Somewhat like performance reviews, a new employee onboarding process is often viewed as just a compliance task that has to be endured when new starters join your organization. But the truth is, it’s a fundamental engagement point and your onboarding strategy is critical to their longevity in your organization.
A new team member’s first few days, weeks, or months will shape how they get started, their long-term performance, and ultimately whether they choose to stay or leave your team.
Onboarding is therefore so much more than just an admin task, and if designed strategically, your employee onboarding strategy has the power to make a serious impact upon organizational success. Here’s why:
1. An effective onboarding strategy directly improves retention
Consider the following employee retention stats:
- 22% of employee turnover happens in the first 45 days of employment. (Bersin by Deloitte)
- 40% of turnover happens in the first year of employment. (Work Institute)
- 4% of new employees will leave a job if they have a disastrous first day. (Bersin by Deloitte)
- 15% of employees have left a role due to a poor onboarding experience. (Society for Human Resources Management)
- One in five employees leave an organization before completing their onboarding period. (People Management)
Research from multiple sources has shown again and again that an employee’s first impression and initial onboarding experience in an organization can make or break their chances of both short and long-term success. If large proportions of your workforce are leaving in the first year, this will become an expensive problem. Not only does staff turnover incur significant costs, but when employees leave this early it is likely that they never actually reached a point where they were generating returns for the business.
As you can see in the diagram below, when a new employee is being onboarded, the returns they bring to the organization in terms of profit is in the negative. And it can take a while – sometimes up to 12 months – depending on the role for them to reach peak performance.
On the flipside, for those employees who have a positive onboarding experience, 69% of employees would be more likely to stay in an organization for three years (Society for Human Resources Management)
People may choose to leave within the first year or less for a range of reasons but if the onboarding experience itself is poor enough this could be a sticking point. Establishing a robust onboarding program with consistent onboarding processes, asking for regular feedback and using system automation to minimize manual steps and achieve consistent delivery will help generate a positive employee onboarding experience.
Once this process is established and you have some data on it, you can look for ways to optimize and improve it so that your employees have everything they need to succeed.
2. Effective onboarding increases productivity and engagement
Not only does a good onboarding experience make new starters want to stay, it also increases discretionary effort and productivity. This can be attributed to a robust onboarding strategy contributing the right resources and training that new starters need, as well as delivering the right tasks at the right time so new starters can slowly build up their skills and competency over time.
Consider these three statistics:
- Effective onboarding can increase discretionary effort by 20% (Corporate Leadership Council)
- Companies with consistent onboarding see a 50% increase in productivity for new starters (Society for Human Resource Management)
- 54% of organizations with robust onboarding processes report higher employee engagement (Society for Human Resources Management)
Naturally, employee engagement also sees an uplift as new staff are feeling recognized and rewarded for their achievements. To aid this, goal setting should be a priority for every new starter to ensure they are aligned with organizational objectives and have clear expectations to meet. The key here is delivering tasks that are stimulating enough to engage them, but also realistic enough that a new hire has the chance to enjoy early successes building momentum.
3. Effective onboarding makes businesses more profitable
Losing an employee in the first year will typically cost at least 3 times the employee’s salary (Bersin by Deloitte).
Not only does an effective onboarding strategy increase productivity and subsequent returns, but by reducing attrition, also minimizes costs to an organization. The costs of early turnover are so high as employees at this early stage typically haven’t had enough time to reach peak performance. On top of this, the business must invest the time of more senior staff as well as financial costs into training their replacement.
So we know that good processes are vital to successful onboarding of new employees which, in turn, is important to building a successful organization, but how can this be achieved? We’ve put together a guide to maximizing your onboarding process here.