The Data Says We Have an Employee Onboarding Problem

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Business owners, at large, are failing to execute structured employee onboarding programs, despite recognizing the importance of such programs, according to an analysis of several small business reports.

79% of business leaders say onboarding is an “urgent” and “important” priority, but only 30% admit to executing a plan.

That’s unfortunate. Onboarding isn’t a process that should be missed. It’s arguably the most important aspect of a new employee’s lifecycle with a company.

Left unaccounted for, or botched altogether, companies risk losing employees early. As much as 20% of turnover occurs in the first 45 days on the job, and 4% of new hires won’t come back for a second day of work if day one was disastrous.

It your employees don’t feel engaged in their work or confident in their roles, their output suffers. There is no productivity killer like lack of care or self-doubt.

“Onboarding is, not only, the induction of a new employee into an organization, but is the dynamic process of ensuring new employees have the knowledge, skills, and organizational awareness to become committed, effective members of the [team].” — U.S. Office of Personal Management

The gap between knowing the importance of onboarding in theory and actuating real “roll-out-able” plans, is a costly oversight both in qualitative factors such as lessened productivity and brand reputation, as well as economic factors like revenue per employee.

Why don’t companies execute structured employee onboarding programs?

Realistically, there are a host of reasons why businesses don’t complete a robust onboarding program:

  • Greater (perceived) priorities of the business
  • Lack of time
  • No manager to do conduct onboarding
  • A lack of process or onboarding framework
  • Pressures to get a new hire working quickly
  • Buy-in or support from upper management can also mar the development of onboarding programs, especially if that means new hires must away from the office for a full day, or more.

Slowing down and making the first few days could lead to employees getting up to speed faster. And what’s a few extra days of employee training compared to the total time it takes to hire and recruit a new employee? It takes a small business 36 days to fill a job role, on average.

A growing body of research supports the correlations between strong onboarding programs ultimately and high employee performance. Moreover, well onboarded employees are shown to:

  • Care more about their jobs
  • Care more about the organizations that they are working for
  • Feel greater dedication and loyalty to their employers

Indeed, employees who participate in a structured onboarding program are 69% more likely to stay with an organization for 3 or more years.

Companies that excel at onboarding not only experience high employee retention, but also boost financials up and right. Companies with good onboarding experience 2.5X the revenue growth and 1.9X the profit margins compared to companies who are found to be lacking at onboarding.

Instinctively, retention and revenue are linked. Employees with longer tenure have better mastery of their job functions, can take on more diverse projects, and have earned greater influence to make decisions with peers.

And if the upside of good onboarding isn’t compelling enough, there’s the costly downside of employee turnover in its absence.

Turnover costs a business about 1/5 of a worker’s salary to replace that worker, according the Center for American Progress’s meta-analysis of 30 case studies “taken from the 11 most-relevant research papers on the costs of employee turnover.”

So for instance, if a worker was making $50,000, their turnover cost would be: .2 * 50000 = $10,000.

A selection of high-earning jobs and high-skill jobs, increase that rate, substantially. Some roles cost over 200% of salary in turnover costs.

Those figures could be crippling for small businesses, who may not have budgets set aside for re-hiring.

“Indeed, it is costly to replace workers because of the productivity losses when someone leaves a job, the costs of hiring and training a new employee, and the slower productivity until the new employee gets up to speed in their new job.” —Heather Boushey and Sarah Jane Glynn, CAP

Tips for rolling out your first onboarding program

So how do business owners build an effective onboarding program?

Here are some tips about getting buy-in for better on-boarding, and executing those plans across your organization.

Step 1 - Get familiar with what “a structured onboarding plan” means

The first step is understanding what goes into an onboarding program typically. Then assess your business’s unique needs, requirements, and processes to cultivate a customized program.

Step 2 - Use an employee onboarding template to get started

In the modern workforce, there’s a template for everything, including employee onboarding. Check out this template which is packed with best practices, checklists, measurement frameworks, and key questions to ask when building your program.

Step 3 - Execute, and validate

Unfortunately, the best onboarding would be hard to measure. It’s quicker and easier to see that lack of a program, in the form of employees who quit their jobs early, than demonstrate the value of retention, loyalty to role, and how productivity is related to employee engagement. But, it’s never too late to start tracking.

High functioning employees are at the foundation of many great companies. Invest early in your employees and we assure you, you’ll feel the positive impact.

This article is intended only for informational purposes. It is not a substitute for legal consultation. While we attempt to keep the information covered timely and accurate, laws and regulations are subject to change.

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