Are Onboarding and Profitability Inextricably Linked?
Onboarding is important: Time is money and the time it takes to get your new employee up and running can cost you big. Recruiting, training, benefits and workplace integration are just a few of the costs of your new hire. The full cost to get your new employee completely integrated into your workforce can be between 1.5x and 3x their salary.
Finding your new hire can end up being easier than getting them to stay, so how do you make sure your investment does not go to waste? It all starts before they even walk in the door, with your onboarding process.
Employee retention & addressing employee turnover
The cost and time involved in the recruitment process makes employee retention a priority for all businesses. Retention is critical due to hiring and training contributing directly to business costs, but how is the loss of time and money avoided? When new hires take part in a structured onboarding process, 66% of them are likely to remain with a company for longer than three years. Onboarding becomes even more important when you factor in that 91% of millennials expect to stay in a job for less than three years.
Employee turnover is not always about direct costs. It consumes expensive management bandwidth, dampens employee morale and can adversely impact revenue opportunities. Worse still, if the leaving employee joins the competition, it increases the possibility of loss in market share. Without a doubt, organizations have experienced higher retention rates and lower turnover costs by capitalizing on their onboarding process.
Tip: The onboarding process is much more than just a new email address and a tour of the office. It starts before day one and can last an entire year. Take it seriously as it will help your company just as much as your new hire. Test your onboarding knowledge and find out how your current process stacks up against the competition.
Ready for day one
Employees are 69% more likely to stay with a company for three years if they experienced great onboarding. Onboarding helps new employees stay, but what else does it improve? 62% of companies that have a solidified onboarding program experience faster time-to-productivity with 54% claiming to have better employee engagement. However, despite the benefits, onboarding is sometimes forgotten; 35% of companies spend nothing on onboarding.
Why start onboarding before the new hire arrives? According to an Aberdeen survey, Best-in-Class companies are 35% more likely to begin the onboarding process before day one compared to all other companies combined. Preparing for your new hire will give you an opportunity to be ready for when they arrive and shows you want them at your company. Get the boring stuff out of the way by preparing your new employees’:
- Workspace- so they can make it feel like home easier.
- Email or any necessary accounts- so they can contribute right away.
- Any paperwork that can be done before they first walk in the door- so their first day isn’t a boring slog through forms and screens.
Engaged employees lead to additional referrals
Engaged employees with a high well-being are 59% less likely to look for a job with a different organization and 18% less likely to change employers in the next 12 months. Engaged employees want to stay. Engaged employees become your best brand ambassadors and, in a way, your best recruiters. When an employee happy at their job makes a referral, retention magic happens.
While employee-referred candidates don’t fill much of the candidate pool, just 6.9%, they account for 40% of total hires. Referred candidates also have an average retention rate of 45% after two years. This results from these candidates joining with more realistic expectations of the work environment and what is expected of them. The onboarding process for referred candidates runs smoother because they already know someone in the workplace. A tour of the office from a friend can go a long way into making the new hire feel more comfortable in a new workplace environment.
Tip: Encourage your employees to make referrals by asking them if they specifically know anyone able to fill a position. Have events where you allow your employees to search through their LinkedIn and Facebook contacts with recruiters waiting on standby.
“It turned out that nobody was meaningfully motivated by the referral bonus. People (who referred other employees) actually loved their work experience and wanted other people to share it. Only rarely did people mention the referral bonus.”- Laszlo Bock, Google’s head of people operations
Engagement and culture have become the most important issues companies face as 87% of organizations cite them as top challenges. When employees have a sense of belonging in their work environment it becomes harder for them to leave. Job turnover at organizations with rich company culture is 13.9%, whereas the probability of job turnover in a poor company culture is 48.4%. When the culture and values of an organization align with those of the employee, it makes them more dedicated to your company and less likely to leave. Onboarding is a great time to impart your values and culture to your new hire. Whether it’s with branded swag or a values orientation day, this is a crucial part of onboarding that many miss.
The importance of a proper culture is also felt by managers. 84% of corporate managers believe culture is critical to business success and 60% believe culture is more important than the strategy and the business model. The culture of a company is created by those in influential positions. This becomes alarming when considering 75% of people don’t leave their job, they leave their managers. The intended company culture needs to be established by managers and it needs to be apparent to the new hires during their onboarding process. Once you’ve nailed your onboarding process, consider training and reinforcing cultural values and the vision with managers on a consistent basis.
Great workplaces are responsible towards their employees. They respect, reward and compensate the employees well enough to earn their trust and loyalty creating a brand name for their company in the eyes of the outsider. Great workplaces are employee focused and judiciously use the onboarding process to also share the company’s immediate goals with the new hires. They understand an aligned, engaged employee who trusts the leaders of the company will make extraordinary contributions to the success of the business.
Highly engaged employees are 87% less likely to leave the company they work for. Start engagement immediately with the help of a comprehensive employee onboarding software program. New employee onboarding drives employee engagement and alignment by focusing on new hire development and performance, taking frequent informal feedbacks, updating them on company’s vision and encourage leadership where appropriate. It can work wonders in aligning the new hires to business strategy, execution and culture. Don’t let your new hire walk out the door, make them part of your work family from day one.