Why Employee Onboarding Matters

Estimated reading time: 5 minutes
Posted on: January 13th, 2015 by Andrew Greenberg No Comments

onboarding

What happens during a new employee’s first day with your company? Is there a video involved? Lots of paperwork? Would employees describe it as a “bore-ientation?” Or is your new employee onboarding program designed to help new hires adjust to your company culture, work environment, and performance expectations from day one? That’s what Talya Bauer, Ph.D., writing for the Society for Human Resource Management (SHRM) says is necessary to prevent losing new hires during their first few months with your company.

Dr. Bauer knows about onboarding. She studies, it along with recruitment, selection, over-qualification, mentoring, and leadership in her research about relationships at work. As the Cameron Professor of Management at Portland State University in Oregon, Dr. Bauer is a teacher and researcher, publishes results of her research in professional journals, and consults for government and Fortune 1000 organizations.

Why Care About Onboarding?

Dr. Bauer recommends employers pay attention to a good onboarding process and make it a priority because more than half of new hires fail within the first 18 months. Mark Murphy, founder and CEO of Leadership IQ and author of “Hiring for Attitude,” knows this is true from his company’s study of 20,000 new hires.

The immediate benefits of good onboarding are well-adjusted new employees, but long-term benefits to the company hit the bottom line, including improved retention, reduced time to productivity, and better overall customer satisfaction. And long-term benefits to employees are job satisfaction, higher performance, lower stress, and organizational commitment.

Consider these statistics:

  • “22 percent of staff turnover occurs in the first 45 days of employment.” (The Wynhurst Group)
  • “Many companies leave executive onboarding to chance, and as a result experience failure rates in excess of 50 percent when it comes to retaining new executive talent.” (Egon Zehnder International)
  • “New employees who went through a structured onboarding program were 58 percent more likely to be with the organization after three years.” (The Wynhurst Group)

Turnover costs money from lost productivity, for recruiting activities, and lost work because of vacancies. Suzanne Lucas, reporting for CBS MoneyWatch, says the average cost of replacing an employee is between 16 and 20 percent of that employee’s salary. High turnover represents a major expense for employers and is well worth every effort to reduce and control it. One way to do that is by making new employees feel welcome and prepared for their jobs with a solid onboarding program.

What Formal Onboarding Means

Does your onboarding process end after the first day or first week? Or does it last for two years like global beauty company L’Oreal? L’Oreal’s program, “L’Oreal Fit,” includes training, meetings with key insiders, mentoring and HR support, site visits, shadowing programs, and various other valuable experiences for employees.

Dr. Bauer explains that formal onboarding programs are more effective than informal or non-existent programs. She describes three levels of onboarding as passive, high potential, and proactive onboarding, with compliance, clarification, culture, and connection the four building blocks of orienting new employees.

  • Passive onboarding involves compliance, or teaching new employees about the company’s policies, rules, and regulations
  • High potential onboarding involves compliance and clarification of the new job and performance expectations, plus some culture and connection to help the employee understand the organization and introduce co-workers, management, and information sources.
  • Proactive onboarding involves all four building blocks in a comprehensive program that systematically syncs onboarding with strategic human resource management.

Onboarding at Top Companies

How does your company’s onboarding compare to these top companies?

Zappos – When new employees start at Zappos, they get an intensive five-week training course to learn about the company’s values and procedures, as well as an offer of $2,000 to quit if they don’t feel they are a good fit.

IBM – IBM’s “Assimilation Process” came out of an accounting of how much time and resources are spent on recruiting and hiring and how important (and economical) it is to successfully integrate and retain new employees. IBM’s year-long onboarding process has three steps to welcome new hires, prepare a functional workspace, introduce new people to the existing workforce, clarify roles and responsibilities, complete paperwork, and ongoing coaching and connecting so employees are fully invested in the company culture, position, and workplace.

Microsoft – Onboarding at Microsoft is a mission to enhance the new employee experience for the thousands of employees hired each year. Although HR professionals at Microsoft work as a team to create and sustain a high quality framework that supports business goals, onboarding is considered everyone’s job and team members welcome, support, and mentor new employees.

Dr. Bauer has filtered her extensive research into onboarding and defines the following best practices:

  • Start to prepare for new employees before the first day on the job.
  • Plan to make the first day special.
  • Use formal orientation with a written onboarding plan that is consistently implemented.
  • Make onboarding participatory, not boring lecture-style and use technology and engage stakeholders in the program.
  • Monitor the program over time and use milestones such as 30, 60, 90, and 120 days on the job, up to a year after the first day.
  • Make sure objectives, timelines, roles, and responsibilities are clearly defined for new employees.

If your company experiences high turnover, take a look at your onboarding process and improve it. It affects new hire satisfaction and retention, as well as the bottom line. Can you afford not to develop better onboarding now?

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