Offboarding use cases: What not to do when terminating employees

Companies in Ukraine often spend little time, effort, and resources on offboarding employees. Many believe that departing employees are a closed chapter, and it's best to shift all their attention to new and active team members. However, poorly conducted offboarding can come back to haunt the company. How? We have gathered real cases of problematic dismissals so that by learning from others' experiences, you won't make similar mistakes.

Why is offboarding so important?

The offboarding process is a natural stage in the work of every employee and the life of a company. Adults aged 18 to 52 change their place of employment an average of 12 times throughout their careers, and 29% of workers return to their previous jobs after some time. Each time, HR specialists need to properly conduct the offboarding process, otherwise it can negatively impact the company's reputation as an HR brand, team spirit, and lead to legal claims, negative reviews about the company, etc. For example, as seen in the stories of our article. Let's get to know each story better!

Layoff of 150 employees due to "disengagement

In July 2021, the company Xsolla — a payment processing service for online games — announced the layoff of 150 employees who were working remotely. Management analyzed the amount of time employees spent in corporate services using Big Data and decided to part ways with those who did not put in enough work during business hours or frequently missed in programs.

The company promised to provide positive recommendations and help with employment for all 150 former employees, as well as pay compensation. However, such a gesture did not help avoid strong backlash and hate:

1. The discussion was sparked by the method used to determine employee engagement and involvement. Deciding whether to terminate someone's employment solely based on Big Data, as HR specialists believe, is unethical towards the employee. Tools for monitoring employee performance can highlight the weaknesses in an employee's work and help make a balanced decision, but they should not be the sole criterion for ending collaboration.
2. The method of informing about the dismissal. The company announced the termination of collaboration through a corporate letter that highlighted the reasons and included a list of employees they wanted to say goodbye to. This method is reminiscent of breaking up with a partner via a text or social media message. The offboarding process should be personalized and humanized. This will help to somewhat soften the unpleasant experience of the dismissal for the employee.

Why shouldn't you do that?

In the case of Xsolla, such termination of employees may lead to:

1. Increased anxiety among company employees. Sudden layoffs in one day shock employees and create a hidden sense of insecurity and worry, which can negatively impact individual performance and the company's atmosphere.
2. Disruption of the employer brand. Many professionals may seriously reconsider whether to work for this company after such an incident. This could prolong the process of finding a qualified candidate.
3. Cancellation of contracts. During the establishment of human-centered values and standards, improper offboarding can lead to the termination of cooperation and partnerships.

Layoff of 406 people via Zoom

Zoom is an incredibly convenient and practical program for videoconferences, but as the history of the American startup Bird shows, it is not advisable to use it for informing about layoffs. Here’s why!

In March 2020, the company Bird, which provides scooters for rent, incurred losses due to the quarantine. To optimize budgets, a decision was made to lay off 406 people. Employees were informed about this via a Zoom call. An unknown specialist communicated with the employees. It would have been preferable for such news to be conveyed by the CEO or, for example, department heads.

Why shouldn't you do that?

The fact that Bird helped former employees with job searches, extended social packages, paid compensations, and covered training costs went almost unnoticed by the public. Everyone mainly discussed the fact of inadequate communication regarding the layoffs. This could negatively impact the company's overall reputation.

Layoff of 200 people via email

The pandemic has adjusted almost every area of our lives. Offboarding was no exception. For example, due to the forced self-isolation, Zume Pizza — technology and services for food trucks — notified 200 employees of layoffs via a work mailing list.

Why is this not the best option for offboarding?

If your offboarding team cannot meet or speak personally with each employee or team, try to personalize documents or online meetings as much as possible. Inform employees about what has been done to avoid layoffs and how valuable each person's contribution is to the company's development. This will help slightly reduce the negative perception of the situation and also increase the chances that employees will return to the company when it "gets back on its feet" and requires skilled workers.

Layoff of 700 Tesla employees

Tesla laid off about 700 employees in 2017 without warning, who had faithfully served the company for 4 years or more. According to Federal laws in the USA, employers are required to give employees verbal and written warnings several weeks before termination to provide workers with enough time to correct their mistakes.

Tesla has also faced criticism for requiring laid-off employees to sign an agreement that prohibited them from criticizing or disparaging the company, its executives, investors, affiliated organizations, and Elon Musk.

Why you shouldn't do that?

Each employee termination, whether voluntary, initiated by the employer, or for other reasons, must comply with the labor code and the laws of the country. Otherwise, this may lead to legal action.

Moreover, any scandal can negatively impact the reputation of the company or the leader, as well as ultimately alienate employees who could be valuable for re-hiring as production needs grow.

1 million dollars after dismissal

Jonathan Kolniak has sued his former employer James Ballengee. During their collaboration, the plaintiff helped sell Ballengee's company for $820 million, for which he was promised 2% of the shares. It is worth noting that this agreement was written on a napkin. However, after his dismissal, Kolniak only received $400,000. The court found this agreement valid and ordered the payment of $1 million to Kolniak.

What is the moral?

Discussing and documenting the details of offboarding with an employee at the beginning of their career path is wise and correct. Let the new employee know what to expect upon the completion of their cooperation and how the offboarding process will unfold. This will help avoid misunderstandings and unpleasant situations. Properly planning the offboarding, even at the start of the employee's career, can be facilitated by our HRM system PeopleForce. Tailor the offboarding to the requirements of your company, each department, or even individual teams, and track the progress of task completion and results whenever it is convenient for you, more thoroughly than during onboarding.

May each of your offboarding experiences be peaceful, respectful, lawful, and not make it to the pages of the media or social networks. Well, only if you want it to 😃