Three No-Brainer Reasons Why You Should Onboard Properly
It would be safe to assume that most, if not all, HR practitioners know the importance of proper onboarding of new employees.
However, only 20% of companies have established a systematic onboarding system for new staff, which should include proper training on how to conduct their job roles, as well as integration socially into their new teams. For a variety of reasons, far too little attention is given by a vast majority of companies to proper onboarding. Clearly, there are other issues being given higher priority than getting new people on board sooner.
However, a quick look at the following statistics offer three no-brainer reasons why proper onboarding should be at the top of your priorities:
1. Companies lose 31% more in sunk costs when you DON'T onboard properly
Research suggests that 1/3 of an employee's annual salary is the cost of turnover, which would mean you would lose one person's full annual salary for every three people who leave you. That's a lot of money.
Additional data indicates that companies with good onboarding systems retain 91% of their first-year workers, while companies that don't onboard properly retain only 60% of their first year hires. That makes a difference of 31% more in employee turnover AND costs when you don't onboard properly.
2. You generate 8% more revenue year after year
According to the Aberdeen Group's research, companies with the best practice in onboarding improve their revenues by 13% every year, as compared to only 5% growth in other companies who do not have as systematic an onboarding approach.
This is supported by the findings in the same research that proper onboarding improves customer retention every year by 12% more, and customer satisfaction year-on-year by 11% more, as compared to companies that have mediocre or non-existent onboarding programs. If you set-up your new employees right, you will reap better results sooner.
3. Your new hires become fully proficient three months earlier
Typically, new hires attain full productivity after their first eight months. That's eight months of hand-holding, major and minor slip-ups, and more-than-usual time and effort spent with your rookie staff, which you would have rather spent on more pressing needs.
However, new employees on companies with intensive onboarding programs gain full proficiency in a little over 5 months, or 34% faster than the norm. That's three months of time saved from baby-sitting new recruits, which you can now spend on strategic, business-building tasks.
What would it take to have a good on-boarding program?
According to Dr. Talya Bauer, Cameron Professor of Management at Portland State University, onboarding has four distinct levels, called the Four C's of onboarding:
- Compliance - it is the lowest level of onboarding, and it involves teaching employees the basic policies, rules and regulations of the job. Nearly all companies accomplish this level of onboarding, which basically tells the new hire what is and what is not permissible in the workplace.
- Clarification - refers to ensuring that new employees have an understanding of their work role and the expectations that come with it. According to Dr. Bauer, about 50% of organisations accomplish this.
- Culture - this level of onboarding provides new hires with a better understanding of the company's culture and work dynamics - how colleagues relate with one another and the values that the company champions and lives by. Dr. Bauer's research indicates that only 20% of companies reach this level of systematic onboarding.
- Connection - refers to helping the new hire establish vital working relationships with colleagues and superiors. The systematic approach to this level of onboarding aims to ensure that the employee is properly integrated socially in the workplace.
The activities related to all levels of onboarding may not be expensive. Based on Dr. Bayler's research, here is a summary of the best onboarding practices you can also apply in your company:
- Develop and keep a formal onboarding plan and process.
- Start with the basic orientation even before the first day on the job. Self-learning through videos and downloadable documents will facilitate this. Explore using e-learning platforms such as Talent LMS, which will help you turn your onboarding and training modules into videos.
- Welcome new hires on their first day and make it a special one. Some managers (and even CEOs) make it a point to have a welcome lunch for new hires with their team members within the first few days.
- Be very clear with new employees on:
- Role objectives
- Regular tasks
- Key performance indicators/expectations
- Celebrate key milestones or accomplishments with each employee at set intervals (30, 60, 90 days, etc.). It may be as simple as a team-wide email, or even just a genuine pat on the back. The approach may vary from one company, or even employee, to another.
- Make the new hire be participative in the onboarding process, and not reliant on spoonfed activities. Encourage new hires to participate/volunteer in company functions or to arrange informal interactions with key personnel, such as a getting-to-know-you-and-the-company lunches and coffee breaks. Consider having new hires fill-up a questionnaire for each colleague they meet-up with to facilitate the discussion.
- Ensure that your onboarding program is applied consistently over time. The use of training and onboarding software such as BambooHR and Employment Hero can help with this, by directing each new employee through pre-set onboarding steps and documents.
- Prepare the necessary tools for the employee to be productive on their first day: laptop/desktop, desk, ID, mobile phone, etc. The key is to make the new employee's first day meaningful, productive and special. By setting a professional tone on the first day, you give the new employee a glimpse of how their conduct in the company should be.
Do you need help with your onboarding program? Drop us a line for a no-obligation consultation.
About the author:
Dondi Alentajan is the Principal Consultant for Alentajan Business Consulting and serves as a consultant for Optimum Direct, a web portal for the best HR tools and software for small business. He was recognised as a “Marketing Maverick” by Business World in 2012, and he headed the Marketing Team nominated “Best Marketing Company” by the PMA for two consecutive years (2010 & 2011). His primary work mission is to help companies and their customers be happier together.