3 Costliest Offboarding Mistakes

Exit and stairs against a brick wall

Depending on your industry, the end of the year could mark your busiest hiring season. More generally, this is the time when companies push to hit their numbers, scrutinize budgets, and plan out next year’s investments. The end-of-year accounting has made the holiday season a popular time for a not-so-popular business decision — layoffs.

And there indeed have been several notable layoffs this past quarter: a series of layoffs in the tech space that have fanned fears of a tech bubble; National Geographic recently announced its largest layoff in its 127-year history; and Oprah announced workforce cuts on the same day she unveiled her annual list of favorite things. 

Although many debate whether the end of the year is really the ideal time to let someone go, workforce cuts still tend to rise towards the close of the year. The decision to let people go is never an easy one, and making these decisions during the busy holiday season could present more opportunities for oversight and missteps in a company’s offboarding process.

Below are three of the costliest offboarding mistakes to avoid, but first let’s set some groundwork on why proper offboarding is so important to your employees–both those who are leaving and staying with your organization–and your brand.  

The Peak-End Rule

People will judge their overall experience by its peak, or most intense point, and by its end.

This is known as the Peak-End rule which is how Nobel Prize-winning psychologist Daniel Kahneman suggests our brain works when logging memories—with the climactic peak and finale as the defining moments of the entire experience.

In the employee lifecycle, these two moments are likely contained in the offboarding process.

If these final chapters have such an impact on a departing employee’s overall impression of the company, how are organizations bringing the relationship to a favorable and memorable close, as well as protecting their own resources?

Surprisingly, according to Aberdeen’s 2012 Strategic Onboarding report, Onboarding 2012: The Business of First Impressions, only 26% of organizations have a formal offboarding process in place. Lacking a consistent offboarding strategy is the first of the Top 3 Costliest Offboarding Mistakes:

1. Not having a formal offboarding strategy in place

Only one out of four companies has formally instituted offboarding—
leaving a large majority of organizations vulnerable to loss and liability.

Not only does a consistent offboarding process send a message of fair management practices to all employees, but standardizing the practice helps shrink legal and financial risk. From terminating access to information, to reviewing non-disclosure agreements, to conducting exit interviews—missing or mismanaging any of these steps can cost companies greatly.

Related: Webinar – 3 Keys to Protecting Your Brand in a Downsize: Lessons from the Tech Industry

2. Assuming employees will withhold negative opinions if denied an exit-interview

Employers wrongly assume that if an exit interview is not offered, employee feedback—negative or otherwise—will not exist.

Social media and sites like Glassdoor have changed the game, forcing employers to become more proactive in preventing the potential brand damage inflicted by a former employee.

By helping transitioning employees stay focused on the opportunities ahead— offering outplacement services and career coaching, for example—employers can make a lasting, memorable impact in these final moments, becoming partners in their employee’s future rather than memories of the past.

3. Failing to error-proof the process

Identifying and properly automating redundant, manual tasks can help rid the process of risks from human error.

One unfortunate case of costly offboarding errors involved the University of Wisconsin which had overpaid $15.4 million for health insurance premiums during the 2011-2012 fiscal year. An audit revealed that more than half that amount was paid for workers no longer employed by the university. According to the official report in February 2014, “…the UW System staff attribute most of the overpayment errors to manual calculations made from April 2011 to July 2011…”

Solutions & Additional Resources

The RIF Checklist

Don’t miss a step. Download our Reduction-In-Force Checklist to evaluate and build upon your current offboarding process.

An Uneasy Look at In-House Exit Interviews
An honest analysis as to why some exit interviews fail.

What is Outplacement?

Learn more about the advantages of offering a universal outplacement benefit to your employees, and its lasting impact on employer brand.