What is offboarding and why is it important?

The end of the employee lifecycle can be a fraught and difficult time, bringing a unique set of challenges for an organisation and its HR department. Whether an employee is quitting, retiring or being made redundant, a company must ensure the correct stages are followed and the process is handled with care and attention.

This is what’s known as employee offboarding - the set of steps required to properly terminate an outgoing member of staff. A proper offboarding process enables a company to manage employee turnover efficiently and successfully, leading to positive outcomes for both sides. But what is the definition of offboarding? Why is it important? And how do you correctly offboard an employee? Read on to find out more.

What is offboarding?

We all know the importance of a smooth onboarding process for new hires. This is the procedure that introduces them to their colleagues and equips them with everything they will need to thrive in their new role. However, offboarding can be just as crucial a step in the employee lifecycle. The opposite of onboarding, offboarding covers all the stages required when the employee comes to the end of their time at an organisation.

Whether an employee is leaving because of resignation, retirement or contract termination, the offboarding process should be efficient, thorough and cover all of the necessary legal requirements. From conducting exit interviews to handling paperwork and mitigating data and compliance issues, offboarding involves an employee and HR working together to ensure the termination ends properly and on good terms.

Why do you need an offboarding process?

According to Glassdoor, 70 per cent of job candidates look to company reviews before making a career decision. If the offboarding process is substandard, this can damage the relationship with an outgoing employee and sour their view of the organisation. They may then go on to paint a bad picture of the company to potential hires. Opposingly, a successful offboarding process can leave the door open for reconnection in the future, with 15 per cent of people reporting that they have boomeranged back to a former employer.

One of the key functions of the offboarding process is to mitigate security and legal risks for the organisation. Managers need to ensure that outgoing employees hand back all necessary devices and physical access to the office, as well as any digital access to company accounts and software. Necessary paperwork, such as contracts, resignation, non-disclosure agreements and benefits need to be handled by HR. Without a solid offboarding process, some of these stages may be missed, leaving both the company and employee at risk.

Finally, employees hold tons of valuable information, and an offboarding process can help an organisation to access this before they leave. By conducting an exit interview, managers can uncover the employee’s reasons for leaving and discuss any problems or challenges they may have faced. During these meetings a manager can ask about the employee’s relationships with other colleagues, their likes and dislikes about working for the company and what would have encouraged them to remain at the organisation. That way, the company can begin to change and improve, resulting in higher levels of employee retainment.

How to offboard an employee

While the offboarding process will vary depending on company size, the seniority of the departing employee and the terms of their exit, there are some key steps to follow to ensure the process is smooth and successful.

1. Carry out the employee’s resignation

In the first stage of the offboarding process, an employee must sign a formal resignation document to record their departure. This is when HR managers should notify the employee’s team of the change, and ensure they are able to continue working successfully. If the employee is client-facing, these clients also need to be notified and a replacement found to handle the accounts. This employee should be equipped with all the necessary information and resources to take over this workload.

HR managers should also arrange an exit interview with the departing employee at this point, covering all of the areas previously discussed. This can help them to learn more about the employee’s reasons for leaving and how the company can improve moving forward.

2. Handle any necessary paperwork

Handling paperwork is a tedious but necessary part of the offboarding process that ensures any legal requirements are adhered to. The nature of the paperwork will depend on the company and employee in question, but can include reviewing contracts, NDAs, benefits and tax documents. HR managers should handle the processing of any outstanding compensation and, in turn, ensure the employee doesn’t owe the company any reimbursements. They should also arrange tax and benefits documentation for the employee moving forward.

3. Organise the takeover of work

A departing employee may leave behind a huge amount of work and responsibilities for their colleagues or a new hire. During the offboarding process, managers need to determine how this work will be distributed, or whether one employee will take over the load. While some employees may be equipped for this, others might need training and any gaps in their knowledge and skills identified.

4. Ensure employee responsibilities are fulfilled

While much of the offboarding process should be handled by HR managers, there are also some responsibilities to be fulfilled by the employee. They should return any company equipment in their possession such as their laptop, mobile phone, ID badge and uniform and they should remove any personal items from their desk.

Employees should assist with the takeover of their work by gathering the files and information needed to replace them, including documents, client and account details and passwords. They can also create a checklist for projects and deadlines before they leave that can be passed on to colleagues.

5. Mitigate any security risks

Perhaps the most important part of the offboarding process is ensuring there are no data breaches or compliance violations. Once an employee has left an organisation, they should no longer have access to company accounts, software such as emails and internal systems or shared platforms. Shared passwords should be changed and contact details redirected to the replacement employee or team. All of this should be done as quickly as possible after the employee’s termination has been confirmed to protect the organisation and mitigate any security risks.

6. End on good terms

Throughout the entire offboarding process HR managers should treat employees with care and respect, emphasising their value and contribution to the company. Before an employee leaves, managers or colleagues could organise a leaving card and gift or throw them a farewell party or meal. Ending on good terms leaves the door open for reconnection in the future and ensures that the positive reputation of the organisation is upheld.

Offboarding mistakes

Without a smooth and proper offboarding process, companies leave themselves open to multiple security, legal and data risks, as well as damage to their reputation. Here are some of the most common risks that come with an improper offboarding process:

1. Data loss

If the relationship between employer and employee is ruined during the offboarding process, this can result in data being damaged, deleted or leaked. Whether it is intentional or not, data loss can have a huge impact on the success of a business. One study by IBM has found that a single incident caused by an insider can cost a company $750,000 including money spent on investigating, responding and mediating.

One example of this is a former IT administrator who worked at boot manufacturing company Lucchese. When the employee was fired he took revenge by shutting down the organisation’s servers, deleting key files and causing damage to company work.

2. Confidentiality breaches

Outgoing employees hold a wealth of sensitive information about their former employers which they can use against them. In one survey, more than half the respondents said that they had taken information from a former employee, with 40 per cent admitting they intended to use it in a new job. There’s also the risk of unscrupulous companies stealing employees from competitors to access sensitive data.

In order to mitigate this risk, companies need to ensure there are clear rules in the employment contract on how confidential information should be treated during and after employment. They should also maintain a positive relationship with the employee during the offboarding process.

3. Financial loss

According to one survey, 52 per cent of IT professionals know someone who still has access to a former employer’s applications and data. This is not only a security risk, but also a financial one. If employee accounts and access to software are not terminated correctly, this could end up costing the company a huge amount in charges for unused services. Examples include cloud applications, subscription services and Office 365.

How can an HRIS help?

Offboarding can be complex and burdensome, and carrying it out incorrectly brings huge risks to a company. Despite this, only 32 per cent of organisations have a partially automated offboarding process, and only 5 per cent have a fully automated. An HRIS can help to ease the burden of offboarding and ensure that each stage in the process is carried out smoothly.

For example, the Humaans employee database stores and manages people information in one place. During the offboarding process this can be used to view key dates such as contract termination, while the teams function is helpful for assigning the takeover of work. The Humaans HRIS also provides insights into compensation allowance, highlighting the benefits owed to an outgoing employee. Finally, the system holds important documents such as contracts and share option agreements. This means they are easy to access when a staff member comes to the end of their employment lifecycle.

Conclusion

There’s no doubt that a proper offboarding process is crucial to company success and positive employee experience. It leaves the door open for reconnection in the future and ensures the outgoing employee paints a favourable picture of the organisation. It also helps to mitigate any security or legal risks for the business and – through conducting exit interviews – enables managers to learn more about the employee’s time at the company and their reasons for leaving.

HR managers should ensure all the necessary steps of the offboarding process are carried out correctly. Employee resignation must be recorded, all the necessary paperwork handled, the takeover of work organised and any security risks mitigated. The employee must also play their part by returning assets, clearing out their desk and assisting with transferring their workload. Throughout the entire process, it is crucial that employees are treated well and that appreciation for their contributions is shown.

If the above steps are not carried out in full, there are huge risks for the company. A soured employee relationship can lead to data and sensitive information being lost, damaged or stolen. This could be passed on to competitors and incur huge financial and reputational costs for the organisation.

Ultimately, offboarding ensures the final stage of the employee lifecycle is completed successfully, providing a positive experience for the outgoing staff member and upholding the reputation of the company.

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