Employee onboarding, in former times associated with a TV playing VHS compliance tapes on a loop, is a critical component of a modern, effective corporate L&D strategy. Whether or not employee onboarding is effective can be distilled into three interrelated measures: engagement, retention and productivity. Each builds on the former, and all contribute significantly to the employee experience in today’s talent constrained environment. Let’s dive into each measure.
Impact 1: Higher engagement
You never get a second chance to make a first impression. A deliberate and positive onboarding experience funnels the enthusiasm of starting a new job into early and ongoing engagement, which can create brand ambassadors and higher performance. In fact, effective onboarding increases discretionary effort by up to 20%. 1
Impact 2: Higher retention
Engagement flows into retention: Creating early and ongoing engagement is key to retaining employees, particularly high-potentials. Those are typically the employees you most want to keep, and they can be expensive and time-consuming to replace. Josh Bersin uses the commonly-cited statistic that the cost of losing a employee can be 150% to 200% of that position’s annual salary. 2
To increase retention, onboarding is a proven lever: 69% of employees are more likely to stay for at least three years after a great onboarding experience. 3
Impact 3: Higher productivity
Productivity is the “why it matters” for the measures we just mentioned--it’s the outcome that engagement and retention have on the business. Research supports this: Companies with engaged employees outperform those without by 202%. 4 And teams with high employee engagement rates are 21% more productive than those with low engagement. 5
Thinking about productivity in the context of onboarding, consider about the time it takes to ramp up as well as the level of steady-state productivity an employee reaches. As the graphic below illustrates - this is from Bersin but there are many similar in message - a new employee is typically a negative return on investment for an organization. We’ve all been in a situation where we’re trying to “climb the learning curve” or “ramp up faster”.
The longer an employee spends taking more from the organization than she/he returns, the higher the waste of time and productivity. This is particularly relevant for organizations who need to ramp up employees very quickly due to a business constraint. Structured onboarding, including facilitating learning, relationships and connections, builds a success framework for new employees, fast-tracking them to positive ROI.
A stronger foundation can also lead to higher steady-state value. Therefore, in addition to benefiting organizations with churn or constrained ramp-up time, effective onboarding is an excellent investment for organizations who expect employees to stay beyond a few months.
Cost to value of an employee
69% of employees are more likely to stay for at least three years after a great onboarding experience.
Current onboarding programs don't exist or are poorly designed
Many organizations realize the need for onboarding, however the majority of existing programs aren’t designed with the elements to support rapid employee growth and lasting impact. In fact, only one in three companies has a formal onboarding program. 6 And as many as 4% of employees leave after a disastrous first day--an extreme example of poor onboarding (and likely hiring). 7
Here are a few common hurdles that onboarding programs should consider:
Engagement is low: Without a structured program, the enthusiasm of starting a new job can quickly dwindle, sometimes even before the first day. New employees can be overwhelmed.
One in three new hires becomes disengaged and starts looking for a new job in the first six months at a new employer. 8
Retention can’t be assumed: One in three new hires starts looking for a new job within six months.8 Ouch! At executive levels, the situation is even worse, with one in two executives failing within the first 18 months of taking a new job.
Performance and productivity: It takes an average of eight to twelve months for a new employee to become fully productive. 9 That’s a lot of wasted time that an organization might be able to reduce up to 34% through effective onboarding. 9
Traditional approaches fall short
We've grouped traditional onboarding approaches into three categories—many organization still use one of these. Acknowledging that each falls short, and looking for improvements that address the hurdles listed above, is a step toward building a better program.
Approach 1: Self-service
A self-service, on-the-job approach leaves new hires to their own devices, providing eLearning courses, checklists and tools on a company intranet or contracted learning site. Although affordable, a purely Web-based, self-service approach does not create sustainable support and fails to establish needed connections and cultural integration.
Approach 2: Blended program
The next level of investment (and return) supplements self study and on-the-job learning with classroom training. Skills can be practiced and connections established, but no mechanisms are provided to build them into the fabric of the new hire’s work. Blended approaches are often touted as the best of all worlds, but they have very little ongoing social element and they separate learning from working.
Approach 3: Comprehensive experience
A custom immersive onboarding program aligns best practices in learning design with the specifics of the organization. This approach utilizes a variety of formats and methods, including longer face to face training. Custom programs like this are costly, difficult to scale to dozens or hundreds of new hires, and they often take new hires away from the job for an extended time.
A new paradigm for scalable, effective onboarding
A better approach incorporates an employee’s human connections and uses planned activities over several months. Such a program needs to be timely, starting well before day 1 and continuing at least most of the way until full productivity is achieved--as mentioned above, that’s an average of eight to twelve months.
It’s also critical to establish success measures and goals up front, which allows the employee and a buddy/mentor/manager to develop a clear onboarding roadmap. Are functional skills a priority? Perhaps organization knowledge and meeting far-flung teams is a high priority?
A modern program also needs to balance learning methods that convey organizational information, external content, and socially-reinforced learning experiences and feedback and guidance from others. That means using technology and tools that encourage and support rich connections across the organization--with other new hires, a manager, a team of direct reports, and ideally a mentor or buddy. These sources, in the structure of a well-designed onboarding program, provide different types of information and support to guide new hires to productivity more quickly and with higher satisfaction.
This approach - enabled by Web-based tech and other ways to scale and measure - facilitates an outstanding onboarding experience for all new hires, providing them with the knowledge, skills and connections they need to contribute more, faster.
In our experience, several common elements underpin successful onboarding programs. Start by planning an employee-centric onboarding program with these attributes:
Lasting: Start early - at offer acceptance - and keep going until new hires reach productivity, often at least 6 months in, spreading out information to fit the changing needs of the new hire. Create a consistent experience aligned with the company culture, and leverage smart technology for scale and personalization. This sounds difficult and expensive, but the right tools can do this at scale.
Social: Make onboarding about connecting new hires with people, not just with material. People will, by their nature, personalize the experience for a new hire. Also, leverage formal mentoring to all new hires, enable peer connections to fast track learning, and prepare managers to take the lead for their new team members.
Empowering: Accountability and empowerment go hand in hand. Develop accountability by establishing, measuring, and reporting on onboarding goals and milestones. On the flipside, empower employees to meet those goals and set those milestones within given parameters. Perhaps one new hire prefers to complete project A before B, whereas the reverse makes sense for a different hire.
Integrate the above into a cohesive onboarding journey that lives in an accessible, central digital location, and you’re on your way to making the new hire learning curve steeper and the end result higher.
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