For decades, companies and organizations have relied on two traditional and time-honored tools — engagement surveys and exit interviews — to improve workplace morale and reduce costly employee turnover.

Here’s a truth bomb from author and business consultant Dick Finnegan: They might as well believe in unicorns and the power of pixie dust, too.

To achieve dramatic gains in retention and engagement, companies would be much better served by using a more meaningful tool called a stay interview, says Finnegan, the chief executive officer of C-Suite Analytics, a management-consulting firm. He’s also a noted corporate speaker and the author of two books, The Power of Stay Interviews for Engagement and Retention, which currently is the top-selling book published by the Society for Human Resource Management, and Rethinking Retention in Good Times and Bad.

“The exit interview and engagement survey models are broken,” Finnegan asserts. “They’re flawed methods because employees don’t tell the truth in exit interviews and companies don’t make changes as a result of their findings.

“I speak in front of groups often, and over the years, I’ve asked people from about 6,000 companies whether they’ve significantly improved their company because of exit interviews,” he continues. “Only 12 responded positively. The fact is that once you tell an employer you’re quitting, your credibility is reduced by half. Employees aren’t truthful and nobody reacts to the reports.”

Ditto for engagement surveys, Finnegan says, which typically result in nothing more than new one-size-fits-all programs that are nothing more than corporate window dressing, such as an employee-appreciation week.

Unfortunately for employers, this is not a great time to use failing methods to improve employee engagement and give workers good reasons to stick around. Finnegan points out that since 2000, Gallup surveys show that the number of employees who feel engaged at work has never risen higher than 30 percent. Moreover, he says that while doing research for his next book, he found a consultant’s report that estimates companies spend $720 million annually to improve employee engagement — and plan to spend up to $1.5 billion in coming years. Money well spent? You be the judge.

Stay interviews provide a much better return on investment and are growing in popularity. Finnegan says that when he wrote The Power of Stay Interviews two years ago, a Google search of stay interviews turned up just 1,000 hits. Today, the same search results in 350 million hits. “It’s definitely a trend,” he notes.

The premise behind stay interviews is simple: It’s better to obtain quality, insightful workplace intel from employees who believe they can benefit from changes, as opposed to interviewing disgruntled soon-to-be-ex-employees who no longer give a rip about the organization. The process is fairly simple, too; managers merely hold structured, one-on-one meetings with their direct reports, and learn what they can further do to retain and better engage them.

“Stay interviews work because they’re not all about company programs or human resources departments,” Finnegan explains. “They put direct supervisors in the solution seat. Supervisors get to ask employees probing questions and then find answers to their problems, such as how to reduce overwhelming workloads, get them the skills they want to learn or allow a flexible work schedule for day-care arrangements.

“It’s funny that when managers find out why people quit jobs, they often say, ‘If I’d have known that, I could’ve fixed it.’ With stay interviews, they get to the things that can be fixed before people quit.”

OK, fair enough — sounds great in practice, right? But is there concrete proof that stay interviews actually work? You bet, Finnegan says. In one instance, he points to a hospital that cut employee turnover by up to 70 percent. In another instance, he cites a technology company that was about to announce a large round of layoffs, but wanted to minimize the odds of losing any remaining valued employees.

“So we trained all their managers to do stay interviews, which were performed within a week after the layoffs,” he says. “The company ended up keeping all the employees they really wanted to keep.”

Don’t confuse stay interviews with performance reviews, however. Performance reviews should be performed separately and focus on how employees do their jobs. Stay interviews should center on what managers can do to make employees like their job more, Finnegan says.

“Some people [we work with] say they ask questions like that at the end of performance reviews, but it’s not the same thing,” he emphasizes. “We recommend that managers hold a stay interview once a year, roughly six months after a performance review, and do them twice for new hires — once after 30 days on the job and again after 90 days. That’s because new employees are more vulnerable [to leaving]. Too often they get hand-held when they’re recruited, hired and onboarded, then they walk off the end of the dock alone. You need a process in which managers can keep holding their hands.”

Finnegan offers the following tips for doing effective stay interviews:

• Develop a firm schedule for holding them, so they don’t get lost in the daily shuffle.
• Train managers how to conduct them, with an emphasis on developing the skill of asking probing questions. “Managers need to get deeper into whatever employees tell them — ask them to explain more about a certain issue, provide examples and so forth,” he says.
• Do stay interviews with people at the top of the org chart first, so they can see the firsthand benefits of doing them. “Then they’ll feel more empowered when they interview their own employees — believe in the process more,” Finnegan says.
• Ask managers to use a forecasting tool (C-Suite provides one) to predict how long they believe each of their employees will stay with the company.

“If they have a high-performing employee who’s in the red column [indicating they’re a flight-risk], the manager’s job is to move them from the red column to the yellow column to the green column,” Finnegan says. “Plus, this holds managers accountable and provides them with a goal [of retaining employees]. They become much better supervisors because there’s a goal they’re getting measured against.”

Is it really realistic, though, to ask already-harried and over-burdened managers and supervisors to find time to also do stay interviews? After all, performance reviews alone, if done correctly, are big time sucks.

“It’s only realistic if you know how much turnover costs and you understand how much engagement drives profitability,” Finnegan replies. “With every client, we begin with a cost-of-turnover study. For instance, at one company that had about a 30 percent turnover rate among its 1,000 truck divers, we found it cost $6,700 every time they lost an employee.

“It’s hard for a company to grow when it’s so busy hiring 300 new drivers every year — and spending $2 million a year to do so,” he adds. “So a better question is this: How can companies not afford to do stay interviews?”

To learn more about stay interviews, contact Dick Finnegan at dfinnegan@theretentionfirm.com.