Employee offboarding (also known as employee exit management) is a term used to describe the process in which an employee leaves a company that he/she previously worked for. It lays out the formal process that surrounds an employee’s exit from an organization, whether it be from voluntary resignation, layoff or termination.
The description and best practice guidelines of the offboarding process can, at times, overemphasize the technical aspect of a more nuanced and complex human resource (HR) procedure. The flip side of the technical process relates to the role that the HR department undertakes (or at least should undertake) in this process. The trend seems to be that most companies spend more time and resources welcoming new employees than making employee exits an equally positive experience. While this behavior isn’t surprising since losing talented employees is never easy, perhaps hiring managers should consider the benefits of turning employee exits into a positive and respectful experience for all involved.
Both aspects of employee offboarding, the technical and the more interpersonal, should be treated and managed with equal importance. We’ll discuss the role that both play in the offboarding process:
From a Technical Perspective
As a technical issue, the offboarding process removes an employee from an organization in both an electronic and physical perspective. Both these areas of the process are important, and require following through on a meticulous and thorough procedure. Many companies choose to automate as much of this strategy as possible, ensuring a consistent application of the exit strategy while reducing the possibility of error. This important aspect of a company’s business management routine can be neglected at times, as it doesn’t show immediate improvements to the bottom line. But this is a faulty argument, because ignoring it can have significant financial consequences.
- Many instances have been reported of companies continuing to pay for employee benefits long after their eligibility has ended.
- Management of an individual employee’s security rights and restrictions to the company’s internal network systems, if neglected, are critical and a potentially costly area to a business.
- A sloppy employee offboarding process makes a company more vulnerable to wrongful dismissal lawsuits. If an employee files a lawsuit for unfair dismissal under the Family and Medical Leave Act, the company’s legal defense is immediately compromised if they don’t have an accurate and uninterrupted audit trail of events leading to the employee’s dismissal.
The security and financial risks that a company is exposed to when offboarding employees, as shown, can be very significant, and therefore worthy of the attention of an astute business manager. There are sound and effective measures to address the concerns and risks that an exiting employee can inject into a business, but ensuring that there’s a system in place to follow through on these measures is critical.
As discussed, technology can go a long way to standardizing many of the administrative tasks required to offboard an employee. It can also help ensure compliance consistency with regards to revoking the rights and privileges of the user identity of the exiting employee. The following are some additional best practices to consider when creating the framework for an offboarding strategy:
- Compliance Processes – final pay, termination of benefit availability, revoking system access to secure company information
- Recovering company assets – ensuring mobile devices such as laptops, cell phones, cards, keys, etc. are retrieved from the employee
- Documentation for the termination – a signed and acknowledged letter of resignation or termination; nondisclosure and noncompete agreements (if required); benefits documents (i.e. explanation of ongoing benefits, retirement plan transfer, unemployment insurance, etc.) and tax documents where required
- Arrange an Exit Interview – this step can be the start of the interpersonal part of the offboarding process, which will be discussed in more detail below
From an Interpersonal Perspective
In order to ensure that the offboarding process is effective and well-managed, it should become part of a larger, well-defined talent management and retention strategy.
The majority of talent and retention strategies are unilaterally focused on the retention of your best employees and attracting top talent. In other words, the safeguarding of talent that’s either already with you or about to come on board. To be clear, this is a very important aspect of a talent management strategy, and should have a significant role in the process. But ignoring or simply improvising an offboarding process can have several negative impacts on your business.
Some important offboarding best practices to consider are the following:
- An exit interview shouldn’t become a thoughtless formality. Instead, it should be used to gain valuable insights about your organization, including strengths, weaknesses and areas for improvement. If the interview is conducted in a respectful and serious manner, an employee should feel comfortable enough to express him or herself freely, believing that there’s genuine interest in their feedback. If recurring problems come up in an interview, this is a great opportunity to deal with issues that may be causing some employees to seek employment elsewhere.
- Extend the opportunity to return to a valued employee who chooses to leave your organization, should the right circumstances present themselves.
- An employee, whether past or present, is a strong promoter of a company’s brand. Today’s interrelated social networking environment creates multiple opportunities for all of your employees to either reinforce a company’s positive brand or reputation, or contribute to a harmful critique.
- The transfer of knowledge from the employee on his/her way out to either a new employee or to an existing employee(s) is beneficial to the company. The knowledge and expertise gathered over time by the incumbent employee is a valuable asset for a business. The transfer of that knowledge to another employee is an opportunity to maintain some of this knowledge and expertise in-house, while helping to maintain continuity and stability between incumbents.
Some Final Thoughts
According to recent industry research, only 29% of companies have an offboarding process in place. This means that there’s a huge opportunity for the remaining 70% (roughly) to take advantage of the benefits that come from implementing or incorporating an offboarding process into a comprehensive talent management strategy.
It’s important to think of the offboarding process as a necessary part of the employee lifecycle. To make this a successful intervention, companies must first gain an understanding of the value of outgoing employees, and how their advocacy for the company can promote its values, its culture and contribute greatly to its ongoing success.
This should be the opportunity to ensure the outgoing employee that his/her contribution to the company is appreciated, and that the possibility for rejoining the company is always an option.
Many companies have argued vociferously about the shortage in the talent market, and the importance of ensuring that you have a compelling attraction and retention strategy to combat this difficulty. However, when good talent decides to leave for a variety of factors (many of which may be outside of your control), an effective offboarding process that mirrors and reinforces the onboarding and retention strategy is absolutely critical.