Sunday, August 22, 2010

Exit Interviews and Reference Checks

This post actually takes off from Rajan's comment on my last post, "When the good guys leave...".   I also use it as a segue to the related issue of Reference Checks.

First, to respond to Rajan: Your experience does (unfortunately) correspond with some of mine as well and it is definitely not too far off from what many have experienced.  But isn't that typical of any process that is done "half-heartedly" and without a clear understanding of it's value?  That's one reason, I believe it should be done by carefully identified interviewers.  These interviewers should not only be skilled in order to be able to flush out the facts but also have the courage to convey it to Management.
As for management using the new information; that's like any other input that Management receives.  It always has the prerogative to use the information it gets in any manner it thinks fit.  That is what, essentially, differentiates good management.

A Management that is serious about exit interviews will not only make sure it is conducted by skilled people, it will also ensure it tracks the feedback so received.  Of course, effective exit interviews cannot be termed ineffective just because no action was taken immediately.  Rather, good Management would not take action based on one interview.  I would say, just like customer feedback, information received from exit interviews too should be collated, verified and studied before taking action.

The "out of line" point is interesting too!  What does that mean?  If it is supposed to mean that what the exiting member has said is not in line with what Management has heard from others, that's one thing.  I'd say one needs to await a 'confirmation' of this new information.
But what if it is to mean that the exiting member is not in line with Management's thinking?  Irrespective of the specifics, I would argue it is better -- both for the organization and for the employee -- to leave if they are not in alignment.  For all you know, it could be the employee who is right.  But, as long as the Management is convinced otherwise,  it would be better for the 'un-aligned' employee to leave.  This alone will enable Management to pursue it's strategy or goal, full throttle.  Having said that, the exit interview would yet have fulfilled its purpose.  It gives an opportunity to the exiting member to vent his / her frustration and allows them to highlight their perspective to management and gives Management a data point to consider.  As these points accumulate, it could well lead them to change or modify their stance on the issue.  Provided of course, the entire process is managed with sincerity, i.e., with a conviction as to its usefulness and by capturing and tracking the information collected in the process.

A neat segue from this issue is the practice of doing Reference Checks.  I have seen so many companies that do this so perfunctorily that it could well qualify for axing the entire process.  Typically, this process involves an HR employee calling the candidate's referees and reading questions from a prepared questionnaire.   I have seen cases where this happens even after the candidate has joined, because the 'person concerned' was on leave or just too tied up with other duties.  In many cases, the interviewer receives no training -- or even a briefing -- on the impact of the process or how it is to be handled.  What is important is to file the neccessary forms in the HR file, to fulfill an "ISO certification requirement".

And yet, there are others who have gained meaningful insights into a candidate by asking pointed (and sometimes, even open) questions and pushing for a detailed response.  I recall at least two cases where imaginative ref-checks have resulted in clear benefits to the company.
In one situation I interviewed a 'grossly over-qualified' candidate.  He was certainly impressive and seemed to have all the right credentials for the vacancy we had.  The only loose piece was that he could well have gone for a higher-paying and bigger job.  I was quite desperate for a good candidate and decided to put aside my fears and short listed him anyway.  And then we did our usual reference check.  The referee was obviously a very busy person.  She pleaded she had no time for the interview.  She, however, quietly sent us an one line email referring us to a news report that went back a couple of years.  Following that link led us to the fact that the guy was practically a fraud.  His claims to 'ivy league' education being totally fabricated, as verified by the news paper with the concerned University.
The second case hardly qualifies as a ref-check in the conventional sense.  This is the practice apparently followed by Panasonic at some of is facilities... obviously Japanese inspired!

As the candidate comes in for the final interview, s/he is welcomed by a 'lower level' employee and ushered into the ante-room of the big boss.  As s/he waits to be called in, this employee strikes an innocuous conversation with the candidate.  How the candidate reacts to this 'intrusion' is actually carried verbatim to the Management and goes toward assessing their attitude toward lower level staff.  Very clever I thought!  Not very white or transparent, but I can see how it can be very effective.

The point is this: even a 'best practice' -- especially HR related -- is effective only if it is implemented with conviction and a due process is installed to make it happen consistently.  This includes developing and implementing a process as much as hiring and training the right people.  That -- like everything else ties back to Management.  It's style, it's convictions and it's willingness to learn.


Tuesday, August 3, 2010

When the good guys leave...

Of all the miseries that can dog the pursuit of Operations Excellence, surely the worst is high attrition – good guys leaving!

I would rate it even above good customers leaving!

Firstly, it is a sign that employees have lost faith in management. It is an indictment that the top management is either totally unaware of the attrition (maybe they are not tracking the metric at all!) or they are in denial (no, it’s just a co-incidence) and basically, there is no plan to take any corrective action.
Now, of course, whenever new leadership takes position and ratchets up a sleepy culture, there is anxiety and people too accustomed to a ‘comfortable life’ will leave.   This is not the same as the attrition I am talking about here.  Of course, when undesirable people leave, it is great news…!  And if there are way too many of the wrong types in an organization, even all of them leaving is not such a bad thing to happen after all!
Yet, we would like them to leave in small lots, so customer service does not slip even further!

But attrition is not always ‘self-propelled’.  One, often-seen, situation is where a new competitor (any organization that is seeking the same kind of staff) has entered the market and is systematically attacking your company by making attractive offers to your staff that are too good for them to refuse.  How does one react to such a situation?

I have seen a variety of reactions from leaders.

One obvious strategy is to ‘lock-in’ your talent with either ‘hard’ or ‘soft’ chains! 
Hard chains are essentially legal bonds, which require the employee to pay a large sum or give a very long notice, if they desire to leave the company. 
The long notice rarely works.  Which company would force an employee to ‘work’ productively, when s/he has already professed allegiance to another company, possibly a competitor?  Rather, many companies, on suspicion of an employee moving to a competitor, will ask them to leave immediately, lest s/he learn even more strategic / competitive secrets to be passed on to the new employer.

Monetary provisions do work to a certain extent.  Senior management candidates, who do not want to burn their bridges -- lest their sins come back to visit them in an ever shrinking world -- rarely try to jump bonds, unless of course, they have other legal reasons.  On the other hand, if the person is really good, many ‘acquiring’ companies are happy to pay-off the large sum.

Most companies today are experimenting with ‘soft chains’.  These are essentially incentives -- stock options and other deferred benefits – which are available only several years after they have been granted.  Of course, the effectiveness of these measures is largely dependent on the amount invested in these programs, as they increase the cost of hiring for the acquiring company.

Another option is to take the issue to an industry association / chamber of commerce-type entity, if there is one and hope they intervene.  I have seen this attempted several times, but have never seen it work.  The ‘attacking’ company always refutes the allegation and says, possibly correctly, that “We never target any one company.  We only use professional agencies to source our talent and then allow our brand / company reputation to do the magic!  If more from any one company are leaving, they should look at their HR policies, rather than blame any external entity!”

The fact is that whenever a new business is launched, it has no alternative but to source experienced talent from elsewhere.  Who has not done that?

I have trouble believing consultants and academics who say employees leave their managers when they do not find the job fulfilling and that money does not count beyond a certain limit.  The fact is that most companies are not so differentiated in terms of culture as to be able to charge a ‘premium’ for it in the form of lower wages.  This means most employees do not have a strong enough reason not to move to a company that pays more.  After all, they do have an obligation towards their family as well!  So, unless your employees just love their Monday mornings, don’t believe money is not important.

An idea whose time may well have come is to stay in touch with your ‘lost talent’.  Some companies have launched or encouraged the setting up of alumni groups on public access websites like Yahoo!, LinkedIn and Facebook.  These places can enable you to keep in touch with good people you know and woo them back.  In fact, should you have the vacancy still open, it is not a bad idea to get in touch with your talent a few months after they have experienced the new company.  Often, by this time, the reality of the new culture hits them and they are wondering if the move was after all a good decision!

There is another important point that is often overlooked.  When attrition levels rise, management’s attention invariable turn toward HR policies, or worse, the HR Manager!  This may not always be true.

Many times the root cause lies outside the HR policy.  We just saw how a change in market situation – the entry of a competitor can affect your attrition levels.  Another, often invisible reason is the slippage of practices and processes.  Established processes are allowed to go lax due to cost or work pressures and become habits.  Lack of metrics ensure that the slippage does not come to the attention of management at all.  Many examples come to mind:
  • Delayed approvals of leave / expense claims and the like
  • Delayed or even inappropriate hiring
  • Performance Management (setting KPIs, providing feedback) becomes a mere formality
  • Excessive hurdles in replenishing or supplementing staff strength
  • Lack of effective orientation for new employees…
And yet, such is the nature of things that when things are going bad, they do tend to go a lot worse before getting better.  It’s much like a street that is a nightmare for traffic.  Whether this is due to pot holes on the way or just more traffic than it can handle, the act of repairing the road or laying a flyover itself causes things to go much worse during the implementation.

When an organization has lousy processes and staff is stretched thin in trying to keep the operations going, management has little choice but to re-engineer the processes and / or replace the systems.  However, this very act requires the best of talent to come together and invest huge amounts of time in the effort.  This in turn both exhausts the best people available and impacts customer service.

Faced with such a situation, many managements resist fixing the broken parts, arguing that time is not right to make such big changes.  Sometimes, this may be the right move.  But only if either the traffic is expected to recede or management has an alternate plan to divert traffic to an alternate channel / street.  Most often, however, this is just paralysis: morbid fear of things going even more wrong; without a concern for the long term or a strategy to fix things.

Good leadership, however, is rarely daunted by such a situation.  Great leaders are able to introduce a hitherto non-existing resource into the equation -- the excitement and energy brought in by a shared vision!  They are able to communicate effectively the unacceptability of the current situation, the shape and contour of a new vision and generate a wave of excitement and positive energy with that vision, at least in a small group of high performers.  It is this new energy that is used for fixing the processes and re-energizing the rest of the organization.

All said, you’ve got to accept that some employees will leave whatever you do.  The typical HR policy or practice is like a product.  It can meet the requirements of one segment of customers.  It is either ‘mainstream’ – meaning a little of everything, or ‘hard’ as in measuring everything in dollars or ‘soft’, i.e., you focus on providing a high quality work life and pay a little below the market.  There is no point agonizing over individual leavers, however valuable they may be.  What leadership should focus on is trends.
Once a trend appears, perhaps the first thing to determine is whether it is internally or externally influenced.  Keep in mind though that it is always convenient to point the finger outwards.  Perhaps, there is no better way of learning the real causes than a heart-to-heart exit interview.

If you have not done this before, here are some good ideas you should practice:
  • Do not try to win the employee back.  It is too late
  • Do not make it compulsory for the employee
  • Choose the interviewer carefully.  At the least, the interviewer should be able to pierce the chill and get into a warm ‘personal’ conversation. 
  • If the employee is senior enough or important enough, lock the time by going out for lunch or dinner.  It may be well worth it!
  • Consider having one single, over-riding objective for the interview: to understand the real reason for leaving.
  • Take his / her personal email / mobile.