September 20th, 2017 | Debbie Lamb, Sterling Talent Solutions
Impact of Onboarding on the Bottom Line
Solid new employee onboarding programs will have a positive impact your business’s bottom line. It will help an organization attract and retain the best talent and empowers the human resources team to focus on finding, recruiting and securing the best talent for the company. Effective onboarding tells a cohesive, compelling employer brand story. It provides the skills, knowledge and tools your new employee needs to become a productive, successful team member for the long haul. A successful hiring program will give valuable new employee training for a company’s systems, workflow and ultimately, its culture.
Onboarding is a critical part of creating a great candidate experience for new employees. Sterling examines the successful components of a new hire process from first-day paperwork needs to creating a 30/60/90 day plan for the candidate in the eBook HR’s Guide to Onboarding: From Decision to Day One and Beyond.
The ROI of Onboarding
You can’t afford not to invest in an engaging, inclusive program that bridges the gap between recruiting and a new hire’s transition into your organization. At its most effective, onboarding tells a cohesive, compelling employer brand story. It engages and socializes the new hire from the moment they step through the door. And it lays the groundwork so that your new employee can become a productive, successful team member for the long haul.
There are many ways that onboarding can affect the bottom line for a business:
- Engagement: New employees who went through a structured onboarding program were 58% more likely to be with the organization after three years.
- Recruitment: A positive candidate experience from hiring through onboarding will give a company the edge in the candidate-driven job market.
- Performance: An effective and inviting hiring process boosts employee engagement. Organizations with a standard process experience 50% greater new hire retention. Manager satisfaction increases by 20% when their employees have formal hiring training.
- Empowerment: Aided by a technology solution, HR and recruiting teams can stop wrangling paperwork and start creating dynamic onboarding programs.
- Employer Brand: Your new hire is sure to be asked, “How’s the new job?” Thanks to Glassdoor, Facebook, Twitter and other social channels, your reputation as an employer is riding on the answer.
Employees who go through an effective onboarding program become more productive quicker and put out more valuable work. Organizations with a standard onboarding process experience 54% greater new hire productivity leading to better performance. In fact, 77% of new hires who hit their first performance milestone had formal onboarding training. Employees who go through a more focused and detailed welcoming experience are more likely to be enthusiastic about their organization and ultimately can become brand ambassadors. This will ultimately translate to bottom-line and tangible results in higher productivity.
Cost of a Bad Hire
If the onboarding process is not successful and the new employee ultimately does not stay with the company, it could have a large impact on the bottom line of a business. In the US and UK alone an estimated $37 Billion is spent annually to keep unproductive employees who do not understand their job. In fact, a bad hire can result in possible uncomfortable and costly outcomes for a business including damaged employee morale, theft, embezzlement, negative publicity, lost productivity and possibly litigation.
The financial implications of a bad hire can seem endless. There is the cost of “off-boarding” the associate, which can escalate quickly if it is not a smooth departure plus the cost of recruiting, hiring and training a replacement. The financial impact of a bad hire varies based on the level of employment. The cost of replacing a failed executive will be much higher than replacing an hourly associate.
- The average cost of replacing an employee is between 16% and 20% of the employee’s annual salary
- The organizational costs of employee turnover are estimated to range between 100-300 % of the replaced employee’s salary
- The cost of a single failed executive level manager can be as high as $2.7 million
The Impact of a Great Onboarding Experience
New employees will remember a transformative onboarding experience that immediately immerses them in the company culture leading to them staying with a company. Organizations with highly engaged workers have higher rates of customer satisfaction and fewer errors. Because most companies lose 25% of their employees within their first year at the company, it’s critical that onboarding a new hire be a positive experience. Learn how to transform hiring process from a cumbersome, paper-laden process to one that engages top talent from the get-go by downloading Sterling’ eBook HR’s Guide to Onboarding: From Decision to Day One and Beyond.
This publication is for informational purposes only and nothing contained in it should be construed as legal advice. We expressly disclaim any warranty or responsibility for damages arising out this information. We encourage you to consult with legal counsel regarding your specific needs. We do not undertake any duty to update previously posted materials.