Talent Development

Onboarding: Your Upfront Investment in Employee Performance

By Sarah AlexanderAugust 15, 2017

In today’s increasingly competitive talent market, what if there was a way to improve retention of top employees? To make them more engaged in their work? To increase their productivity and profitability, all while making them happier at your company? All of this can be achieved through effective onboarding.

When the topic of onboarding comes up, employees often think of dreaded paperwork sessions and long days of being talked at. Ceil Tilney, Principal at Right Management, shared in a recent conversation with the Everwise team, “As someone who has built onboarding programs in many organizations, but also as someone who has onboarded to new employers more often than most, I have become painfully aware of how much traditional onboarding can take all the positive energy out of the room.”

However, this is beginning to change. Companies are embracing technology to take an innovative employee-experience approach versus the age old employee data management method of onboarding. Through this process, they are discovering just how powerful thoughtful onboarding can be in answering all of the questions above.

The Aberdeen Group exposed the relationship between innovative onboarding programs and employee engagement in its research, which found that after implementing structured onboarding processes, 54 percent of companies experience better employee engagement than before implementing such programming. Along these lines, a meta-analysis conducted by Harvard Business Review also found that feeling welcome and socially accepted was a key factor in employee engagement. This engagement manifests itself in three key performance areas for businesses: retention, productivity, and profitability.

Better Retention

When new hires sign onto a new position and new company, they will undoubtedly be nervous about starting their next chapter and all the uncertainties this holds. This means that first impressions are critical. As Tilney observed, “Phrases become cliché because there is some truth to them. ‘You never get a second chance to make a first impression,’ and ‘People will forget what you say, and what you do, but they will never forget how you make them feel,’ are part of the reason that first experiences on the job are so important.”

Research by the Wynhurst Group was able to prove this philosophy quantitatively: it found that 22 percent of employee turnover happens in the first 45 days of employment. BambooHR research backs up this statistic. One-third of approximately 1,000 survey respondents said they had quit a job within six months of starting it. Nearly 17 percent of these respondents left between the first week and the third month of starting their new job. Ben Peterson, CEO of HR technology company BambooHR, observed in an interview with SHRM, “That means the average company is losing 1 in 6 of their new hires each month for the first three months.”

These statistics show the importance of creating an organized, well-timed, and impactful onboarding process that recognizes the needs and wants of the new hire. What would that look like? Of BambooHR’s survey respondents who left within the first six months, 23 percent said “receiving clear guidelines to what my responsibilities were” would have helped them stay on the job. Twenty-one percent said they wanted “more effective training,” 17 percent said “a friendly smile or helpful co-worker would have made all the difference,” 12 percent said they wanted to be “recognized for [their] unique contributions,” and 9 percent said they wanted more attention from the “manager and co-workers.”

Improved Productivity

While turnover improvements are an important and immediately visible result of onboarding investments, Tilney notes that “Engaging people accelerates their full investment in their work…in the long run, teams perform better.” This observation is corroborated by the data. According to Aderdeen Group, 62 percent of companies with a solidified onboarding program see faster time-to-productivity.

As management software company UrbanBound’s infographic displays, onboarding programs can be directly tied to time-to-proficiency and ultimate productivity: employees whose companies had longer onboarding programs gained full proficiency 34% faster than those in the shortest programs, with new hires who go through a full onboarding process exhibiting 50% greater productivity.

Additionally, research shows that spending up to a year helping new employees get up to speed in the workplace may be necessary to capitalize on the skills, knowledge, and excitement that they can bring to an organization. This excitement and positivity can be contagious as well, leading to happier managers and colleagues and smoother functioning teams.

Increased Profits

Gallup has found that a staggering 87% of employees worldwide are not engaged, and companies with highly engaged workforces outperform their peers by 147% in earnings per share. Onboarding is one way to achieve this engagement-related profitability according to BCG, which found that companies with successful onboarding programs report measurable profit growth.

Temkin Group reports a similar correlation between employee engagement and success in customer experience. Its 2016 Employee Engagement Benchmark Study found that companies that excel at customer experience have one-and-a-half times as many engaged employees as customer experience laggards do. Similarly, Gallup reports that when employees are engaged and feel accepted, they are more likely to experience good relations with customers, which is directly tied to customer loyalty and increased market share.

So if your objective is to ensure that your new employees feel welcome, prepared and ready to make a positive impact, consider innovating your onboarding process. As Peterson says, “When all the paperwork is signed and the employee’s first day is complete, we in HR think we’re done, but the reality is we’re just getting started. [Onboarding] is not a single event. It’s an ongoing talent strategy.”

Sarah Alexander

Sarah Alexander

Author & Contributor

About the Author

Sarah is an elite triathlete and independent strategy consultant with an MBA from Chicago Booth. She is passionate about empowering others to achieve excellence.

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