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How Much Does Onboarding New Employees Cost?

How Much Does Onboarding New Employees Cost?

By Mark Swartz
Canadian Workplace Specialist
 
Kay Parkwell* accepted a job offer as Customer Service Manager at a call centre some months ago. The company had been very professional in its recruiting efforts, making her feel welcome and wanted.
 
But they dropped the ball when it came to helping Kay “onboard” properly. Kay’s new boss was too busy to meet with her until midway through the second week, leaving Kay unsure of what to get started on. The mentor she’d been assigned resigned a week before Kay’s arrival. No one had been picked to replace him.
 
Even basic arrangements were a mess. There was neither a phone nor computer in Kay’s office for six days after her arrival. A package of forms to fill out immediately was handed to her day one without instruction. No one took her out for lunch to make her feel part of the team.
 
Three weeks in to her job Kay resigned in frustration. “I felt like I’d been hired and forgotten about,” she said during a hasty exit interview. “If this was how the company treated its new hires, who need all the support they can get, then surely they’d have left me dangling later when important decisions had to be made.” She didn’t stick around to find out.
 
Onboarding The Right Way
 
According to a June 2006 study conducted by the Corporate Executive Board, about 4 percent of employees leave a new job after a "disastrous" first day. Think of all the wasted time and money spent in the recruiting process if your new hire jumps ship early on.
 
There are two basic components to look after when bringing someone new into your workplace. You have the mechanical aspects such as getting necessary forms signed, setting up the person’s office and gear for them, making sure they have a security pass or key, providing passwords for their computer, and supplying other tools/equipment if required.
 
Then come the “soft” elements. These tend to center on helping the new employee get accustomed to their surroundings and do their job correctly. Mentoring, training, introductions to the team, talking about the culture of this workplace, all should be addressed.
 
Is Onboarding Expensive?
 
How much would it have cost Kay’s employer to onboard her properly? Well, they’d have had to invest in the following:
·         an orientation session to inform the new hire of procedures, rules, who’s who
·         time for her to fill out required paperwork
·         meeting time with the boss to set expectations, get initial questions answered
·         time with an assigned mentor
·         follow up sessions with boss and mentor as required
·         lunch session that introduces the employee to their colleagues
·         administering a survey at 30 days and three months to check for the employee’s satisfaction
·         any formal training programs that may be required to get the employee up to speed
 
 
Adding up the hours a new hire puts in to completing forms, attending orientation meetings, getting trained and becoming comfortable with the equipment they’ll be using to perform their tasks, you may be looking at three or four days worth of time, plus the real costs of formal training programs and the time value of the new employee’s boss and mentor.
 
The Payback
 
The Human Resources Corporate Leadership Council found that increasing an employee’s
level of engagement could potentially improve performance by 20 percent and reduce
the employee’s probability of departure by a whopping 87 percent.
 
Since it can cost up to 150% of a departing employee’s salary to replace them (taking into account lost productivity, recruiting fees, retraining, and other outlays), it doesn’t take long to see how cost effective an effective onboarding program can be.
 
Add it up for yourself. Consider the money you’ll save and hassles avoided by bringing new employees into your organization in ways that help them feel welcomed and equipped to start working quickly.  Do so and you will likely keep your own Kay Parkwells engaged, productive and loyal from their very first day aboard.
 
*Real name disguised for reasons of privacy.