF MUMBAI
FOR

MASTER OF COMMERCE PROGRAMME

(SEMESTER - II)
YEAR: 2013-14

Shri Vile Parle Kelvani Mandals

Mithibai College of Arts, Chauhan Institute of
Science &
Amrutben Jivanlal college of Commerce and
Economics
Vile Parle (West) Mumbai 400056

EVALUATION CERTIFICATE
This is to certify that the undersigned have
assessed and evaluated the project on Topic Exit
Interviews

submitted

by

AMULYA

BAHETI,

student of M.Com. Part - I (Semester II) for the

academic year 2013-14. This project is original to
the best of our knowledge and has been accepted
for Internal Assessment.
Name & Signature of Internal Examiner
Name & Signature of External Examiner

College Seal
B. GADAKARI MANGAONKAR

PRINCIPAL

Dr. D.

Shri Vile Parle Kelvani Mandals

Mithibai College of Arts, Chauhan Institute of
Science &
Amrutben Jivanlal college of Commerce and
Economics
Vile Parle (West) Mumbai 400056

DECLARATION BY THE STUDENT

I, AMULYA BAHETI, student of M.Com. (Part I)
Roll No.: 03 hereby declare that the project titled
Exit Interviews for the subject Human Resource
Management submitted by me for Semester II of
the academic year 2013-14, is based on actual
work carried out by me under the guidance and
supervision of PROF Harikrishnan Kurup I further
state that this work is original and not submitted
anywhere else for any examination.

Place:

MUMBAI

Date:
Name & Signature of Student

ACKNOWLEDGEMENT

First and foremost I seek the blessings of my beloved TEACHERS who keep lot of
expectations on me and showering their infinite love forever.
I would like to thank University of Mumbai for giving me this opportunity of taking
such a challenging project, which has enhanced my knowledge about Exit interviews.
I show my gratitude to the Principal, Vice Principal and Co-ordinator of Mithibai
College who gave me a lot of moral support and under their guidance I was
successfully able to complete my project.
And with deep sense of gratitude I would like to thank Prof. Harikrishnan Kurup for
his immense help and co-operation.

EXECUTIVESUMMARY
It is a well-known fact that successful organizations do not owe their success
solely to market realities and sustainable competitive advantages. Instead, most of
them consider their human capital as their most important asset. The biggest
challenge that organizations face is to retain its human capital treasure once it has
been acquired. A retention strategy cannot be formulated till the company knows the
reasons for the attrition rate. Exit interviews play an important role in identifying
these problems. An exit interview is a survey conducted with an individual who is
separating from an organization or relationship. Most commonly, this occurs between
an employee and an organization, a student and an educational institution, or a
member and an association. Once the problems have been identified correct steps can
be taken to retain the key personnel and ensure a satisfied workforce.
This paper works towards understanding and elaborating on the importance
and need of exit interviews. It also explains the various benefits the company gets by
conducting these interviews and what steps must be undertaken by the company to
improve the effectiveness of exit interviews.

Objectives of the study

The main objectives of the study include:
1. To understand the meaning of Exit interviews
2. To identify the need and importance of Exit interviews
3. To comprehend the benefits and challenges of exit interviews
4. To understand how to improve the effectiveness of Exit Interviews.

CONTENT
Evaluation Certificate....i
Declaration.....ii
Acknowledgement....iii
Executive Summary.iv

INDEX
Sr. No

Particulars

Page No

1.

Chapter 1: Introduction

2.

Chapter 2: Exit Interviews

4.

Chapter 4: Case Study: PWC Research

30

5.

Chapter 4: Conclusion

32

Bibliography

36

CHAPTER 1: INTRODUCTION
In 1994, a noted leader in the human resources (HR) field made the following
observation:
Yesterday, the company with the access to the most capital or the latest
technology had the best competitive advantage. Today, companies that offer products
with the highest quality are the ones with a leg up on the competition. But the only
thing that will uphold a companys advantage tomorrow is the caliber of people in the
organization.
That predicted future is todays reality. Most managers in public and private
sector firms of all sizes would agree that people truly are the organizations most
important asset. Having competent staff on the payroll does not guarantee that a
firms human resources will be a source of competitive advantage, however. In order
to remain competitive, grow, and diversify, an organization must ensure that its
employees are qualified, placed in appropriate positions, properly trained, managed
effectively, and committed to the firms success. Achieving these goals is the aim of
human resources management, the field that is explored in this text.
Having agreeing that people are the core assets of any organization today, we
need to understand the practices adopted by organizations all around the world to
enhance the competitiveness of the said assets, which gave rise to human resource
management.
Human resources management (HRM) refers to the management of people
in organizations. It comprises the activities, policies, and practices involved in
obtaining, developing, utilizing, evaluating, maintaining, and retaining the
appropriate number and skill mix of employees to accomplish the organizations
objectives. The goal of HRM is to maximize employees contributions in order to
achieve optimal productivity and effectiveness, while simultaneously attaining
individual objectives (such as having a challenging job and obtaining recognition),
and societal objectives (such as legal compliance and demonstrating social
responsibility). Thus a human resource manager needs to perform a variety of
functions starting from human resource planning to identify the gap between the

human resource demand or the organization and the human resource supply (both
present and future), recruitment, selection, placement, performance appraisal,
promotions, training, transfers, career development and succession planning,
Motivation, termination and lay offs, human resource policy, etc. In order to perform
any of these functions, it is necessary that the Human Resource managers have in
depth, updated and accurate information related to human resources of the
organization. This highlights the need of data collection as a function. Data is
collected by past records, forms, observation, interviews, etc. To a large extend
interview is the most popular method for collection of data.
An interview is a conversation between two or more people where questions
are asked by the interviewer to elicit facts or statements from the interviewee.
Contrary to popular belief, interviews are not just used for selection purpose but also
for performance appraisal, organizational development, to check the effectiveness of
training and development, and to review and improve organizational policies. In
order to serve these different purposes, different types of interviews have been
constructed.

I.

Employment interview:
Employment interview forms an important step of the selection process. In
this case the interview is a formal, in-depth conversation conducted to evaluate the
applicants acceptability. These interviews are considered to be an excellent selection
device because of their flexibility. It can be adapted to unskilled, skilled, managerial
and professional employees. It allows a two- way exchange of information where the
interviewer learns about the applicant and the applicant learns about the employer.
However the interviews do have shortcomings like absence of reliability, lack of
validity, biases of interviewers, etc. The main objective of this interview is:
1. Helps obtain additional information from the applicant
2. Facilitates giving general information to the applicant such as company policies, job,
products manufactures and the like
3. Helps build the company's image among the applicants.

Employment interview can be classified as:

2

1. One to one: In this type of interview, there are only two participants- the interviewer
and the interviewee.
2. Sequential interview: This type of interview is a step further and involves and series
of interviews, usually utilizing the strength and knowledge base of each interviewer,
so that each interviewer can ask questions in relation to his or her subject area of each
candidate, as the candidate moves from one room to another.
3. Panel interview: This interview consists of two or more interviewers and the figure
may go up to as many as 15. A panel interview is less intimate and more formal than
a one- to- one, but if handled and organized well it can provide a wealth of
information. If not handled properly, the panel interview can make the candidate feel
ill at ease and create confusion about whose question to answer and whom to address.
Interviewers themselves are likely to experience a nightmare not knowing who will
ask which question and in what order.
4. Group Interview: In this type of interview, groups rather than individuals are
interviewed. Generally, a topic for discussion is given to the group. The applicants
enter the discussions, knowing that the interview is a test, but do not know which
qualities are being measured or tested. The candidates in the group are carefully
watched as to who takes the lead, who tries influencing others, who summarizes and
clarifies issues, etc. Such interview is based on the assumption that the behavior
displayed in a group situation is related to potential success in the job.
There are different types of interviews that are held. The usual types are discussed as
follows:
1. Structured Interviews: In a structured interview, the interviewer uses preset
standardized questions, which are put to all interviewees. This interview is also called
guided or patterned interview. It is useful for valid results, especially when dealing
with a large number of applicants. The biggest advantage of this type is
standardization.
2. Unstructured Interview: This type of interview is also called unguided or
unpatterned interview. It is largely unplanned and the interviewee does most of the
talking. Questions are mostly made up during the interview. Unguided interview is
advantageous in as much as it leads to a friendly conversation between the
interviewer and the interviewee and in the process, the latter reveals more of his or
her desires and problems. But the unpatterned interview lacks the uniformity and,
worse, this approach may overlook key areas of the applicants skills or background.
3

3. Mixed Interview: In practice, the interviewer while interviewing the job seekers uses
a blend of structured and unstructured questions. This approached is called the mixed
interview. The structured questions provide a base of information that allows
comparisons between candidates. But the unstructured questions make the interview
more conventional and permit greater insights into the unique differences between the
applicants.
4. Behavioral interviews: Behavioral interviewing focuses on a problem or a
hypothetical situation that the applicant is expected to solve. Often, these are
hypothetical situations and the applicant is asked what would he/ she do in the given
circumstances. This interview technique has a limited scope. It primarily reveals the
applicants ability to solve the types of problem presented. Validity is more likely if
the hypothetical situations match those found on the job.
5. Stress interviews: When the job involves much stress, stress interview is used to
know how the applicant will respond to pressure: if he loses his temper, gets confused
or frightened, etc. This technique is more relevant in jobs involving stress, for
example, in the police force. In order to put the candidate and stress, the interviewer
asks questions rapidly, criticizes his answers, interrupts frequently and so on. Since
stressful situations are usually only a part of the job, this technique should be used
along with other approaches.

II.

Counseling interview:
In the world of ever increasing complexity and the stress in the lives,
especially the workplaces of the employees, counseling interview has emerged as the
latest HR tool to attract and retain its best employees and also to increase the quality
of the workforce. Some problems either in the work or personal life of employees
start influencing and affecting their performance and, increasing the stress levels.
Counseling is guiding, consoling, advising and sharing and helping to resolve their
problems whenever the need arises. Some of the situations that call for counseling
from a superior to his subordinate when an employee violates your standards, when
an employee is consistently late or absent, when an employees productivity is down,
when one employee behaves in such a way that productivity of others is negatively
affected, when two employees have a conflict that is becoming public and it is

affecting the work, when you want to compliment an individual, when you want to
delegate a new task, etc.

III.

Grievance interview:
Another important interview is the grievance interview. This type is conduced
as a part of employees grievance handling procedure whenever any complain is made
by an employee against his superior, subordinate or any colleague. Formal grievances
are submitted in writing directly by the employee. The manager or officer receiving
the complaint arranges for an interview with the employee and attempt to resolve the
situation and render a decision in writing as promptly as possible usually within five
working days. The key to good grievance handling is a proper investigation and that
process should start with interviewing the member who comes to you with a problem.
Based on this key interview, the manager can make a number of important decisions
such as what to do with the problem, whether to investigate it further, and how to
resolve the issue.

IV.

Exit Interview:
A very important role of interview is seen at the time of managing separations
and rightsizing. Separation of whatever type results in the exit of employees from the
organization. It is advisable for the HR Executive to elicit views of the people who
are exiting, particularly those who are resigning from their jobs. Exit interviews are
conducted to know why employees are quitting, and what circumstances compelled
them to do so. They are generally conducted just prior to the employee leaving.
As it can be seen, interviews at every stage serve a unique purpose. This project
however, focuses on the importance and role of interviews for separation
management taken in the form of exit interviews.

CHAPTER 2: EXIT INTERVIEWS

In todays world employee satisfaction directly affects the productivity,

efficiency and thus the survival of any organization. When an employee leaves an
organization, their action and decision indirectly affects both the employees who are
working with the company as well as potential recruits. An unsatisfied employee will
spread the reasons of his unsatisfaction through word of mouth and grapevine
communication, which can permanently damage the image of any organization. Since
employees are recognized as internal customers, no company can afford to have
dissatisfied employees in todays competitive world.

Understanding why the

employees leave is almost as important as understanding why they stay. Some would
say it is even more important.
An employees real reasons for leaving can be revealed in exit interviews. In
the most straightforward terms, an exit interview is simply a means of determining
the reasons why a departing employee has decided to leave an organization is a
survey that is conducted with an employee when he or she leaves the company. An
exit interview is a survey conducted with an individual who is separating from an
organization or relationship. Most commonly, this occurs between an employee and
an organization, a student and an educational institution, or a member and an
association. An organization can use the information gained from an exit interview to
assess what should be improved, changed, or remain intact. The information from
each exit interview is used to provide feedback on why employees are leaving, what
they liked about their employment and what areas of the company need improvement.
Exit interviews are most effective when the data is compiled and tracked over time.
More so, an organization can use the results from exit interviews to reduce employee,
student, or member turnover and increase productivity and engagement, thus reducing
the high costs associated with turnover. Some examples of the value of conducting
exit interviews include shortening the recruiting and hiring process, reducing
absenteeism, improving innovation, sustaining performance, and reducing possible
litigation if issues mentioned in the exit interview are addressed. It is important for
each organization to customize its own exit interview in order to maintain the highest
levels of survey validity and reliability.

Importance of employee satisfaction

Employee satisfaction is essential to the success of any business. A high rate of

employee contentedness is directly related to a lower turnover rate. Thus, keeping
employees satisfied with their careers should be a major priority for every employer.
While this is a well-known fact in management practices, economic downturns like
the current one seem to cause employers to ignore it.
There are numerous reasons why employees can become discouraged with their jobs
and resign, including high stress, lack of communication within the company, lack of
recognition, or limited opportunity for growth. Management should actively seek to
improve these factors if they hope to lower their turnover rate. Even in an economic
downturn, turnover is an expense best avoided.
The Starting Point
An employee who has no interest in his or her field, or the position in which he or she
begins in a job, may initially put forth his or her best effort. However, this employee
will often become bored with the work because there is no intrinsic motivation to
succeed. Finding the daily job mundane reduces the individuals desire to show up to
work and to do the job well. In this case, the employee may continue to come to
work, but his or her efforts will be minimal.
In contrast, an employee may be entirely too overwhelmed to handle the position; the
responsibilities may prove to be too demanding.
In an instance like this, the employee will search for another position that offers the
financial security he or she needs with job characteristics that challenge them
appropriately; thus increasing the initial companys turnover rate

The Sources and Effect of Stress

Stress is one of the leading causes of employees discontentment with their job.
Branham (2005) asserts that, it seems clear that one quarter to one half of all
workers are feeling some level of dysfunction due to stress, which is undoubtedly
having a negative impact on their productivity and the probability that they will stay
with their employers.
Stress can have many causes, including when companies cannot, or will not, supply
the tools necessary to produce or work efficiently while on the job. This produces
higher stress levels because these workers are expected to perform at certain rates, yet
they are unable to do so. This results in lower productivity and higher turnover
because the employees on staff cannot meet quotas. Knowing that management is
able to provide the tools essential for the position is crucial to the employee trusting
the intentions of their employer.
Another source of stress is the now common practice of employers, which attempts to
cut costs by eliminating positions and disbursing the workload to other employees.
The issue that arises is that tasks will not be performed effectively or efficiently
because the employees become more concerned with having an overbearing
workload. Consequently, the efforts of these employees fail to reach their own, or
their employers, standards.
These actions, and employee responses to them, result in employees who attempt to
finish incomplete work assignments during personal time, such as lunch breaks, in an
effort to keep their jobs (Branham, 2005). When a company expects their employees
to perform outside normal working hours, it detracts from those employees relaxation
time. Personal time is essential in maintaining relationships, personal wellbeing, and
sanity. The extra strain of needing to finish an unreasonable amount of work to keep
the job dramatically increases employee anxiety. Employees that struggle to finish
their tasks become less likely to attempt advancement and more likely to begin the
search for a new job elsewhere.
Those who do not attempt to complete all of the assignments are eventually
terminated. The termination of some employees also causes stress to the remaining
employees. Those remaining begin to wonder whether they are going to be the next
people on the chopping block. The excessive strain can have a very detrimental
effect.
8

Employers that are untrustworthy are a burden to their employees and may cause
stress. Distrust can result from a variety of situations (Branham, 2005). Harassment,
in any form, may cause a new level of stress for the employee. It becomes
increasingly difficult to do a respectable job at work when one is consistently faced
with an uncomfortable working environment. This anxiety is caused by trying to
avoid troublesome confrontations and situations. Workers may agonize about the
consequences they would face if the harassment were to be reported, as well as the
repercussions of not reporting it.
Other Sources of Employee Dissatisfaction
Dissatisfaction with the job may come from sources other than stress or poor fit
between employee and job. Employers that are deemed unethical by their workers
may be viewed as such because they appear to care exclusively about company
revenues, rather than the employees that are working for them. This perception of an
employer may lead to job dissatisfaction, and raise the companys turnover rate.
Dissatisfaction may also arise, with the same result in turnover, when the work
environment fails to have any flexibility or any source of amusement for the
employees; the tone of the business will become stressful or tedious (Kaye & JordanEvans, 1999).
Lack of communication in the workforce is a major contributor to dissatisfaction.
This is usually the result of managerial staff that is isolated and does not know how to
relate to their employees on a personal or professional level (Branham, 2005). Bad
communication leaves employees feeling disconnected from the organization. This is
detrimental to the wellbeing of the company because when an employee feels
neglected, he or she will tend to perform at a lower level. This employee becomes
unsure of his or her position within the company, and wonders what his or her
purpose is within the workplace.
Employees may be unaware of how their performance measures up to that of their coworkers and have no sense of how they can improve.
Without communication, it becomes difficult for employees to make any progress in
their efficiency.
Employees want to know that their employers recognize their achievements in the
workplace. They need to feel appreciated, as workers and as people (Branham, 2005).
Often companies become more focused on production and revenues, rather than with
their own employees, or even their customers. In the case of employees, the
9

employees may rarely be praised for the quality of their performance.

If a company does performance appraisals, the results may be given in such a harsh
tone that, rather than motivating an employee, it intimidates and an employee may
feel uncomfortable in the workplace, rather than encouraged to achieve more.
It may be common for upper management in some workplaces, to take the ideas of
lower level employees lightly, which leaves these employees feeling neglected and
worthless. It becomes difficult for workers to see a bright future while working for
the company. If an employee fails to see a future with the company, why would they
work to produce results?
Those employees who do work well to support the company may not be compensated
for their efforts. Employers that choose to under-compensate know that these
employees will work hard for minimal pay, and these employers will compensate
accordingly (Timpe, 1986). At the same time, the same employers will pay more to
other employees who are not willing to work for minimal compensation. This
compensation disparity leads to dissatisfaction because eventually the hard worker
will notice that he or she is not being compensated fairly for the amount of work they
are doing, and will begin searching for another company that will appreciate his or
her labor.
Finally, failure to provide employees with opportunities to grow within the company
results in employee frustration. Barriers within the company may prevent some
employees from reaching their full potential (Branham, 2005). Such barriers may
include favoritism of certain employees or company policies requiring hiring from
outside the company. Glass ceilings for minority employees may also cause difficulty
in advancement.
Organizations that do not provide sufficient training opportunities for employees are
also doing themselves a disservice.
These organizations are missing out on employees that are dedicated to their
companies and knowledgeable in their fields, and with sufficient training, have the
potential to do well in higher positions.
Why Should an Employer Care?
It is important that employers care about the happiness of their employees. Recent
statistics show that throughout their careers,
American workers hold an average of eight jobs (Rudman, 2003). The rate of
10

turnover because employees are unhappy is alarming. Even is an economic downturn,

employers must spend an enormous amount of money recruiting new employees,
going through the hiring process, and finally training new employees. Dissatisfaction
has many negative side effects for the company, while satisfaction results in a much
better retention rate.
The effects of dissatisfaction that results in an employees withdrawal from job and
company can range from mild to severe.
Tardiness, in showing up for work and coming back from breaks, shows a lack of
interest by the employee for his or her responsibilities. This may escalate to the
employee not showing up to work entirely. Some less obvious signs of withdrawal
from the job include: taking care of personal matters while at work, playing games,
engaging in non-work related talk, spending time on social networks, and diminishing
job performance. These withdrawal behaviors, when evidence of dissatisfaction, may
end with an employee leaving the workplace; the heuristic model posits that thinking
of quitting is the most probable outcome of job dissatisfaction (Koslowsky &
Krausz, 2002). Therefore, withdrawal will lead either to the employee voluntarily
leaving the organization or being terminated for unprofessional behavior.
Happiness in the workplace leads to much higher levels of productivity. It increases
employee morale; therefore employees are more willing to work harder to improve
the company and its goals.
According to Branham (2005), Gallup studies show that businesses with higher
employee satisfaction also have:
86% higher customer ratings
76% more success in lowering turnover
70% higher profitability
44% higher profitability
78% better safety records.
Companies need good, knowledgeable employees. If these employees are not treated
fairly, they are going to take advantage of other job offers that will provide more
stability, more benefits, and more compensation.
What Should the Employer Do?
The employer has a responsibility to ensure the satisfaction of all of its employees.
There are many precautions that managers can take to make certain that they are
meeting the working needs of their employees.
11

Employers also should be more cautious during the hiring process. Having multiple
people interviewing final candidates will help ensure that the employee will work
well with the company.
During interviews, employers should ask questions relating to the type of work that
the potential employee enjoys doing. It is imperative to match the personal
characteristics and values of the employee with the organization. Employers should
prepare for the interview by doing a job assessment to see what skills are necessary
for the position, then testing applicants to see if they have the ability to be trained to
the position and have the skills and knowledge that correspond with the job
description (Kaye & Jordan-Evans, 1999). It is critical that during this phase, the
employer give an accurate description of the job to candidates so they can prepare for
the challenges ahead.
Managers must learn to communicate better with lower level employees. Connection
to the company gives staff a better feeling of belonging and worth. Supervisors
should set an example by promoting friendly relationships with the staff so the work
environment is healthier (Kaye & Jordan-Evans, 1999). They need to learn to listen to
the employees when they have a concern or a question about the work that they are
doing or the direction that the company is taking. It is imperative that managers show
respect for all employees, their opinions, and their work.
Managers need to convey a good understanding of the mission and goals that the
company is trying to attain so that the staff recognizes what the organization is
working toward. Clarification, of the expectations associated with different positions,
assists employees in comprehending their direct relationship with the company and
how their work affects that of others. Performance reviews are a good managerial tool
because they give administrators an idea of those employees that are contributing to
the organizations success and those who need to work harder (Branham, 2005). It
also offers employees the ability to gauge their performance. Often, employees will
think that they are performing better or worse than their managers perceive their work
to be. The performance review presents the perfect time to bring together these
different perspectives, to correct negative behavior, and to reward productivity.
Providing employees with the opportunity for growth is also a major contributor to
satisfaction. Because performing the same job becomes uninteresting, it is important
to challenge employees with work that they can accomplish but stretches their
abilities (Timpe, 1986). It is a good opportunity to see the abilities of lower level
12

employees. Giving employees new projects or goals allows them to become creative
and skilled in new areas. This broadens their knowledge while they become a more
valuable asset to the company.
Lateral movement does not change the status of the employee, but helps them learn
more about different aspects of the company. Doing another job entirely gives the
employee a change of pace and direction. The employee may find that they enjoy a
different branch of the workforce better than the one previously held.
Recognition of an employees hard work is essential to his or her satisfaction in the
workplace (Kaye & Jordan-Evans, 1999). Letting employees in on the decision
making processes gives those employees a feeling that their opinions are respected
and that they hold a place of importance within the company.
Pay is a huge motivator for many employees. Making the connection between money
and performance motivates employees to be more productive and to go the extra mile
(Timpe, 1986). Caring about employees on a personal level is important as well. Let
them know that the work that they do, the lives that they lead, also are of benefit to
the company.
The employer can make sure that employees are aware of their achievements. These
employers can show appreciation for those achievements. Conversely, employers
should take notice when employees become overwhelmed and attempt to alleviate the
daily burden by adding more help when it is obviously needed.
There is substantial academic and business literature demonstrating the importance of
employee satisfaction in building loyalty to an organization and, by extension,
reducing employee turnover. In this case, turnover is defined as an employees
voluntary decision to leave an organization, thereby representing an exercise of
choice on the part of the employee and reflecting some form of decision process on
the part of the employee.
Overall, there are three key reasons why employee retention should be seen as having
broader business implications, rather than simply being a concern of HR alone:
1.

Turnover is expensive, including both tangible and intangible costs, with

estimates of the costs of turnover ranging from 50% - 200% of an employees annual
salary.

13

2.

Excessive employee turnover is often cited as a key barrier to high quality

service.

3.

Turnover reduces the productivity of an entire work unit/team, particularly as

a result of uncompensated extra workloads, the stress and tension caused by turnover
and, as a result, a decline in corporate morale.
The costs of employee turnover can be estimated in a number of ways,
depending on whether the calculation includes both direct and indirect costs. The
direct costs of turnover include separation and replacements costs as follows:
Separation costs

Severance costs

Unemployment insurance premiums

Outplacement fees.
Replacement costs

Advertising costs

Training costs

Interviewing time

Pre-employee assessments

Relocation costs.
Indirect costs include the harder-to-measure variables such as the loss in
organizational knowledge and skills, reduced corporate growth through lower
productivity and the negative impact on organizational commitment that frequent
turnover can have among the employees who stay at the organization. These indirect
costs can often be greater than the direct costs of turnover.

14

Separation Management
Separations occur when an employee leaves the organization. Reasons for
employee separations may be voluntary. In the former, initiation for is taken by the
employee himself or herself. Where the employer initiates to separate an employee, it
becomes involuntary separation. In the latter the employee entertains the feeling of
injustice and seeks legal protection to undo it.

Separations

Voluntary

Involuntary

-Quits
-Retirement

-Discharges
-Layoffs
-Retrenchment
-VRS
-Rightsizing

Separations of whatever type maybe functional or dysfunctional. On the

functional side, organizations become trimmer and leaner, there is saving in the
wages and salary bill, and new entrants, hired to fill the vacant jobs bring new ideas
and experience along with them. However turnover disrupts employee morale and
instead of reduction of cost may add to the cost. It is precisely for these reasons
turnover has to be managed with circumspection. In order to minimize the cost
incurred in this process, separation management through exit interviews helps the
organization identify the problems.

Main Reasons Why Employees Leave

In traditional internal face-to-face exit interviews, better pay and better job
opportunity are often the main reasons cited for leaving the organization. However,
relying on the information gathered in this way can be misleading, since, in this type

15

of interview situation, employees are often reluctant to identify the true causes for
their decision to resign and tend to provide more socially acceptable reasons for
leaving.
This is not to suggest that pay has no influence over an employees decision to
leave. Rather, this issue emphasizes the need to be sensitive to both push and pull
factors that may have influenced the employees decision.
In order to collect the most effective information from departing employees,
employers need to recognizes the need to provide departing employees with a forum
that makes them comfortable revealing the full range of factors that led to their
resignation and encourages them to give an honest critique of the expectations,
conditions and requirements of their jobs. With the use of an exit survey system that
effectively canvasses the opinions and attitudes of departing employees, a wide range
of operational, organizational and personal variables affecting the decision to leave
are likely to be uncovered. It is this information that is essential to highlighting the
areas of perceived deficiency in the organizations working environment and can then
be used to plan effective retention strategies and actions.
When exit interviews are conducted in this way and summarized across a
wide range of organizations and job types, the main reasons for leaving can be
categorized into five primary themes
Career opportunities, including:

Perceived opportunity for advancement

Presence and/or clarity of development plan.

Enjoyment of the work, including:

How well work utilizes skills

Fit with job

Work/life balance.

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Corporate leadership, including:

Clarity and strength of vision and mission

Management style

Overall perception of leadership

Level of respect and support received.

Availability of training, including:

Opportunity to learn new skills/develop new talents

Corporate commitment to training and development

Keeping up with latest technology.

Compensation/rewards, including:

Base/variable pay

Benefits

Recognition of contributions

Communication regarding performance.

Structure of the exit interview

A structured system of exit surveys can play an integral role in a well-planned
programme of employee satisfaction and work climate research. Some useful
principles for planning an exit survey system include being:

Universal interviewing all voluntary departures provides a more complete

understanding of turnover.

Standardized using a core set of consistent questions ensures comparability

throughout the organization and across time.
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Comprehensive including feedback on the work environment in addition to

reasons for leaving increases usefulness in determining strategies to reduce turnover.

Independent minimizing the discomfort in revealing the true reasons for

leaving improves the reliability of the results.

Available encouraging centralized access to the findings increases the

likelihood of taking action.

Monitored setting targets for reduction in turnover through planned

strategies helps to ensure that the investment made in exit surveys is put to its
maximum use.
Reasons for conducting an exit interview
Following are the main reasons why Human Resource managers conduct exit
interviews.

1. Reduce costs of recruitment and retraining

Employee turnover can cost the company 1.5 times the annual salary budget. If the
companys average turnover is just 11%, one can only imagine the huge impact on the
bottom line. This highlights the need for retention.
2. Save time
The company has to spend a lot of time dealing with replacing and re-training a new
employee. Time is also spent on recreating the corporate culture, doing their best to
repair the dynamics of the team and redistributing the workload of the employee
whos left. Thus, the company could save a lot of time by retaining the employees
that they have got.
3. Save time and money on potential productivity losses
What happens when a key person leaves with a major job due for delivery next week?
Lost time, lost productivity, and possibly lost orders and lost customers can be the
long-term result of this situation. If the company can identify why people leave, it can
come up with measures to stop high turnover.
4. Determine the real reasons for people leaving
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Exit interviews are used to find out exactly why people are leaving. Sometimes
during this interview the interviewer might discover that the departing employee has
a problem that the company can fix and the company might not lose its excellent
employee after all.
5. Minimize the risk of litigation
The company covers all possible processes in the termination process to minimize
any risk of future litigation by the departing employee. For example, if the employee
claims constructive dismissal at the CCMA, an exit interview will give the company
an idea of the issues and allow it to address them. The company could also use it as
evidence, i.e. he didnt raise any issues in the exit interview was it really
unbearable?
6. Collect key information for the job description
The Company can clarify exactly what skills and capabilities the job requiresfrom
the person who has done it. This will mean the new person knows exactly what he
has to do which will reduce future employee turnover and improve induction and
succession planning.
7. Identify and manage trends and underlying company issues
The Company can identify underlying company issues, for example if theres hidden
political turmoil or conflict, sexual harassment or intimidation. These could be the
causes of high employee turnover, which youll be able to manage. A person whos
leaving will be more willing to open up about whats really going on.
8. Review overall recruitment and selection process
Exit interviews may show that the departing employee wasnt the right person for the
job in the first place. This means that the company knows what to avoid in future.
The interview may show the manager doesnt have good management skills and
needs more training. Being aware of these issues means the company can address
them.
9. Measure the effectiveness of performance management systems

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The company can identify, through their exit interviews, that it need to improve its
performance measurement and feedback systems.
10. Enhance morale and staff satisfaction
If the company shows that it cares about what departing employees think, it will show
that is cares about its current employees. This will have a very positive effect on
employee morale. Satisfied employees are a lot less likely to leave, saving the
company the time, money and hassle if they do.
11. Rule out discrimination.
It would make management aware of any discrimination problems. In an
organization, the trend during exit interviews pointed towards blatant discrimination
of women and minorities. They were quitting the organization, as there was total lack
of promotion opportunities.
12. Uphold a competitive workforce.
Retiring star performers can always be evaluated for their interest in continuing their
association with the organization. One organization used this effectively and managed
to convince most of their retiring employees to continue on a part-time or temporary
basis.
13. Identify strengths and weaknesses.
Another organization found out that many of its departing employees criticized their
low salaries. On the other hand, they were all in praise of their flexible benefits
programme. Companies can identify their strong points while recruiting and retaining
employees.

14. External factors vs. internal problems.

A group of hotels realized that managers leaving their organization were leaving the
industry altogether. They found this out when the chain of hotels was trying to assess
stress-related and burnout-related problems.

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15.

Caveat
Exit interviews are not always hundred percent reliable. Some employees are
reluctant to put forth the real reason behind their departure. Especially if the
organizational policies or culture are the reason for they leaving, they would be all the
more cautious. They would not want their employees to be upset lest that would be
reflected in the references.

Types of Exit Interviews

The exit interview may be conducted through a variety of methods. Some of the
methods include: in-person, over the telephone, on paper, and through the Internet
such as with Nobscot's WebExit, exit interview management system.
Pros and Cons of each method of Exit Interviewing
In-Person Exit Interviews: With in-person exit interviews an HR representative
meets individually with each terminating employee.
Pros

Can provide information regarding benefits and retrieve company property during the
exit interview

Gives a personal touch to each employee

Can probe for more information on each exit interview question

Cons

Employees may be afraid to share sensitive or negative information during an inperson exit interview

For larger companies, it may be too time consuming to exit interview every employee

It's difficult to track information received verbally during an exit interview

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Telephone Exit Interviews

An HR Representative or an outside third party consultant conducts telephone Exit
Interviews over the telephone.

Pros

Can probe for more information on each exit interview question

Enter data into a tracking system while conducting the exit interview

Easier to schedule than in-person exit interviews

Cons

Time consuming if done in-house by an HR Representative

Expensive if done with an outside consultant

Employees often reluctant to verbally share sensitive or negative information

Paper and Pencil Exit Interviews
A form that is given to the employee on their last day or mailed to the employees
home usually conducts paper and Pencil Exit Interviews.

Pros

Takes less time to provide an exit interview form compared with conducting an in
person or phone exit interview

Employees can share information on paper that they may be reluctant to say in person
Cons

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Return rates for Exit Interview Forms average just 30-35%

Difficult and time consuming to compile and track the data from paper and pencil exit
interviews
Online Exit Interview Management Systems
Pros

Employees comfortable sharing information by computer so more honest responses

Employee self service is easy for /hr to administer

Information automatically compiles and tracked

Reports available at a click of a button

Participation rates (for WebExit customers) double that for paper and pencil exit
interviews
According to a study by the Society of Human Resource Management, over 90% of
companies conduct exit interviews. Exit interviews are one of the most widely used
methods of gathering employee feedback.

What kind of information should employer look for in an exit interview?

Information that would help the employer on the hiring end: The feedback
given by employees leaving an organization, help the company hire better and avoid
repeating mistakes. Sometimes, the company hires over qualified people for a
position. So when the employee gives a feedback on such things, the company can
rectify such errors in the next phase of hiring.
On several occasions, employees leave due to better packages in another
company. This helps companies to restructure their compensation packages.

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Employers today, have been taking proactive steps like talking to employees if
they hear that they intend quitting in the near future. Cross-functional training and onthe job counseling are some effective ways to retain employees
STRESS FREE EXIT INTERVIEWS
A successful exit interview enabling HR to gain meaningful employee
insights.
After working a few years in one company, employees tend to feel stagnated.
Stagnation results in job dissatisfaction, especially among highly talented executives.
This may lead to employee turnover and the time to conduct exit interviews, which
are dreaded both by the management and the employees.
After a long stay in Solutionssoft, a Hyderabad based company, Sethuraman,
the finance manager of the company decided to call it quits. He felt that it was taking
him a long time to achieve his professional goals and that the company took long to
appreciate and promote employees for their work. As he was leaving the company,
the exit interview proved to be one of the most difficult phases in his career.
Exit interviews are designed to help former employers ascertain reasons
behind an employees decision to leave. Experts suggest that employers and the
employees should be prepared for this stage.
Raghuraman, Vice President Human Resources at Explore Design India, has
developed an exit interview form that allows employees to write down the key points
they wish to address at the interview stage. The form includes reasons for leaving,
suggestions for improving the work place and what the employee has learnt from the
company during his stay.
Information collected at the exit interview stage helps employers successfully
retain the remaining employees in the company.

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Post Employment Exit Interviews

One of the newest fads is conducting the exit interview after the employee has
been gone from the company for 3 or 6 months. The theory behind this exit interview
strategy is that employee will have a better perspective on things once he or she has
had a chance to reflect on his or her employment. Therefore, the employee is
expected to provide more valuable information in an exit interview if it is held six
months after employment. In research that Nobscot has conducted, this theory has yet
to hold up. The majority of companies that have tried these kinds of PostEmployment exit interviews found that the results were similar to the exit interviews
conducted immediately upon termination. Additionally, it's difficult and time
consuming to reach employees this far after employment has discontinued.
Generally, you can expect to get the most valuable information by conducting the exit
interview a few days before or after an employee leaves the company. The employee's
employment experiences are fresh in his or her mind and the employee is usually
happy to express their final thoughts before leaving the company.

EXIT INTERVIEWS AND KNOWLEDGE TRANSFER

The days, weeks (or months in some cases) between the decision for the
employee to leave, and the employee's actual departure date offer a crucial
opportunity for the organization to gather important information and knowledge from
the employee. This is especially relevant in roles where the employee has
accumulated a significant amount of knowledge and personal connections, as
typically applies in sales and buying roles, and obviously business unit management.
The knowledge of the departing employee commonly has immense value, and the
recovery of it is often overlooked altogether by the organization, until the employee

25

has departed, or more likely been hurried out of the door holding the contents of their
desk in a cardboard box.
When any employee resigns, or a decision is made for a person to leave for
any reason, always ask: Should we spend some time thinking about how to enable
some sort of knowledge transfer? In other words, if we place a value on the
knowledge that the departing employee holds, isn't it worth thinking about how to
enable this knowledge to be passed to the appropriate people remaining in the
organization?
Instead of course all too often, senior management's response to all the headscratching after a vital person has left, is to rationalize the loss of information (and
vital personal contacts often) with the old clich, "No-one is indispensable". The
adage might ultimately be true, but that's not really the point. The fact is that most
people who leave do actually possess useful (often critical) knowledge and
experience. Moreover most departing employees are delighted to share this
knowledge, to help a successor, or to brief a management team, if only the
organization would simply ask them politely to do so (assuming their exit is handled
decently of course, which the exit interview helps to enable).
This is another good reason for thinking properly about the exit procedure,
and for properly organizing some form of exit interview process.
So much depends of course on the atmosphere surrounding the departure.
Often, particularly in sales, there is suspicion and imagined threat on both sides,
which rather weakens the chances of a helpful hand-over. This mistrust should be
diffused - it really does nobody any good. In an ideal world the leaver should be
encouraged and enabled (and arguably rewarded if necessary) to hold a briefing
meeting, which all interested parties (and certainly the person's replacement if
possible) can attend and learn what they need to know. I would urge you to take a
more open constructive view.

There are some suggested enabling questions below.

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For organizations large and small, exit interviews therefore provide lots of advantages
and opportunities:

Exit interviews aims and outcomes

They provide an opportunity to 'make peace' with disgruntled employees, who

might otherwise leave with vengeful intentions.

Existing employees see exit interviews as a sign of positive culture. They are
regarded as caring and compassionate - a sign that the organization is big enough to
expose itself to criticism.

Exit interviews accelerate participating managers' understanding and

experience of managing people and organizations. Hearing and handling feedback is
a powerful development process.

Exit interviews help to support an organization's proper HR practices. They

are seen as positive and necessary for quality and effective people-management by
most professional institutes and accrediting bodies concerned with quality
management of people, organizations and service.

The results and analysis of exit interviews provide relevant and useful data
directly into training needs analysis and training planning processes.

Exit interviews provide valuable information as to how to improve

recruitment and induction of new employees.

Exit interviews provide direct indications as to how to improve staff retention.

Sometimes an exit interview provides the chance to retain a valuable

employee who would otherwise have left (organizations often accept resignations far
too readily without discussion or testing the firmness of feeling - the exit interview
provides a final safety net).

A significant proportion of employee leavers will be people that the

organization is actually very sorry to leave (despite the post-rationalization and sour

27

grapes reactions of many senior executives to the departure of their best people). The
exit interview therefore provides an excellent source of comment and opportunity
relating to management succession planning. Good people leave often because they
are denied opportunity to grow and advance. Wherever this is happening
organizations need to know about it and respond accordingly.

Every organization has at any point in time several good people on the verge
of leaving because they are not given the opportunity to grow and develop, at the
same time, ironically, that most of the management and executives are overworked
and stretched, some to the point of leaving too. Doesn't it therefore make good sense
to raise the importance of marrying these two situations to provide advantage both
ways - i.e., facilitate greater delegation of responsibility to those who want it? Exit
interviews are an excellent catalyst for identifying specific mistakes and improvement
opportunities in this vital area of management development and succession.

Exit interviews, and a properly organized, positive exit process also greatly
improve the chances of successfully obtaining and transferring useful knowledge,
contacts, insights, tips and experience, from the departing employee to all those
needing to know it, especially successors and replacements. Most leavers are happy
to help if you have the courage and decency to ask and provide a suitable method for
the knowledge transfer, be it a briefing meeting, a one-to-one meeting between the
replacement and the leaver, or during the exit interview itself.
Exit interviews are best conducted face-to-face because this enables better
communication, understanding, interpretation etc., and it provides far better
opportunity to probe and get to the root of sensitive or reluctant feelings. However,
postal or electronic questionnaires are better than nothing, if face-to-face exit
interviews are not possible for whatever reason. In some cases perhaps a particularly
shy employee may prefer to give their feedback in a questionnaire form, in which
case this is fine, but where possible, face-to-face is best.

Responsibility of conducting Exit Interviews

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In large organizations HR or Personnel department should be responsible for

designing the process, issuing guidelines and documentation, collecting results data,
analyzing and reporting findings, trends, opportunities and recommendations,
especially including anything relating to health and safety, or employment law and
liability.
If you design a questionnaire or exit interview form which will be used as an
input document towards central analysis it is a good idea to convert questions
wherever practicable into a 'scoreable' and/or multiple-choice format, which makes
analysis far easier than lots of written opinions.
Actions resulting from exit interview feedback analysis, in any size or type of
organization, fall into two categories:

Remedial and preventative, for example improving health and safety issues,
stress, harassment, discrimination, etc.

Strategic improvement opportunities, for example improved induction,

management or supervisory training, empowerment or team building initiatives,
process improvement, wastage and efficiencies improvements, customer service
initiatives, etc.
The head of HR or Personnel would normally be responsible for raising these
issues with the board or CEO, and the conversion of exit interview feedback into
action is a critical factor in justifying and maintaining a serious priority and operation
of the process.
For many organizations, exit interviews provide a major untapped source of
'high-yield' development ideas and opportunities. Use them.

Problems faced while conducting Exit Interviews:

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Since Exit interview in most of the companies is voluntary for the employee,
the biggest challenge for the HR Manager is to maintain high participation rate. The
rate could be low because of the following reasons:

Employees Not Completing Their Exit Interview

Some of the reasons that employees choose not to complete exit interviews are:
- The exit interview is too long
- The exit interview questions are confusing or personally invasive
- The employee does not believe that it will be read or make a difference
- The employee is afraid of repercussions
- The employee is angry with the company
- The employee procrastinates or forgets
- The process is difficult or uncomfortable

Exit Interview Feedback Ignored

Employees will not complete their exit interviews if they believe that the feedback
they provide will not be read or will be promptly ignored. It is important to let
employees know that you value their feedback. When you do make improvements
based on suggestions from exit interviews, dont be afraid to tell employees where the
idea came from. Over time, employees will learn that you do listen. Once this
becomes a part of the corporate culture, you can be assured of lots of open and honest
ideas, suggestions and critiques.
Repercussions From Honest Feedback
Also be clear with employees that honest feedback will not result in repercussions.
Statements made on an exit interview should never be used to prevent future
eligibility for re-hire. There are many supposed experts that tell employees not to be
honest on their exit interview form or not to complete one at all. They claim that
companies use this information against the employees. Human Resource
professionals know that this is nonsense, however, they still must battle this
unfounded perception.
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Angry Employee Feedback

Employees that are angry with the company may feel they dont want to help by
participating in the exit interview. These employees can be encouraged to vent their
anger in the exit interview. Many of these angry employees are thrilled with the
chance to have their voice heard particularly if they know that senior management
will hear it.
A clean and simplified process is also important. Whether it is web-based or paper
and pencil, the exit interview form should be laid out nicely with an intuitive and easy
to understand survey form.

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CHAPTER 4:CASE STUDY

Exit interviews show top 10 reasons why employees quit
David Witt / May 28, 2012

Ask employers why people quit a company and 9 out of 10 will tell you its
about the money. Ask employees the same question and youll get a whole different
story. PricewaterhouseCoopers (PwC) discovered this when they asked 19,000+
people their reasons for leaving as a part of exit interviews they conducted for clients.
The top 10 reasons why employees quit? Following were the results generated by the
company

As reported in (2005) The 7 Hidden Reasons Employees Leave by Leigh Branham,

page 21, Figure 3.1
Compensation was a factor in 12% of the cases, but this research gave insight into
some of the other issues that drove people awaygrowth, meaningful work,
supervisor skills, workload balance, fairness, and recognitionto name a few.

32

What type of environment are companies providing for its people?

Author, speaker, and consultant Leigh Branham, who partnered with PwC to analyze
the results of the study identifies that trust, hope, worth, and competence are at the
core of most voluntary separations. When employees are not getting their needs met
in these key areas, they begin to look elsewhere.
T

Exit interview outcomes must result in the following statements to be true for the
workforce:

I am able to grow and develop my skills on the job and through training.

I have opportunities for advancement or career progress leading to higher

earnings.

My job makes good use of my talents and is challenging.

I receive the necessary training to perform my job capably.

I can see the end results of my work.

I receive regular feedback on my performance.

Im confident that if I work hard, do my best, demonstrate commitment, and

make meaningful contributions, I will be recognized and rewarded
accordingly.

33

CHAPTER 5: CONCLUSION
The review of literature on exit interviews shows the importance of exit
interviews in todays world. The reason that companies have exit interviews is to gain
valuable information which can prove to be useful in all aspects of the work
environment, including aspects such as the work culture, day to day concerns,
processes, issues around management style, workplace ethics and employee morale.
An exit interview will give the company the opportunity to get the opinions of those
leaving the company in terms of how they perceive the company, and most
importantly, why they would want to leave the company. Once employees have
handed in their resignation and know they are going to be leaving they are far more
likely to open up and be honest when asked to provide constructive criticism in terms
of how they perceive the company, the way its run, its culture, its management style,
the opportunities offered for career growth etc.
By the company examining and keeping track of the outcome of exit
interviews over a period of time, employers can begin to identify trends and patterns
over time, as to why people want to leave the company. It also gives the company the
opportunity to discover why turnover may be particularly high in certain departments,
and to identify problem areas such as management issues, or whether the companys
remuneration offered is maybe not in line with their competitors. An exit interview
will also give the employer the opportunity to sort out issues with those leaving the
company on bad terms. It gives the employee an opportunity to get whatever issues
they have out in the open, where they can be discussed, and hopefully resolved. Most
importantly information gathered during the exit interview, can help to address
problem areas within the company, in order to prevent more resignations.
However, unless exit interviews are analyzed properly and used as a tool for
brining about positive organizational change, they are of no use to the company. Most
of the companies conduct these interviews and do not follow up or implement the
necessary measures. In such cases, conducting these interviews does not just become
a redundant task for the company wasting resources, but also creates dissatisfaction
among the employees.

34

BIBLIOGRAPHY
WEBSITES:

http://www.hr.com/SITEFORUM?
&t=/Default/gateway&i=1116423256281&application=story&
active=no&ParentID=1119278077613&StoryID=1120080631
406&xref=

http://careerminer.infomine.com/the-importance-of-exitinterviews/

http://www.citehr.com

http://leaderchat.org/2012/05/28/exit-interviews-show-top-10reasons-why-employees-quit/

http://en.wikipedia.org/wiki/Exit_interview

BOOKS:

Human Resource Management- K Aswathappa

Human Resource Management- Sunny Fernandez

PAPERS:

Importance of Employee Satisfaction by Kristen Gregory

35