When computer systems are retired, the disk drives should be zeroed out and all magnetic media should be degaussed. This involves applying a strong magnetic field to initialize the media (also referred to as "disk wiping").

Keep in mind, though, that erasing files on a computer system doesn't guarantee that the information is gone from the disk; for that, you'll want to perform a low-level format or bring in a utility to completely wipe the disk clean. The low-level format returns a disk drive or other magnetic media back to the state it was in when it was brand-new. The process physically rewrites every location on the disk back to its original state.

(NOTE: Degaussing hard drives is difficult and may render the drive unusable. It works better for floppy drives while utilities are often used for hard drives.)

If you can't be certain that the hardware doesn't contain important data, then it should be destroyed. You can't -- and shouldn't -- risk the data your company depends on falling into the wrong hands.