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Why “Exit Transparency” Can Make Companies Stronger

February 4, 2020
Auren Hoffman

Exit Transparency is a deal all companies and employees should make … and live up to

Eventually, all great things must come to an end.

Your best-performing employee will eventually leave, either to start their own business or work for another company. Since the great recession, the number of employees voluntarily leaving their jobs has risen steadily. 

Unemployed Americans who voluntarily quit their job

These moments are riddled with emotion. Some might even cry when a team member breaks free. But what’s critical is that you treat them well on the way out regardless of who is making the change. 

One of the best things one can do to manage exits is to have a blanket, well-defined “Exit Transparency” with all their direct reports. 

Exit Transparency is a deal made between an employer and the employee at the time of hiring. The deal is built on a bedrock of honesty on the way in and honesty on the way out. 

In practical terms, it means that an employee promises to tell their employer before they start actively looking for a job. They agree to not sneak around when doing a career search, but to be upfront about it instead.

In return, the employer agrees to allow the employee to be employed during the time they are making the transition and to actively support them during the interview process. If you’ve ever changed jobs, having the support of your employer as you make the transition is a massive deal. The employee can drop all pretense and obfuscation, and simply do the best they can for the company in their final weeks. The employee can also better optimize their search for a new role.

The employer also agrees to never go behind the employee’s back to look for a replacement. For example, if the company is looking to hire a CFO, it would tell the current Director of Finance what it’s doing and why it’s doing it. It would even tell them if they were no longer needed after the CFO is hired, being very clear about the reasons why. 

Two-way respect

We’d all like to believe that these simple acts of integrity are already carved into American business. They are not. Exit Transparency builds the infrastructure to support what we should all be doing anyway: treating our employees with the respect we expect in return. 

We should not treat employment like a marriage.  Most marriages actually do last a lifetime (the U.S. divorce rate is dropping fast and already is less than 30%).  But 99% of employment relationships eventually end and we should be OK talking about that and make sure that they end on good terms.

Photo by Adeolu Eletu on Unsplash

Transparency in actions and building trust. 

Exit Transparency builds trust between the employer and employee from day one. When a company outlines the parameters of their Exit Transparency, it immediately shows the employee three things: 

  1. The company recognizes reality.
  2. It has a long term outlook.
  3. It respects the employee and their agency to find other opportunities.

It may seem counterintuitive that outlining the procedures for a new employee’s exit on the first day builds trust, but it does. The transparency encourages reciprocation. If the employee senses that the employer is being honest and direct in their exit strategy at the time of hiring, as well as during the exit, they are likely to reciprocate this attitude. 

This is something we implement at SafeGraph and I’ve seen it work. It’s not always perfect and we are always working to make it better.  But in many cases, it has eased the transition for both the employee and the company. 

Exit Transparency is a positive-sum agreement. 

Exit Transparency is mutually beneficial to the employer and the employee. It creates the path to a positive-sum outcome that will occur under difficult circumstances.

It’s harder now than it has been in the past to build positive-sum agreements between employers and employees in tech. There are no life-long employment contracts anymore. There are no guarantees. The technology space is filled with disruptors, and young companies either iterate or fail. The world where a company lists employee security as a core value has long passed. The uncomfortable truth is that most employees can be let go at any time for almost any reason.

At the same time, it’s increasingly hard for companies to keep and nurture their 10x employees. These people are connected to the world in a way that provides them almost unlimited opportunities should they choose to pursue them. 

Exit Transparency is a critical way to recognize and plan for this. And there’s a genius in it because the deal is made under positive and transparent circumstances, during the employee’s first few days. This is when the relationship is filled with hope and opportunity. It’s the ideal time to make a positive-sum rainy-day agreement grounded in reality. 

“Technology is nothing. What’s important is that you have a faith in people, that they’re basically good and smart, and if you give them tools, they’ll do wonderful things with them.” - Steve Jobs

Your company has alumni: the relationship isn’t over once the employee leaves the company. 

Exit Transparency views employees as future alumni. While the company handles the employer/employee relationship during the course of employment, Exit Transparency helps to structure the employer/alumni relationship (see the LiveRamp Mafia)

Reid Hoffman (no relation), Ben Casnocha, and Chris Yeh write in their book, The Alliance, about this ideal lifetime relationship between employer and alumni. They argue that very few companies have put into place a strategy for maintaining (and leveraging) the company’s alumni network. They write: 

“Establishing a corporate alumni network, which requires relatively little investment, is the next logical step in maintaining a relationship of mutual trust, mutual investment, and mutual benefit in an era where lifetime employment is no longer the norm.”

Exit Transparency begins to build this positive-sum network. In an article called “Tours of Duty: The New Employer-Employee Compact,” Hoffman, Casnocha, and Yeh write that the exit interview is an underutilized opportunity to build this post-employment relationship with entrepreneurial employees. 

In addition to gathering a personal email address, Twitter handle, LinkedIn profile, phone number, etc. to add to an internal database, employers should use this time to build trust. The authors write: 

“The exit interview is also a trust-building opportunity. Many employees have sat through grimly polite or even resentful parting talks. You can make your company stand out by emphasizing the ongoing nature of the relationship.”

One of my personal goals at SafeGraph is that we do a better job of exit interviews and supporting our alumni in 2020.  Even though we are a small company, we already have some extremely talented alumni and we can do more to support them.

Photo by Cytonn Photography on Unsplash

After the employee leaves on amicable terms, the employer can also invest purposefully in the alumni network. They can provide alumni benefits, host alumni events, as well as provide quality references and career support. 

In return, the authors in Alliance argue that the company will be able to leverage the alumni network in 4 different ways: 

  • candidate referrals (hiring)
  • network intelligence
  • customer referrals
  • brand ambassadors

Companies like McKinsey have done a great job promoting their alumni network. With the speed at which start-ups innovate, a small advantage in these areas can compound into a large one over time. 

Exit Transparency is a competitive advantage.

This agreement sets the stage for a company 3, 5, and 10 years down the line. It allows it to leverage talented, entrepreneurial alumni even though they’re no longer on the payroll. 

And that’s a competitive advantage - especially in an event that often leaves behind a sour taste. If those ex-employees become assets and not liabilities, the company is in a better position for it.

With Exit Transparency, what looks like an exit is actually an entrance into a new, positive-sum relationship. And over the very long term, for a company on the very edge, that can be the difference between shipping the product or closing up shop. 

Special thanks to Thomas Waschenfelder for his help and edits.

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