Compliance Sheba

Employee Exit Checklist & Guide

How an employee leaves a business can be as valuable as how they are recruited and hired. Remember, if they are a talented employee, they probably have a wealth of knowledge that you’d like to stay in the business.

By maintaining a good relationship, you also leave the door open for them to return in the future or to become your brand ambassador in the market. Following an employee exit checklist ensures that your off boarding process is as smooth as your onboarding process. 

What is an employee exit?

An employee exit is a process an organization uses to off board an employee. Off boarding is the formal process of separating an employee from your organization. It is a systematic and consistent way of managing the exit of an employee without affecting the normal running of an organization.

Every business has a strategy and process for recruiting, onboarding and training employees. However, when it’s time for an employee to leave, a similarly well-planned process is not always followed. In fact, according to one study by Aberdeen Research, 71% of organizations say they have no formal handover process in place.

An employee exit plan manages an employee’s experience at the end of their employment with the organization. It is systematic and consistent. When done well, a clear off boarding process and exit checklist ensure a smooth transition for both the company and the departing employee. 

Why should you follow an employee exit process checklist?

People leave their employment for a variety of reasons. They might want to pursue other opportunities. Perhaps a recruiter approached them. It could even be for personal reasons or because they want to spend more time with their families. And, of course, in some cases, after suitable disciplinary steps and actions have been taken, an employee may be terminated.

Here’s why employee exits are an excellent opportunity to enhance your reputation as an employer of choice:

  • Provide valuable insights: The off boarding process gives HR professionals the opportunity to conduct an exit interview. These interviews can give the business invaluable insights into how employees experience the company, its processes, managers and management structures, and overall operations. Exit interviews can help HR professionals identify flaws in the business’s organizational culture, which allows you to design and implement a better overall employee experience.
  • Reaffirms the company culture: How an employee is treated when they leave a business is a clear indication of how the organization values its employees overall. If you treat a departing employee with respect, you are signaling to other employees how they will be treated if or when they leave. If an employee knows they will be treated well, they are more likely to value their tenure in the business.
  • Enables smooth handover: Employee exit processes minimize the disruption of an employee leaving, ensuring business as usual and that there is a good handover process and the knowledge and experiences of the employee become institutional knowledge.
  • Signals employee value: People leave organizations. They also return. If you treat a talented employee well in their exit, they are more likely to return to the business than if the entire offboarding process leaves them feeling disregarded and disrespected. Instead, they should feel valued and that the organization values their choices and supports their personal or career decisions.
  • Builds brand reputation: Employees are your brand advocates in the market. After leaving a business, many employees will continue to be brand supporters and trusted referees for future customers and employees. However, they can also be adversaries in the market. It’s therefore important to part on good terms.
  • Provides a process: If an employee has been terminated, an employee exit process ensures that all relevant steps are followed without the process being emotional or any steps being missed. Other employees will be able to see that a fair and consistent process was followed and the organization is protected from any legal or security threats.

Steps of the exit process of an employee

People leaving organizations is a natural step in every business’s evolution. Employees leave and new employees join. HR professionals and managers should treat resignations as part of doing business – with a clear process supporting it. How the resignation is handled sets the tone for the rest of the steps in a successful employee exit. 

Without a clearly documented employee exit process, the exit experience cannot be curated to ensure that all knowledge is transferred and that you have taken the opportunity to learn from the employee’s experience working within the organization.

Employee Exit Checklist Steps for HR

Step 1: Manage the resignation

It is important for a resignation (or termination) to be formal and documented and for there to be a clear process in place.

Do this:

  • Accept the resignation and ask the employee to complete a standardized termination form.
  • Plan to announce the resignation as soon as possible and discuss with the employee how and when this will take place. People will find out and start talking about the resignation anyway – it’s important to control the narrative so that the rumor mill does not run wild.
  • Inform key stakeholders in payroll, IT, operations, legal and senior management so that they are prepared for the exit process.
  • Work with the employee and their manager to plan how and when clients will be informed.
  • If it is a senior employee, discuss who else should be informed, including key clients and even shareholders.

Step 2: Document the employee exit

An employee may resign in a variety of ways. Sometimes it’s verbally or over the phone. Other times it’s done through email or text.

But, to make it official for HR purposes, it’s important to request a formal letter of resignation that states the employee’s decision to voluntarily resign from their position.

Do this

  • Ask the employee to complete a resignation letter
  • The letter should specify:
    • That the resignation is voluntary
    • Their last day of employment
    • whether they plan to work up to their last day or use any built-up vacation days to fill out their remaining time. 
    • If the termination is involuntary, this will also need to be documented.
  • Determine if a non-disclosure agreement should be signed

Step 3: Communicate the employee exit internally and externally

Once all the necessary paperwork is finalized, the employee’s departure should be announced as quickly as possible. This minimizes the news slipping out and rumors spreading about how or why the employee is leaving.

If the employee is a manager or senior leader or engages with customers, it’s also important to plan how you will communicate their departure to shareholders and clients.

Do this:

  • Send out a crisp, informative email to all internal stakeholders. Include details about:
    • The employee’s reason for leaving (if they have an exciting new position, share the good news and celebrate with them)
    • When their last working day will be
    • If their position is being filled, and if yes, by whom and by when
  • You might need to send the employee’s direct team an additional email. Include details about:
    • How workflows will be managed until the role is filled
    • What the departure means for the team
    • How will the team be supported
    • What the handover process will include
  • Finally, plan how you will engage with clients:
    • Will the employee send an email?
    • Is it appropriate to set up face-to-face meetings with some clients?
    • What will be discussed? We recommend:
    • Who will be taking over the account
    • How business continuity will be maintained
    • How will the client be supported during the transition  

Step 4: Plan for a transfer of knowledge

The transfer of knowledge is one of the most important steps in the exit process. Every employee has some knowledge that resides only in their mind. This is your opportunity to help them think through and capture the details of their job.

Do this:

Determine how you will transfer the knowledge:

  • Ask the employee to create a list of their current tasks
  • Include daily, weekly, monthly, and even annual responsibilities
  • Ask team members to review the list – has anything been missed?
  • Ask the exiting employee to keep a running diary, documenting any knowledge or insights about specific clients, products, or processes that are not documented but the result of experience only.

Who will the knowledge be transferred to:

  • Who will be handling these responsibilities?
  • If it is a colleague, set up regular sessions between the exiting employee and their co-worker to discuss their tasks
  • Create and encourage ‘shadowing’ opportunities where junior employees watch how the exiting employee works
  • Making training and coaching one of the exiting employee’s responsibilities in their final weeks, with a. strong emphasis on knowledge transfer
  • Ask employees to keep a record of what they learn for HR and managers to review and potentially institutionalize
  • If a new employee will be taking on the role, document all tasks carefully so that the employee has a full ‘onboarding’ pack for the role.

What are your time lines:

  • Don’t wait too long to begin the process
  • Ask the exiting employee to set time aside each day for this task
  • Aim to have the list complete so that an internal knowledge transfer can take place a week or two before departure.

Step 5: Collect company assets

Does your organization provide any equipment that helps employees complete their work? This could include IT equipment, such as laptops and monitors, as well as ID cards, uniforms, company credit cards, and even a company vehicle. In today’s hybrid workspaces, assets do not only refer to hardware but the various company accounts and platforms that employees have access to, from servers to applications.

Do this:

  • Create a checklist of the assets the employee has
  • Create a checklist of the various accounts, servers and other IT-related platforms the employee has access to
  • Ensure the process is overseen and nothing is missed
  • Inform IT that the employee will need network and other technology access deactivated and provide timelines.
  • For employees who are terminated involuntarily, the best practice is to immediately disable all IT access to prevent any disgruntled employees from stealing data or causing an IT breach. This will be a separate process and checklist for employees who have resigned.

Step 6: Arrange final payments & benefits 

This is a simple step if your organization uses payroll and HR software. All payments and benefits will be automated and up-to-date. If your payroll and HR system is not automated, you may need to review paperwork to ensure you are aware of any leave accrued, benefits due, pension, and outstanding salary due.

Do this:

  • Pay a final salary as per your organization’s wage policy
  • Calculate outstanding leave days and compensate for them in their final wage bill
  • Account for any unpaid payroll advances
  • Review all expense reports
  • Remove the employee from the payroll system once they have left the business.

Step 7: Discuss binding agreements

Depending on your organization, clients and the type of work you do, there may be some binding agreements in place that should be reviewed.

Do this:

  • Review all contracts and non-disclosure agreements (NDAs) to determine if everything is legally in order
  • Involve the legal department in the process
  • Include the employee in the process and make sure they have no questions or concerns

Step 8: Conduct an exit interview

Exit interviews are confidential meetings between an HR professional and an exiting employee. They are an opportunity to gain insights into the employee and their impressions of the organization, their teams, ways of working and products. They are also the perfect opportunity to run through your exit checklist one final time to ensure nothing has been missed.

Remember, many employees will choose not to speak their minds while they are employed, particularly if there are processes or managers that they feel negatively about or believe could be improved in some way. Use this time to gain insights your business would not normally receive.

Do this:

  • An HR professional must run this meeting and it should not include any colleagues or supervisors – the goal is to create a safe, impartial environment
  • Ensure the employee that the interview is confidential
  • Unpack that the reason behind the interview is to ultimately improve processes, team cultures and workflows
  • Capture the information shared by the employee so that it can be documented

Step 9: Check in with the remaining employees

The final two steps in your exit checklist take place after the employee has left the organization. This does not make them any less important. In fact, they may be your most crucial steps because they focus on maintaining company culture and morale and maintaining a good relationship with the exiting employee so that they become your brand ambassador (and potentially even a future client or employee again).

Checking in with your employees lets them know the company cares, that the employee is missed (and not simply forgotten) and that they will continue to receive the support they need. Managers should be regularly checking in, but it’s a good idea for an HR professional to do the same. This will show that the company as a whole is acknowledging and monitoring the changes teams are experiencing.

Do this:

  • Review additional workloads – is everyone coping or do they need additional support?
  • Conduct team check-ins and one-on-one check-ins.
  • Share any long-term plans or changes
  • Provide regular feedback if you are still looking for a replacement
  • If a replacement starts, check in on their progress as well

Step 10: Maintain relationships with exiting employee

There are multiple reasons to maintain a good relationship with exiting employees. Perhaps your organization will need a contractor in the future whom you know and trust and who can immediately add value because they know your systems and processes. Perhaps they have moved to a new business and will recommend your organization as a supplier. Perhaps they come back one day – and since they were a talented loss to your business, you want them to. These are just some of the reasons why it’s always a good idea to maintain good relationships with former employees.

Do this:

  • Maintain LinkedIn connections
  • Send the occasional email checking in and finding out how the employee’s career has progressed
  • Lay the foundations within your company culture that all ex-employees are still part of the family, encouraging colleagues to support each other even after they have left the business.

Tips to effectively handle employee exits within the company

Here are a few things to keep top of mind while you work through the employee exit checklist:

  • Be professional. Some resignations can blindside managers and employers. As an HR professional, you can help them to navigate this process.
  • Always be authentic. Show the emotions you are feeling and avoid being fake. If you are authentic, you will have an authentic response from the employee, which should support a strong transfer of knowledge and a final exit interview.
  • Don’t cut off access to the various accounts and equipment too early. But don’t forget to do it either – automating access is a good way to ensure it happens, but not before it’s meant to.
  • Show appreciation to the employee. They should feel valued and their team members should also see how their colleague is valued.
  • Begin looking for a replacement as soon as possible. Don’t hope the employee changes their mind or think that because their team has managed to pick up the slack their role does not need to be filled.

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