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THE ADOPTION OF EXIT INTERVIEWS AS
EMPLOYEE TURNOVER MANAGEMENT TOOL IN
NIGERIAN SMES AND THE GENUINENESS IN
EMPLOYEES’ EXIT REASONS
Tejumade Omowumi Siyanbola Obafemi Awolowo University Department of Management and Accounting, Faculty of Administration Nigeria
Abstract
The paper assesses the adoption of exit interviews as a tool for understanding the rate at which employees leave Nigerian manufacturing and services SMEs (employee turnover); it also evaluates whether or not the reasons for leaving given by employees during exit interviews are genuine. This was with a view to understanding the usefulness of exit interviews, and grasping the value of the information gathered from the exercise to management decisions on curbing high rate of employee exits in the businesses.
A mixed-method approach was adopted in the collection and analysis of data from multiple sources: employees, managers and owners of randomly selected SMEs. Quantitative survey data was collected from 95 owner-managers while 35 qualitative interviews were conducted with employees, managers and owners. The collected quantitative and qualitative data was analysed using SPSS 21 and NVIVO 10 respectively.
Results show that although many of the SMEs put in place mandatory exit interview policies and were conducting the same, high turnover still pervade the businesses. This may, perhaps, be because the information extracted from the exit interviews were rather inadequate due to validity issues regarding the reasons given by employees during the interviews. Employees were found to be either evasive about the fundamental reasons for leaving or provided incorrect reasons, probably, to avoid being castigated by management.
The paper concludes by anticipating potentially serious challenges to rational managerial decision making capable of thwarting high exit incidence; this is however avoidable if relevant information is available from existing employees. Such combination could prove more useful than a lone method with its attendant obstacles.
Keywords: Exit interviews, employee turnover, SMEs, manufacturing, services, exit reasons’ genuineness, Nigeria
I. Introduction
This section of the paper presents the background to the paper with a view to highlighting why it is significant to evaluate the adoption of exit interviews in the Nigerian SMES to analyse and manage employee turnover (E- Turnover). It also attempts to explain some of the related studies in extant literature in order to understand existing research context. The rest of the paper is structured as follows: Section II describes the methodology adopted in the research including the data collection and analysis techniques. Section III present findings about the respondents’ perception regarding exit interviews and explain responses relating to whether employees’ reasons for quitting are genuine or not. In section IV, concluding remarks are given based on research findings. Sections V and VI present a brief representation of the author’s biography and references cited in the paper respectively. The next paragraph continues with the introduction of the subject matter.
Researchers have found that exit interviews (E-Is) are “…diagnostic measures…” (Tracey and Hinkin, 2010, p.10) that provide employers with crucial information regarding the causes and analysis of E-Turnover (Mok and Luk, 1995). While Hancock, Allen, Bosco, McDaniel and Pierce (2013, p.576) define E-Turnover as the departure of employees from “...the formally defined organisation”, it is described by Price (1997) as the degree of individual movement across the membership boundary of an organisation. When employees leave organisations, particularly when the exit appears unforced, management may take two actions to understand why employees are leaving: carry out exit interviews and analyse the reasons for the exit (Armstrong, 2006). Although, research has shown that using exit interviews alone to understand employee exit may be fallible, its efficacy has been shown to improve when combined with organisation’s ability to identify and improve on key areas of concern like dissatisfaction among employees through attitude surveys (Armstrong, 2006) among other tools.
E-Is provide employers with the opportunity of a candid feedback from an exiting employee, a feat that may prove impossible with previously existing employment relationship (Iqbal, 2010). They also serve as valuable sources of information about issues that are management-related such as management-induced shocks (Holtom, Mitchell, Lee and Inderrieden, 2005) that could trigger or aggravate exit thoughts in employees; this makes it possible for organisations to put in place mechanisms that control for such management inadequacies. While one fundamental purpose of exit interviews is to establish why people leave organisations, it is not designed to persuade them to stay (Armstrong, 2006). However, eliciting such information from outgoing employees could help to curb future dysfunctional turnover; although, conducting it effectively requires a high level of skills on the part of the interviewer so that the underlying reasons are clearly extracted from the employee for later management retention plans and decisions. Abelson and Baysinger (1984) refer to dysfunctional turnover as a condition of malfunction in which the loss of valued employee(s) causes the overall organisation to detract from its effectiveness.
Despite decades of studies on exit interviews to understand employees’ exit from developed countries organisations (e.g. Tracey and Hinkin, 2010 ; Armstrong, 2006; Steers and Mowday, 1979) and manage talent retention (Allen, Bryant and Vardaman, 2010), its effectiveness has been specifically called to question. For instance, Williamson, Harris and Parker (2008), in their findings from studies carried out in New Zealand hotel industry, challenge E-Is’ effectiveness in terms of the information they provide. Apart from this, the dynamics of E-Is’ applications in developing nations’ organisations and businesses, particularly in Nigerian SMEs, have not been fully understood. Arguably, this may be linked to the sparseness in studies that focus on entrepreneurial firms both in the context of E-Turnover and general management literature (Fern and Budhwar, 2006; Tansky and Heneman, 2003). This paper aims to fill this gap in literature by analysing the adoption of E-Is in Nigerian SMEs.
In addition, this paper’s contribution to knowledge is enhanced by its ability to examine turnover and exit interviews’ burning issues from diverse perspectives of three key actors that are germane to SMEs survival (employees, managers and owners). This is not a common occurrence in most existing E-Turnover studies where issues are usually considered from either one or two perspectives at most (e.g. Price, 1977, 1997, 2001, 2004; Price and Mueller, 1981). Furthermore, although studies on organisations in advanced nations (e.g. Tracey and Hinkin, 2010; Armstrong, 2006) suggest that an exclusive use of exits interviews on its own to understand and manage E- Turnover is flawed as previously indicated, such studies actually appear to be a rarity on business organisations in developing countries like Nigeria irrespective of the perceived value of exit interviews; they are even rarer on Small and Medium-sized Enterprises (SMEs). Indeed, Fern and Budhwar (2006) posit that a dearth exists in E-Turnover- related literature associated with business organisations in emerging and developing economies; this is in contrast to the attention their counterparts in the developed world attract. Tansky and Heneman (2003) also suggests that HR- linked research on entrepreneurial firms has continued to suffer perpetual neglect.
In view of this apparent lack of access to reliable data and statistics on business firms, particularly in countries like Nigeria, there is inadequate evidence to evaluate the effectiveness of E-turnover-related concepts and tools like exit interviews in businesses operating in such context or the like. From the foregoing, it suffices to infer that this paper stand to bridge this gap in existing E-Turnover and management literature by providing empirical foundation and data for further relevant studies. In order to achieve this broad goal, the paper assesses employees’ and owner- managers’ perception about exit interviews in Nigerian manufacturing and services SMEs; it also examines the genuineness in the reasons exiting employees advance for wanting to leave. One could argue that only an aggregated evaluation of both issues within the same research and/or paper (as is the case in this paper) can assist a holistic comprehension of E-Turnover, particularly as both issues cannot be treated as mutually exclusive.
a) Owner-managers’ responses on whether they normally discuss with exiting employees before they leave
Table 1 shows that about 73% of the owner-managers indicated that they were conducting exit interviews and that these were carried out before past employees’ final departure; but about 27% hinted that they were not carrying out exit interviews. Although it is a good sign that such a huge number of bosses indicated that exiting employees were spoken to before they left, the proportion of those who did not talk to exiting employees is also worryingly sizable. In addition, the effectiveness of the discussion during exit interviews can be describe as tentative. For instance, there was no concrete evidence that those bosses who indicated that they were carrying out exit interviews actually did so. Also, it is unclear whether the interviews conducted added any value to the organisations either by reducing future incidence of E-Turnover or by specifically helping the businesses to retain valuable employees. As previously indicated in section I, the efficacy of E-Is is in doubt as researchers like Williamson et al. (2008) have questioned the usefulness of information retrieved from them. With such uncertainties, it may be argued that using such information on its own for managerial decisions may be misleading; so the information would need to be applied with the utmost level of caution. The discussion on organisations’ exit interview policy is presented in the next two sections.
Table 1: Owner-managers responses to whether they normally discuss with employees before they leave organisations
Valid Percent Cumulative Percent Yes 72.7 72. No 27.3 100 Total 100 Source: Extracted from owner-managers quantitative data using SPSS 21; N = 95
b) Managers’ perspectives on whether their organisations have a policy requiring that exit interviews be conducted
When managers were asked whether their organisations had any particular policy providing them with a mandate to conduct exit interviews before employees’ exit, 7 of them gave clear-cut responses. 6 of the 7 (86%) confirmed that a company policy existed to that effect by saying ‘yes’ as shown in the NVIVO 10 model in figure 1. The implication of this is that, at least, it appears that some of the companies recognised the benefits that could accrue from carrying out exit interviews despite its shortcomings (Williamson et al., 2008; Armstrong, 2006). In their responses, managers 1 and 12 respectively said following:
“Yes, we do exit interviews”. Manager 1 (Manufacturing)
[
“Ideally…the next thing is to call the person to find out why the person is resigning…whether the person is leaving for education progress, leaving for another company, or someone has offended them. However, if you find out that the person is trying to make excuses and…the person would not change their mind, there is not a lot that one can do. But I do not just collect resignation letter from them without asking questions and advising them”. Manager 12 (Services)
The two comments confirm that exit interviews were conducted; manager 12, who manages a service firm, particularly explained that it was not in his habit to just collect resignation letters from employees without asking them some questions. In essence, some of the managers attached importance to learning from past occurrences to shape the company’s future. However, the outcome of the E-Is may be as good as the lessons the manager learns from what the employees say; but the dividends of exit interviews are not automatic, rather, it requires much more deliberate efforts from management to understand and decode the information acquired from E-Is. Moreover, even though manager 4 of hotel Co2. (a service organisation) did not particularly give a resounding yes to the question, he was probed into explaining why, in his own opinion, companies do exit interviews. In his response, the manager explained that exit interviews would be useful in understanding why employees leave in order to prevent future occurrence (see figure 1).
In addition to figure 1, figure 2 diagrammatically shows NVIVO 10 word cloud indicating the most common hundred (100) words adopted by the responding managers while answering questions about their organisations’ policy on exit interviews. From figure 2, words such as salary/pay, education, honesty, work opportunity, excuses, and complain were prominent; they could probably point to some of the reasons employees reportedly gave to managers for wanting to exit. Similarly, words like yes, trying, persuasion, advising, discourage and insists could point to efforts being made by management to dissuade valuable employees from leaving. If this is the case, managers attempt to dissuade employees from leaving is not in line with Armstrong’s (2006) assertion that E-Is are not designed to persuade exiting employees to stay (see section 1). What this shows is that there is a clear attempt by managers to understand E-Turnover better. The owners’ perspective on similar issues are presented in section (c).
Figure 1: Whether organisations have policy in place that requires exits interviews to be conducted – Managers’ perspectives
Source: NVIVO 10 Model developed by the researcher from managers’ interviews
The responses from the three owners show an apparent lack of clear-cut or consistent organisations’ policy on exit interviews that cut across both SMEs sub-sectors (i.e. manufacturing and services businesses). Although one could argue that owners whose managers have more direct contact with employees than the owners themselves may be unaware of exit interviews, certain deductions can still be made from this nonetheless: the first is that it is either that there are no particular exit interview policies in place, or that there is communication deficiency between owners and their managers. Whichever is the case, it is highly unlikely that such organisations conduct thorough exit interviews before employees’ final departure. It could therefore be presumed that such organisations would have been missing out on learning about existing employment relationships with their employees; based on these, there may be a need to review company policy on certain issues. Indeed, as Tracey and Hinkin (2010, p.10) and Mok and Luk (1995) explain, the company will miss out on the “…diagnostic measures…” that serve as the sources of employers’ information regarding E-Turnover issues [ see section I for further details]. With these, many of the advantages accruing from conducting exit interviews were being missed with potentially serious implications for future management of E-Turnover, particularly in organisations where E-Turnover is rife.
Figure 4 visually illustrate the most common words that owners employed to describe their organisations’ E-I policy. An attempt to use NVIVO 10 to extract the most common 100 words from the owners’ interviews yielded the following words among others: yes and sometimes. Although yes seems prominent, it arguably indicates that at least, many of the companies probably attempt to speak to past employees before they left, the frequency may be in doubt as earlier indicated. The prominence of the word ‘sometimes’ lends credence to the lack of consistency in doing exit interviews. Also, a group of words such as training, salary, change, communication, contentment, jobs and cost were also prominent in owners’ responses. Their usage could be referring to some of the reasons employees gave to owners for deciding to leave their organisations. The knowledge of employees’ perception of such words and management’s ability to analyse and interpret them could go a long way to helping management curb the incidence of unwanted E-Turnover (Armstrong, 2006). Section (d) that follows evaluates employees’ responses on whether their organisation actually carry out E-Is.
Figure 3: Whether organisations have policy in place that requires exit interviews to be conducted – Owners’ perspectives
Source: NVIVO 10 Model developed by the researcher from owners’ interviews – 2012
Figure 4: Word cloud showing words frequently adopted by owners in response to questions about exit interviews
Source: NVIVO 10 Word Cloud Model developed by the researcher from owners’ responses to exit interview questions
d) Employees’ responses to whether their current organisations actually carry out exit interviews
In order to corroborate owner-managers’ explanation on whether they actually carry out exit interviews so that a more balanced view of the issues was possible, employees were also asked to indicate their awareness about and explain whether their current organisations do exit interviews. The NVIVO 10 model in figure 5 shows that 8 out of 10 employees [80%] whose responses were clearly analysable indicated that their organisations do exit interviews; two of them, however, indicated that exit interviews were not normally done. The results resonate with owners- managers’ indication that there were E-I policies in place and that, indeed, most of them do exit interviews albeit inconsistently.
Moreover, the intensity of the usage of some words, as can be visually seen in the word cloud in figure 6, indicate three major group of words. The first group consist of: yes and sometimes , the second consist of: asked, persuade, talking, tell, tried, attempt and stay, and the last contain: welfare, salary/wage, fraud, security, opportunity etc. The three groups respectively confirm that E-Is sometimes occur, that management was making efforts to carry out E-Is, and indicates reasons employees cited for wanting to leave. From the foregoing, it is possible to infer that responses from all three responding groups are indicators that the businesses do some level of exit interviews and owner- managers were able to extract some reasons employees leave their organisations; this could prove very useful to management if the information is put to good use.
The problem with these results, however, is that, there appears to be a high incidence of E-Turnover among employees of the SMEs sampled. For example, findings from the wider study show that manufacturing SMEs that employ more of casual workers were particularly worse affected; this raise a number of questions: the first is whether the reasons cited by employees were genuine (CIPD, 2004), and the second is whether management
Figure 6: Word cloud showing words frequently adopted by employees in response to questions about exit interviews
Source: NVIVO 10 Word Cloud Model developed by the researcher from employees’ responses to exit interviews questions
e) Managers’ responses to whether their companies actually interview past employees before they left
Aside from having a mandatory policy on exit interviews, managers were further probed about whether their various organisations actually did exit interviews before past employees left. From figure 7, it can be seen that 10 (about 91%) of the 11 managers who responded clearly to the question said yes while only one (9%) did say no. This further reiterates that most of the SMEs actually attempt to talk to their employees before they leave. Arguably, this is a step in the right direction for the businesses. They may, however, need to make better use of the information derived from the interviews to curb existing high incidence of E-Turnover in their businesses. The next section gives a highlight of the most frequent words used to describe exit interviews and answer questions relating to the overall subject matter of this paper.
Figure 7: Whether past employees were actually interviewed before leaving – Managers’ perspectives
Source: NVIVO 10 Model developed by the researcher from managers’ interviews
f) A highlight on the most frequent words adopted by the three respondents categories (employees, managers and owners) to explain issues on exit interviews
In a bid to further expatiate on how all respondents perceive exit interviews, NVIVO 10 was instructed to provide an output of word cloud on the most common 100 words all categories of respondents (employees, managers and owners) employed to describe E-Is and answer questions about the issues. The NVIVO 10 model in figure 8 indicates that the following three sets of words were commonly used: the first set contain the words sometimes and yes, the second set contain ask, talking, prevent, advising, discourage etc., and the third set contain salary, education, welfare, opportunity, excuses, complain, job etc. The sets appear to replicate those extracted from words cloud from the separate respondent categories. All of the sets and their content point to indicators of exits interviews in existence, managerial efforts to comprehend E-Turnover better and potential causes of the exits in that order. It is worth noting that businesses that can consistently adopt similar structure have the chance to strengthen harmonious employee-employer relationship in the longer term (Iqbal, 2010). Section (g) examines the possible lessons organisations could learn from conducting E-Is.
“You want to know whether the person is leaving for education progress, leaving for another company, or someone has offended them”. Manager 12 (Services )
There are clearly obvious lessons to be learnt from the issues brought up by the managers’ responses. One is that certain issues are germane to employee exits and one of them is salary/pa y. As indicated by manager 2, it reverberates with what many respondents, particularly managers’, point to in most of their discussions (e.g. see figure 2); in addition, all respondents also spoke about this aspect (see figure 8). Moreover, manager 4 indicates the need for E-Is as management can learn of past mistakes and make amendments; this is particularly in line with Holtom et al.’s (2005) view that E-Is serve as valuable sources of information about issues that are management- related such as management-induced shocks (see section I for further details). It is similar to the view by manager 12 that exit interviews helps an understanding of key causes of the exits, and indeed, those of E-Turnover, a potentially positive development for any organisation/business. Section (h) provides an insight on the genuineness of reasons cited by employees for leaving.
Figure 9: Lessons learnt from past exits interviews
Source: NVIVO 10 Model developed by the researcher from managers’ interviews
h) How genuine are ‘reasons for leaving’ given by employees to their managers/owners during exit interviews?
This section queries the genuineness in the reasons employees associate to their wanting to leave during exit interviews with owner-managers, and whether the reasons truly reflect why they exit. Figures 10, 11 and 12 illustrate the respondent categories’ observation on the extent to which employees’ account of reasons for leaving are genuine. The explanation given by respondents in all categories, as depicted in figures 10-12, are similar in that the majority of all the groups agreed that employees did not give genuine reasons. For example, in figure 10, four of the seven employees (57%), five of the seven managers (71%) [figure 11], and two out of three owners (67%) [figure 12] expressed the view that employees appeared not to have given genuine reasons. This is in line with the 2004 findings by the Chartered Institute of Personnel and Development (CIPD) that employees would deliberately cite the wrong reasons like ‘pay’, in their own case, to cover up the real reasons for exit; the CIPD notes that some of the reasons may sometimes be management-bullying related.
Based on the seeming agreement in all respondents’ data that employees were not totally sincere in the reasons they gave before leaving, one can infer that management could have been misled by the information extracted from E-Is. Evidence from other related analyses of the data appears to also indicate that the managers/owners perception of E- Turnover-related issues vis-à-vis employees’ own perception are sometimes at variance (as extracted from the exit interviews). For instance, while employees commonly gave furtherance of education as the reason for leaving previous employment, many of them later explained during their own interviews that family issues, low pay, delayed payment and inadequate welfare were some of the key reasons they left previous jobs. They, however, said that they had to lie by giving false information relating to education (e.g. that they just gained admission into a school) such that management would be dissuaded from encouraging them to stay. Surely, this should be a cause for concern for management of the sampled businesses because except the root causes of issues are known, most of management’s efforts to slow down the incidence of unwanted exits could be in vain.
Figure 10: Genuineness of reasons given by employees for wanting to leave – Employees’ perspectives
Source: NVIVO 10 Model developed by the researcher from employees’ interviews
when talking about the genuineness in the reasons given are: education, admission, school, crises, discouragement etc. The clearly observed reasons cited by managers in figure 14 are salary, school and education while those used by owners in figure 15 are family, education and school. Looking at these words, it is obvious that issues connected to family and education were common to owner-managers’ and employees results; however, words such as being discouraged (perhaps by actions of colleagues, members of management or supervisors) and crises (i.e. within the organisation) were also frequently cited by employees. It could be a pointer to lack of synergy in what employees tell management during exit interviews and the actual situation on ground.
The indication from the analyses and discussions in this section is in line with the report by the CIPD that “ pay” had been deliberately cited wrongly by UK employees during past exit interviews (CIPD 2004, p.28). It was, for instance, suggested that contentious issues such as ‘bullying of employees by management members’ were deliberately not cited by exiting employees for fear of reprisal in their current workplace, where they may require referrals for future potential jobs.
In summary, the sampled SMEs’ bosses might have been misinformed to believe that previous employees left their organisation for education and family related reasons whereas some of the main reasons might have been the challenges of job security, especially for casual, contract and part-time employees, who could be desperate for something more permanent and guaranteed than temporary employment. This is in line with findings by Wanous (1992) who reveals that the reasons given by outgoing employees during exit interviews (before employees’ final exit) always differ markedly from those given months after termination. It also supports Williamson et al.’s (2008) argument that E-Is usually fail to uncover relevant information needed to understand the nature of employee- employer relationship in existence before employee’s exit.
Figure 13: Word cloud showing words frequently adopted by employees in response to questions about genuineness of reasons they gave for leaving
Source: NVIVO 10 Word Cloud Model developed by the researcher from employees’ responses to question about genuineness in reasons employees gave for leaving
Figure 14: Word cloud showing words frequently adopted by managers in response to questions about genuineness of reasons given for leaving
Source: NVIVO 10 Word Cloud Model developed by the researcher from managers’ responses to question about genuineness in reasons employees gave for leaving
Figure 15: Word cloud showing words frequently adopted by owners in response to questions about genuineness of reasons given for leaving
Source: NVIVO 10 Word Cloud Model developed by the researcher from owners’ responses to question about genuineness in reasons employees gave for leaving
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