The Business Case for creating a better Employee Onboarding Process

The Business Case for creating a better Employee Onboarding Process

Is time to revamp your employee onboarding process?

 Key indicators that it is time to create a better employee onboarding process include: high employee turnover; low morale; lagging productivity; low net promoter scores and it is taking longer to fill open positions.

New hires tend to decide within the three months of starting a new job whether or not they will stay with the organisation.New hires tend to decide within the three months of starting a new job whether or not they will stay

What are your real employee turnover costs?

Most organisations don’t know the real cost of employee turnover as they don’t have the systems in place to track the complex associated costs. Recruiting (interviewing, hiring, orientation and training); Lost productivity; potential customer dissatisfaction; administrative costs; lost knowledge and expertise; etc.

A report by Oxford Economics (2014) estimated that the true cost to replace an employee is more than £30,000

Logistics: £5,433 e.g. agency fees and advertising

  • Temporary workers before the new hire starts: £3,618
  • Manager’s time spent interviewing candidates: £767
  • Agency fees: £454
  • Advertising: £398
  • HR time processing CVs and doing paperwork: £196

Productivity wages: £25,182 for the time it takes new hires to reach effectiveness (+/- 28 weeks) based on an average salary of +/- £40 000. The higher the base salary the higher the potential cost to replace.

  •  The cost of reduced performance while a replacement gets up to speed
  •  The impact on the productivity of the team (disruption and increased workload)

Replacing those who work in compliance (e.g. legal or financial) is often more expensive (estimated at £39,887) due to the complex nature of their roles and an average of 32 weeks to reach peak effectiveness.

These costs do not take into account the cascade effect that often happens when an employee is disengaged and/or decides to leave. Other employees begin to question if they are in the right place. With repeated voluntary departures nervous employees that can leave often will, those that stay may end up being those that cannot leave.

…it takes up to eight months for a new hire to reach full potential….  Source: How to Make New Employees More Productive, inc.com

New hire retention statistics

  • 69% of employees are more likely to stay for three years if they experienced a great onboarding
  • Up to 20% of employee turnover effectively happens in the first 45 days
  • Organisations with a standard employee onboarding process (not just an orientation) experience 50% greater new hire retention

New hire turnover statistics

  • The direct cost of replacing an employee is estimated at between 16 and 20% of salary
  • The real costs of employee turnover are estimated to be between 100% and 300% of the replaced employee’s salary
  • Nearly 33% of new hires start look for a new job within their first six months on the job if expectations are not met
  • 23% of new hires leave before their first anniversary

New hire performance and productivity statistics 

  • 60% of companies fail to set specific benchmarks/milestones for new hires
  • It can take up to eight months for new hires to reach full productivity
  • Best-in-class firms are 35% more likely to begin onboarding before day one
  • Only 37% of firms extend their onboarding beyond the first month
  • 22% of companies have no formal onboarding programme
  • Longer onboarding programs help new hires gain full proficiency 34% faster than those with shorter programs
  • Manager satisfaction increases by 20% when new hires have formal onboarding training

Effective onboarding can help build a strong foundation for the intrinsic elements that create a great place to workEffective onboarding can help build a strong foundation for the intrinsic elements that create a great place to work, and use that to attract and retain top talent.

Key benefits of an improved onboarding programme

1. Shortened learning curve to productivity

Onboarding can help new hires get up to speed faster, understanding their jobs and the relationships that enable them to perform as a valuable member of the team.

2. Speed up procedural compliance

By understanding the impact and importance of key relevant policies new hires can apply them to their new roles earlier.

3. Promote communication

An effective onboarding plan stimulates conversations between the new hires, colleagues and management. This helps new hires explorer potential career paths and helps them feel they are a member of the team.

4. Build teams & increase collaboration

Assigning new hires a mentor or onboarding-buddy during the process helps build relationships and a sense of belonging. Research by Gallup shows that highly engaged employees are those who have strong connections to their colleagues and managers. A mentor can serve as a resource and crucial support system during the critical first thirty days.

5. Boost performance

New hires that understand their work, and what is expected of them, from the beginning perform better (as much as 10%).

6. Engage employees and gain commitment

Working closely with new hires managers can build toward the four keys of employee engagement: Relationship with manager, Belief in leadership, Sense of belonging and Having a voice. Engagement should be a key objective of any onboarding program as it drives business growth.

7. Increase retention

Regardless of whether employees are a bad fit, or just moving on when they leave it can negatively impact team morale and your bottom line. An onboarding programme can help ensure a better employee/organisational fit from the beginning.

8. Encourage employee voice and knowledge sharing

An onboarding programme can help new hires get answers to questions about their new workplace. An effective programme can also helps gain a fresh perspective and new ideas. Providing this opportunity during onboarding can set the tone for their career with the organisation. 

9. Build trust

Encouraging open communication throughout the onboarding program can help build a level of trust that will encourage effective collaboration and employee insights. Ensure new hires meet with senior management to hear directly from them about key organisational initiatives and goals.

10. Attract top talent

An effective onboarding programme can also help attract the best and most productive talent.  59% of HR professionals believe that the challenge of attracting and retaining top talented will only increase over the next few years as social media exposes an organisation’s true culture (e.g. Glassdoor reviews).

Key benefits of an improved onboarding programme Infographic

 

For more on the elements and steps required see: Crafting an effective onboarding programme for retention or for more on  Offboarding, Reboarding and Onboarding talent for engagement

 

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Richard Riche

Change Communication and Employee Engagement specialist at One Clear Message Consulting
Richard specialises in helping you build real human communication skills. Employee Engagement / Experience, Emotional Intelligence skills, building high performance teams and a great place you want to work. TED style speaking and presentation skills. Training, consulting and coaching.
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