Attracting and hiring top talent continues to be a tough slog for many organizations, leading most to focus mainly on the process and hurdles of onboarding. However, not much attention is given to the offboarding process (the process of managing an employee’s departure from a company). Unfortunately, most organizations still consider offboarding as a mere checklist of administrative tasks that includes ensuring transferring the work to another employee or new hire, collecting equipment and deactivating accounts. Big mistake!
At best, they miss a valuable opportunity to learn from the outgoing employee and create a positive reputation that could benefit the company and attract talent in the future. At worst, when offboarding is not handled consistently or correctly – it could lead to legal consequences with negative and financially punitive consequences. In this article, we’ll dive into the many benefits of proper offboarding, as well as the potential pitfalls when it goes wrong.
The Positives of Proper Offboarding:
Closing the Gap and Reducing Turnover Costs
As the saying goes, “people leave managers, not companies.” Sometimes, employees leave due to a lack of growth opportunities, poor communication, or even toxic company culture. According to a Gallup poll, 50% of workers who quit their jobs voluntarily cited their manager as the main reason. That’s where offboarding comes in.
A thorough offboarding program can provide closure for both the employee and the company and uncover the root cause of why an employee is leaving. By collecting feedback and data, HR teams can use this insight to evaluate the company’s shortcomings and make improvements to retain top talent. A positive offboarding experience can also lead to that employee speaking highly of the company to others.
Safeguarding Company Information
The offboarding process should also include ensuring that confidential information and access to systems are removed. When employees leave, they still may have access to data, customer information, and intellectual property, making them a potential risk to the company. A proper offboarding program helps prevent data breaches, cyber attacks, or any unnecessary loss of company knowledge, ensuring that employees only have access to what they need to accomplish their work.
Building a Positive Reputation
Former employees will remember how they were treated upon leaving, whether it was positive or negative. By creating a supportive exiting program, you’re investing in employee morale and building a positive reputation that can impact the company’s brand in the long run. Word of mouth about how an employee left a company can travel far and wide, affecting not just potential employee hires but also partners and clients.
Future Hiring Opportunities
In this age of social media where our online reputation is carefully curated, it’s crucial to consider the potential impact a negative offboarding experience could have on future hiring opportunities. It’s important to think about the future of your organization and the effects that negative PR could have in finding suitable candidates. Transitions in an organization are inevitable, and negative reviews and posts that stem from a bad offboarding experience can stick around long after an employee has left.
The Negatives of Improper Offboarding
If offboarding is not managed well, it can lead to several legal problems and potential liabilities for the employer. Some of the common legal issues that may arise due to poor offboarding practices include:
- Wrongful Termination Claims – If the termination process is not conducted in accordance with labor laws or without just cause, the former employee may file a wrongful termination claim against the company.
- Discrimination and Retaliation Claims – If an employee believes they were terminated based on discriminatory factors such as race, gender, age, religion, or in retaliation for whistleblowing or filing a complaint, they may bring a discrimination or retaliation claim against the employer.
- Breach of Contract – If the company fails to comply with the terms and conditions outlined in the employment contract or any applicable collective bargaining agreement, it may be subject to a breach of contract claim.
- Unpaid Wages and Benefits – Employees must receive all their owed wages, including salary, overtime, unused vacation days, and any accrued bonuses, in compliance with wage and hour laws. Failure to do so could result in wage claims.
- Mismanagement of Employee Records – Mishandling or improper disposal of employee records, such as personal information, can lead to violations of data privacy laws.
- Non-Compete and Non-Disclosure Agreements – If the company fails to enforce non-compete or non-disclosure agreements, it may face potential damage if former employees disclose sensitive information or join a competitor
- Final Paycheck Compliance – Many jurisdictions have specific requirements for the timing of an employee’s final paycheck after termination. Failure to adhere to these regulations may lead to legal consequences.
- COBRA Compliance – Employers may be required to offer terminated employees the opportunity to continue their health insurance coverage under the Consolidated Omnibus Budget Reconciliation Act (COBRA). Failure to provide the required notices and options can result in penalties.
- Improper Handling of Sensitive Information – If the company fails to protect sensitive company information or client data during the offboarding process, it may be vulnerable to data breaches or lawsuits related to data privacy violations.
- Unemployment Claims – Mishandling the termination process or not providing sufficient cause for termination could lead to former employees successfully claiming unemployment benefits, which could increase the employer’s unemployment insurance costs.
To mitigate these legal risks, companies should have clear offboarding procedures in place that comply with relevant employment laws and ensure that departing employees are treated fairly, respectfully, and in accordance with company policies. Consulting with legal professionals and following HR best practices can help companies navigate the offboarding process effectively and minimize potential legal liabilities.
To sum it up, neglecting offboarding can have negative consequences for both the company and the outgoing employee. By implementing a consistent and positive offboarding program, companies can make positive use of the experience and data they collect to make their organizations strong, reduce turnover costs, and protect their company.
So, why not invest in the offboarding experience just as much as the onboarding? It’s a win-win scenario that will pay off in the long run for all parties involved. Remember, the experiences your employees have with your company do not end when they leave. Make sure their offboarding experience is just as positive and memorable as the onboarding experience. Managing a pleasant exit for an employee not only avoids potential legal consequences, but it can also bolster your organization’s reputation and maybe even help find new talent!
How Commonwealth Payroll & HR Can Help You with Onboarding and Offboarding:
New hires are excited to join your team. We can help you meet their expectations through our modern, streamlined onboarding experience that will set them up to make a positive impact on your organization. And when it comes time to say goodbye to an employee, you can ensure a smooth departure by automating administrative tasks using our modern, streamlined offboarding process. Download our guide to “Better Onboarding and Offboarding” and when you are ready to talk, contact us to learn how we can help you make a great first – and last – impression with employees.
*The information provided in this article does not, and is not intended to, constitute legal advice; instead, all information is for general informational purposes only. Information in this article may not constitute the most up-to-date legal or other information. This article may contain links to other third-party websites provided only for the convenience of the reader.