The cost of onboarding new employees is a common expense for companies. They either hire people for new positions or are struggling with high turnover and have to hire and train people for the same positions over and over again. Either way, having a simplified, automated onboarding process is the first step in bringing retention up and moving towards a more efficient operation.
Companies must first figure out a few things in order to reduce the cost of employee onboarding:
- How to streamline the onboarding process using fewer people and fewer steps
- How to improve retention
- How to automate onboarding activities
Onboarding is the first phase in the employee lifecycle, but many companies often wait until an employee is on the job and self-sufficient before they think about engagement. But the cost of onboarding employees is substantial and can add up the more a company has to repeat the process. By understanding what it is, and why it’s critical to engagement and retention, companies can create an onboarding process that delivers results!
What Exactly Is Onboarding?
Onboarding is the period of time from when an employee accepts a job until they are up and running in their position. It is a series of steps a company takes to integrate a new hire into an organization.
The onboarding process may include any new-hire paperwork, training, and orientation, but it also typically includes familiarizing a worker with the company’s mission, values, and culture. But onboarding is much bigger than the short window of time it once was. It is an ongoing process that can take up to a year. It’s that getting-to-know-you phase that can determine whether or not an employee stays with the company.
Why Onboarding Is Important
Onboarding was once just an HR formality of guiding new hires through the required paperwork to work at a company. But companies discovered that 20% of people quit a job within the first 45 days. Now, many companies recognize that the employee lifecycle begins the moment they accept the job offer. Onboarding is a critical period for several reasons.
- Onboarding can set an employee up for success and longevity at a company.
- Effective onboarding can boost productivity by 70%.
- Onboarding empowers people with information to reach peak productivity in their new jobs faster.
- Onboarding takes time and costs over $4,000 for each hire. Getting it right can boost retention by 82%, which means that the fewer times companies have to onboard can save thousands each year
Onboarding is a company’s chance to ensure employee engagement from day one. As the saying goes, you don’t get a second chance to make a first impression!
What Should Be Included In New Hire Onboarding?
You’ve found the perfect employee for a position in your company, made an offer and they’ve accepted it. Now, it’s time for onboarding! Onboarding looks very different than it once did. What was once a “sign on the dotted line” formality has become a journey — and a critical part of the employee experience.
Pro tip: Create an onboarding checklist on your mobile device so you can track progress and new hires know what to expect!
Today, onboarding often includes:
New Hire Forms
There’s no getting around the fact that every new worker must fill out required forms to begin at a new company—health insurance, tax forms, employee handbooks, etc. Many companies are opting for mobile communication apps with online forms that make it easy for new hires to complete them at their convenience, and not have to carry around all of that paperwork.
When employees start at a new company, they have to adopt and familiarize themselves with any technology or software. For companies with frontline workers, the best employee tech is a mobile-first communication solution that they can use on the go and on their smartphones.
Training is, of course, a big part of onboarding. New employees need to learn how to perform their job and specific protocols related to their position. That might be a mix of online training on their mobile device or in-person training with colleagues and managers.
Pro tip: Create an employee training plan that new employees can follow on their mobile app.
Rolling out the Welcome Mat
Onboarding has become much more than just paperwork and formalities. Part of onboarding should be a big welcome to new workers to make them feel at home. Orientations, meet and greets, tours of the workplace, and a welcome lunch. Introduce the new employee on your workplace app so everyone can give them a warm welcome.
This is the perfect opportunity to create those relationships at work that contribute to higher engagement.
Mentors or Buddies
While not a regular part of onboarding, many companies are now assigning mentors to new employees (here at Beekeeper, all new hires are paired with a “bee buddy” to help them get settled in.
Pairing a veteran employee with a new one can benefit your company in a few ways:
- Make employees feel more comfortable and at ease at their new company
- Have someone for new hires to go to with any questions
- Create a sense of community for deeper engagement
- Help guide employees through the onboarding process for faster time to productivity
Schedule the 1-3-6 check-ins
Annual reviews are becoming a thing of the past. Instead, companies are shifting their focus to one-on-one check-ins much earlier in the employee lifecycle, at one, three, and six months. This gives employees and their managers a chance to set goals and expectations. These meetings set an employee up for success in a way that’s more effective than annual reviews that just look back instead of forward.
Once an employee is up and running in their job, let them know there are opportunities for growth. The final part of onboarding should be the beginning of the employee’s ongoing professional development to train them for the next step up in the organization. While they won’t have the lengthy onboarding they did with this first position, they’ll have another period of adjustment as they begin their next role, and can serve as mentors for the next person that fills their old job.
What Factors Influence The Cost Of Onboarding?
Onboarding is a multi-step process. And each step can contribute to how much your company spends getting each and every new worker up to speed. Here are a few of the top factors that contribute to the cost of onboarding:
Every employee will require some level of training to perform the tasks specific to their role. That will include time for the person conducting the training and any relevant training materials.
Onboarding is a labor-intensive process. When evaluating onboarding costs you should always look at how much people power it takes to onboard each employee. Your HR team’s time is valuable
Bigger organizations are more complex and require lengthier onboarding which means higher onboarding costs.
Tools And Software
Whether it’s a mobile workforce communication tool or a mobile device, many employees often get some kind of technology or software to perform their jobs.
Onboarding Cost Vs. Cost-Per-Hire
Let’s make sure we’ve got our terminology right before we go any further. People often get onboarding costs confused with cost-per-hire.
Cost-per-hire refers to how much you spend to fill a role at your company. This includes recruiting, interviewing, and hiring new workers. These expenses can include things like advertising for the job, background checks, referral bonus (if applicable), and any external recruiter fees.
The average cost-per-hire is $4,700.
Onboarding costs are incurred after someone is hired. It covers the activities that acclimate an employee into their new role, training, paperwork to get them going in their new job, etc.
What’s The Average Cost Of Onboarding A New Employee?
While onboarding costs vary by company and by job, the average is about $4,100 when all is said and done. Here’s how to calculate your company’s cost of onboarding a new employee.
How To Calculate Onboarding Costs
Breaking down what you spend to bring a new employee into the fold can be tricky and time-consuming. But the more you understand your exact cost of onboarding, the easier it will be to take control and reduce that cost. Create a spreadsheet and list all direct and indirect costs like:
- How many hours it takes HR personnel to conduct the onboarding of one employee
- Any tools or technology for onboarding
- Training time and hourly cost of the person doing the training
- Salary of the new employee during onboarding and before they’re actively contributing to value-generating work
Add those items up and you’ll discover approximately what it’s costing your company to onboard every employee.
3 Tips to Reduce the Cost of Employee Onboarding
If you run a frontline organization, your employee turnover could be as high as 50% for hourly workers during the first four months. So you want to really get onboarding right to make sure you have low (or zero!) turnover during that critical period. Here are three tips to optimize your onboarding process and extend the employee lifecycle.
1) Automate your onboarding process
Onboarding is a repetitive process for the HR team, and it often eats up a lot of their time that can be put towards value-generating tasks. With a team communication tool, all paperwork and forms can be digitized so employees can simply fill them out on their mobile devices. Then, HR simply tracks when forms are completed rather than having to hand-hold new hires through each form. And the faster your employees can fill out all of the necessary forms the faster the time to productivity. So find tools for onboarding new employees to help streamline the process!
2) Make it fun!
The higher your turnover, the higher the number of employees you have to onboard. And at over $4,000 a person, that can add up! Focus your efforts on making a strong, and fun, onboarding experience with activities that focus on engagement. Throw a welcome lunch for new hires with their manager and new colleagues. It might feel like a splurge but the more a person feels at home and likes where they work, the longer they’ll stay…and the less you’ll spend.
3) Use training videos and e-learning
Managers are often the ones that end up showing a new employee the ropes. That takes up valuable time that they should be spending performing their supervisory tasks. Some training might have to happen in person, like showing an employee how to use a specific machine. But you can save money by creating training videos. It’s a one-time investment rather than having managers repeat training over and over which will cost more in the long run.
Another perk of online learning? Employees can refer to the videos on their mobile app whenever they have a question rather than having to go find someone to ask.
The cost of onboarding new employees is inevitable. But companies can take greater control over how much they spend by deploying an expense management system, this will help them analyze their expenses and automate the process. By automating the process with a mobile-first workforce communication tool, companies can create a more efficient onboarding process that engages employees from day one.