Guide to Employee Offboarding: How to Gracefully Handle Employee Separation

December 27, 2023

Saying goodbye to a popular employee doesn’t always have to be painful or sad. With a solid employee offboarding process in place, your company can learn valuable lessons and make it a positive experience. 

Wouldn’t it be wonderful if we could keep the same favored employees at our companies for their entire careers? It’s a lovely thought, but whether you like it or not, employees will always retire or move on to greener pastures.  

Employee separation rates spiked during the Great Resignation, but labor statistics from the past two years show rates hovering around 3-4% per month.  

For large businesses, that means more than a handful of employees leave every month. So, how are you handling those exits? 

Employee offboarding maintains your reputation and builds a positive experience for leaving team members. In this guide, we’ll explain the benefits of employee offboarding and how to get the most out of a potentially negative situation. 

Key Takeaways

  • Offboarding is the set of tasks that happen after an employee decides to leave an organization. It’s designed to smooth out the transition process.
  • It involves crucial tasks like equipment return, knowledge transfer, and updating the employee record.
  • Offboarding helps maintain a positive relationship with your employee post-separation, prevents security risks, and provides valuable feedback into your current employee experience.

What is Employee Offboarding?

Offboarding happens when an organization formally parts ways with an employee. This includes notifying employees, transferring duties, collecting equipment, and conducting a final exit interview. In many ways, offboarding an employee follows the reverse process of onboarding employees.

The goal of offboarding is to tie up any loose ends before an employee officially separates from the company. There are necessary logistical tasks, like collecting equipment and verifying current mailing address. But you can also use this time to gain valuable feedback about an employee’s experience with your organization.  

What is the Difference Between Onboarding and Offboarding?

The employee onboarding and offboarding processes both aim to ease transition or change within the organization, but on opposite ends of the employee lifecycle.

When you onboard employees, you meet with them and have an introduction or orientation, HR signs them up for payroll and benefits, and other employment forms are filled out. New hires are also given equipment, ID badges, and access to business systems.

Offboarding is the opposite. Instead of notifying an employee of their hiring, the employee notifies you that they’re leaving. Next, they’ll meet with HR to work out their last paycheck and withdraw from any benefits programs. Lastly, the departers turn in their equipment and ID cards, and have any system access revoked.

The employee lifecycle begins with a job interview, so it’s natural that it finishes with an exit interview.

What are the Benefits of Offboarding?

Offboarding might just seem like standard protocol, but how does your organization stand to benefit from a well-thought-out offboarding process?

Strengthens Your Employer Brand

Every employee has their own unique reasons for leaving your organization. Some may be more negative than others. Employee offboarding shows soon-to-be former employees that you care, which can be a boon to your employer brand.

Some are simply up for a new challenge. Others may be leaving due to conflict and disagreement. Regardless, offboarding gives you a chance to rectify any bad feelings, end things on a positive note, and help your employees leave with grace. 

Quality offboarding sets them up for success on their next adventure while allowing you to help make their last experiences with your company meaningful. A departing employee is more likely to be a valuable brand ambassador if they feel appreciated.

Feedback Drives Positive Change

Offboarding is a two-way street. It provides a chance to address any logistical confusion and gives the employee a chance to speak their mind about management and the company. As they’re on their way out, they may be more honest than in an annual review or informal 1-to-1, which will give you a clearer picture of why they’re leaving. 

You can then use this information to address problem areas, such as promotion opportunities and compensation. In this way, you can stem the “bleeding” and improve retention.

It’s ultimately a win-win for everyone involved. The employee gets a better leaving experience, while you get a step-by-step guide for tying up loose ends or addressing hard feelings. You avoid burning bridges with people as they move on with their lives. 

Boomerang Employees

A recent study found that 43% of people who quit their jobs preferred their old jobs. By leaving the door open for the future, you'll attract more boomerang employees.

This is great for many reasons. Former employees already have the knowledge and experience of working in your company, so they require little to no onboarding or training when they return.  

Boomerang employees are also much less expensive than hiring someone new. Bringing in new hires requires greater effort from recruitment, HR, and managers. You can save on human capital debt by reeling back in a portion of your leavers. 

In fact, boomerang employees accounted for 4.3% of all employee movement in 2021. That number has more than doubled since 2010 and continues to trend upward. 

Improved Security

Staggeringly, one in four employees still have access to old accounts from past jobs. Such a situation leaves your data open to theft and attacks from malicious hackers and aggrieved former employees.  

This puts more than just your customer and organizational data at stake. In fact, the average cost of a single data breach incident is $4.24 million — and this doesn’t account for damage to your company’s image due to negative or embarrassing press. 

With that in mind, revoking permissions and credentials is a vital part of any offboarding checklist. As employees meet with managers and HR, they should go through the list and make sure everything is closed correctly.  

How to Offboard an Employee: Your Offboarding Checklist  

You’ve got an onboarding checklist, right? Well, now it's time to familiarize yourself with an offboarding checklist.  

1. Collaborate and Communicate Departure:

Someone has informed you they’re leaving, so it’s time to discuss how to communicate their departure. Sooner than later is always better, but depending on the sensitivity of the situation, some information may need to be withheld until the employee has exited. Confer with leaving employees and jointly agree on how to handle the situation.  

2. Document Institutional Knowledge:

During a leaver’s notice period, ensure there’s a knowledge transfer for their colleagues and future employees. Instruct a manager to review the tasks and responsibilities the departing employee handles daily. Ask the employee to write down important job information, including:

  • Accounts and access rights attached to apps such as Dropbox and Google Docs
  • Creation of standard operating procedures (SOPs) for any process developed during their time at the company
  • Records of whom to collaborate with and report to 
  • Details of and access to any other tools, documents, or spreadsheets needed to perform the job

It’s easiest to capture institutional knowledge by using a handover document to stay organized. This will ensure you get all relevant information and nothing is overlooked. Another option is to use an HR platform that guides employees through the offboarding process. 

Knowledge capture also helps inform succession planning and change management by giving you a better grasp on which roles and responsibilities to delegate permanently or temporarily. 

3. Recover Equipment

Next on the offboarding checklist is to recover company assets. This includes any laptops or other devices given to the employee at the time of hiring. One study found that nearly half of companies lost at least 5% of corporate-issued assets during offboarding.

That equates to one in 20 smartphones, computers, cameras, and other expensive equipment. Spread across hundreds or thousands of employees, costs accrue quickly. 

Besides the obvious equipment, other important items to recover include: 

  • Company credit cards or gas cards 
  • Uniforms 
  • ID badge or ID card 
  • Company car 

4. Revoke Access

Equally as important as recovering equipment is recovering digital assets. You can accomplish this by revoking permissions and transferring privileges to the relevant employees. As mentioned above, this goes a long way in maintaining security and protecting data for your company.

Your offboarding document should instruct personnel to account for all business tools, including your customer relationship management (CRM) system, document management, payroll, and other systems.  

Regulations, such as the European Union’s General Data Protection Regulation (GDPR), require that you delete the departing employee’s information. Even if you don’t need to comply with such laws, the employee may ask to have their information erased from the system. 

5. Exit Interview 

The exit interview is as crucial as the original job interview. It’s your best chance to smooth over any issues and gain valuable information. Since the exit interview is your best chance to smooth over any issues and gain valuable feedback, it’s best to schedule the interview in person when possible. 

A member of the HR team should conduct the exit interview. This will allow the employee to feel comfortable speaking their mind (as opposed to interviewing with management). To get the most out of the exit interview, you can use questions such as: 

  • Why have you decided to move on? 
  • What could we improve about working here? 
  • Could we have done anything differently to make you stay?  
  • How would you describe your relationship with your manager? 
  • What qualities should we look for in your replacement? 
  • Would you recommend working here to other job seekers? 

6. Update Directories 

Next, you’ll need to update your company directories and organizational charts. This will avoid confusion when someone tries to contact an employee who no longer works at the company. If possible, complete this step while adding the information of the replacement employee.  

7. Retire from Payroll and Benefits 

A major part of employee offboarding is to disenroll them from payroll, arrange their final paycheck, and remove them from the system. You'll need to determine what benefits currently apply to employees and disenroll them from those as well. 

Improve Your Employee Offboarding With a Robust Talent Management System 

Offboarding is one bookend of the employee journey. Paylocity’s employee offboarding software for HR and Payroll makes it a breeze.  

Our platform is equipped with the tools to make parting ways with an employee easier. Implement HR workflows that'll automatically tee up necessary administrative tasks. And give employees easy self-service access for keeping benefits information up to date. 

Plus, our talent management system streamlines the recruitment and onboarding process. The same tool helps you manage your onboarding checklist, schedule exit interviews, and stay in touch with potential boomerang candidates.  

Request a demo of our HR and payroll platform today! 


The Tools You Need to Attract and Retain

Embed employee experience features from recruiting, onboarding, and beyond with tools built for the modern workforce. Kick off day one with a welcome message using video. Connect your employees with collaboration tools and peer groups. Develop your team with relevant and interesting training. Keep the conversation going with surveys. And do it all while automating and collecting data to proactively make improvements.

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