August 4 2022

What is employee offboarding and why does it matter?

Most HR teams put significant effort and planning into the onboarding process. Meanwhile, offboarding gets much less attention. However, there are some worthwhile benefits to getting onboarding right. Read on to find out what employee offboarding is and why it’s so important.

What is employee offboarding?

Offboarding is when an employee transitions out of an organisation. This can be the result of many reasons, many of which are not under the employer’s control. 

In this article, we’ll be discussing the importance of having a clear strategy for managing this separation process and how your business can benefit from it. 

What’s the difference between offboarding and onboarding?

Onboarding comes at the beginning of the experience, after the hiring process, while offboarding ends it.

Defining what employee offboarding is wouldn’t be complete without looking at where it fits in the bigger picture. This begins by recognising that the process of an employee’s departure is just one stage of the employee life cycle.

When this life cycle runs smoothly, it contributes to the wellbeing and cohesion of your workforce. Onboarding and offboarding are both essential if you’re going to create a streamlined and positive employee experience. 

Offboarding is a crucial part of the employee life cycle

The employee experience involves six distinct stages. Each phase of this experience is important and makes up the entire life cycle of the employee at your company.

There are six distinct stages to this cycle:

  1. Attraction
  2. Recruitment
  3. Onboarding
  4. Development
  5. Retention
  6. Offboarding

Most organisations spend considerable time and money on the onboarding process. That’s because they realise that integrating new employees into the company culture and vision is an investment. 

By investing time and energy into welcoming new employees, it helps create a sense of belonging for them. This process helps to create happier employees that are more productive.

Why invest in employees when they’re leaving?

It’s easy to see why investing in an optimised onboarding process pays off. But why invest in an employee who’s on their way out? 

Aberdeen Research found that only 29% of companies have an offboarding strategy. So you might be asking, is it worth it? 

The answer might not be immediately obvious, but delve a little deeper and the benefits become clear. So, now that you know what employee offboarding is, let’s look at the advantages it offers.

Why is offboarding good for business? 

A big part of ensuring employee wellbeing is investing time in creating a streamlined employee life cycle, one which includes a good exit strategy.

The link between wellbeing at work and productivity is clear. An Oxford University study found that happy, healthy employees are 13% more productive. 

In short, understanding and planning for the entire employee life cycle is an excellent way to improve retention, morale, and return on investment on new hires. Offboarding is an integral part of this life cycle.

Now let’s take a look at the six ways that offboarding brings long-term benefits to your business.

1. Optimise Offboarding to boost morale and improve employee experience

The offboarding process is not only experienced by the employee leaving. It’s also carefully observed by the whole team – some of whom may be considering leaving themselves. 

When employees leave, it creates uncertainty for those staying

When an employee moves on, it can create a good deal of uncertainty among other team members. Managers have worked hard to create team cohesion and departures can throw unity off balance. 

For this reason, a weak offboarding strategy can negatively affect the morale and confidence of your whole workforce.

A good offboarding strategy will ensure early communication with other team members. It will also offer them reassurance and a strategy as to how duties will be transferred or managed among the remaining team members. 

Knowing that projects will continue to run smoothly, even though that key person is leaving, is crucial to preventing a dip in performance and productivity.

If you value employee wellbeing, carry that through to the very end

A defined employee exit strategy also contributes more broadly to your organisation’s culture of wellbeing. As research from Gallup confirms, a robust culture of wellbeing contributes to engagement, retention, productivity, and a reduction in absenteeism.

Forward-thinking organisations want to provide a consistent experience throughout the employee life cycle. When an employee leaves in bad faith, it affects everyone.

2. When you offboarding strategically, you gain valuable data insights

Offboarding is an ideal opportunity to gain valuable feedback from the employee leaving. This data could just prove critical to the organisation’s success.

According to LinkedIn, companies that fail to listen to feedback from employees can suffer from loss of revenue and reputation.

Surprisingly, 52% of exiting employees say their company could have done something to prevent them from leaving. But far too often, the organisation finds out too late or not at all. Understanding the 10 things your employees want but don’t always ask for is an important tool for helping to prevent this.

Gain insights through exit interviews 

Use exit interviews to get honest feedback from your employees. Having access to these insights can help you tweak and improve your recruitment strategy.

Data from exit interviews offers great insights to help increase retention. They may provide incredibly valuable insights that are invisible to leaders. 

One of the best ways of acquiring this data is through the offboarding exit interview. This is one of the components of the checklist for developing your onboarding strategy. We’ll include this checklist in another article.  

Acting on feedback you receive from exiting employees can lead to cost savings, increased morale, and many other positive outcomes. 

3. Leaving the door open to employees creates a no-cost pool of talent 

In the current tight labour market, most organisations have all eyes on their recruitment strategies. Yet this recruitment strategy is sometimes overlooked. 

If an employee leaves on good terms, then it’s just possible that they will consider returning to that organisation later. Research has found that 40% of employees would consider returning to a company where they have already worked, while 15% have already done so.

Closing the employee life cycle off on a positive note contributes to a good employee experience. Onboarding means you’re keeping the door open for potential future hires, also called boomerang employees. 

Boomerang employees are ex-hires that are recruited again in the future when the right opportunity shows up. They represent a potentially untapped pool of talent for hiring managers and, according to LinkedIn, contributed to 4.5% of all hires in 2021.

4. Reduce cyber risks with effective offboarding

Another reason that offboarding is so important is because being without an exit strategy puts your company at risk of data breaches. 

According to TechRepubic, 48% of businesses are aware that former employees still have access to corporate networks. A further 20% say they’ve experienced a data breach because of this.

When data breaches happen, the stakes are high

In 2018, a US-based organisation, Pagosa Springs Medical Center provided a real-world example of how poor offboarding can have serious security consequences.

Because of a weak offboarding process, a former employee retained access to electronic patient information. The medical centre had to pay fines totalling $111,400.

Good offboarding helps prevent data breaches when an employee moves on. For this reason, a robust offboarding strategy is essential for compliance.

5. The right offboarding process enhances your reputation

Previous employees can be a fantastic representation of your employer brand. On the other hand, disgruntled employees can do a lot of damage.

As research by Gallup confirms, your employee experience is your brand. Employees who leave your company with a positive experience are 2.9 times more likely to recommend your organisation as a place to work.

Not every separation is a happy one, but you can make sure you have a clear protocol in place that ensures the departure is as positive as possible.

You want ex-employees to speak highly of their time with you. They could send the perfect candidate your way later down the line. Given that attracting and retaining talent is one of HR team’s biggest challenges, it makes sense to do everything possible to help boost those figures.

Leave a lasting impression and your investment will pay off

Offboarding is an essential part of the employee life cycle and a robust offboarding strategy can positively impact your bottom line. There are many ways to optimise your offboarding strategy to gain maximum benefits when someone leaves your organisation.