Why Structured Onboarding Matters When Battling Employee Turnover

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Employee turnover can cost businesses productivity and profitability. This article details how a structured onboarding program can help.

Employee turnover is a killer. After you’ve gone to the trouble to recruit, hire and onboard a qualified worker, losing that talent hurts productivity and — ultimately — profitably.

But what causes high employee turnover rates? And how can you reduce them?

There are many reasons an employee might leave his or her job. Not all of them are controllable. But there is at least one contributing factor you can control: your onboarding process.

In this article, we’re going to walk you through a process called “structured onboarding.” This is an organized, proactive process that incorporates forms management, task management, and socialization in the company culture. And research shows that employees who go through structured onboarding are 58% more likely to stay with the organization for three years or longer.

But first, a few things you need to know about employee turnover.

How Expensive Is Employee Turnover?

Very expensive. Replacing an employee who leaves their job can cost anywhere from two months salary to more than double the employee’s annual salary.

A study conducted by the Center for American Progress found that the cost of turnover varies quite a bit by job level. The average costs are:

  • 16% of annual salary for high-turnover jobs earning under $30,000 a year.
  • 20% of annual salary for mid-range jobs earning $30,000 to $50,000 a year.
  • Up to 213% of annual salary for highly skilled executive positions.

So whether you’re compensating your employees at $10 per hour or $200,000 per year, expect to pay thousands of dollars each time you need to replace one of them.

What are the Costs Associated with Employee Turnover?

Nobody can perfectly estimate the cost of employee turnover. There are too many factors to consider, and many of them are difficult to quantify. But according to Josh Bersin of Bersin by Deloitte, when you lose an employee, these are the costs you might rack up:

  • New employee hiring expenses, such as advertising, interviewing, screening, and hiring.
  • Onboarding expenses, such as training and management time.
  • Expenses related to lost productivity. It could take a new employee a year or two to reach the productivity level of their predecessor.
  • Reduced engagement. Keep in mind that other employees might disengage when they see high turnover all around them. This leads to a loss in productivity among the rest of your staff as well.
  • Expenses related to customer service and errors. Your new employees will take longer to complete a task and may not handle customer concerns as well as a seasoned employee.
  • Training  expenses. In a two to three year period, the average business invests 10 to 20 percent of an employee’s salary in training

As you can see, employee turnover isn’t just expensive. It’s harmful to your company culture and your other employees.

Employee Turnover Rates by Industry

OK, we know that employee turnover is expensive, but how bad is it really? The way we’re sounding the alarm, you might think that employees are dropping their jobs like hot rocks. Is it really that bad?

Yes. It might be even worse than you’re thinking.

According to a 2016 study by Compensation Force, the annual turnover rate for US employees is 15.1%. This means that 15.1% of all working Americans left their jobs that year. That number includes voluntary turnover as well as layoffs and firings.

Some industries experience higher turnover than others. The industries with the highest voluntary employee turnover include:

  • Hospitality
  • Healthcare
  • Banking and Finance
  • Nonprofit

Not surprisingly, one of the top reasons employees give for quitting their jobs is a bad cultural fit. If a new hire gets the impression that that the people, customs, and practices at your company just don’t work for them, they are likely to start looking for yet another new job.

That’s why the first 60-90 days are crucial to your employee retention efforts.

The Elements of a Structured Onboarding Program

Every employer should do their best to create an onboarding process based on current best practices. Experience and research shows onboarding is most successful when it increases employee engagement, emphasizes socialization, and puts your new employee on the fast track to contributing to your organization’s success.

This is why creating a structured onboarding program is so crucial. A standardized onboarding program shows your new employees that they are important to you and your company. Showing gratitude, checking in, and making people feel as if they are contributing are all great ways to ensure your new hires feel like part of the team.

A good structured onboarding program typically includes some or all of the following components:

  • A clear plan for onboarding. Give your employees a written outline detailing your onboarding process on day 1. This way, they can see how much thought you’ve put into bringing them on board, and they’ll know what to expect.
  • A discussion with the boss about management style and work ethic. Let your new employees know what you expect of them and what they can expect from you. Are you a stickler for punctuality? Tell them. Do you appreciate employees speaking up in meetings? Let them know. Not only will this help them to know if the culture is a right fit for them, it will help them understand the best way to succeed in your organization.
  • Formal and informal meetings with staff from every level and department at your organization. New hires need to get a feel for the entire organization, even the parts where he or she is not working. Chances are, they will interact with most of these departments at some point. They’ll do their jobs better if they understand how the entire machine operates.
  • A meeting with HR to go over all those pesky forms. A huge stack of paper can be a little intimidating. Have someone help your new employees by walking them through the paperwork.
  • Training on all of your technology. If you have any special software or e-gadgets that your employees use, you’ll need to teach them how to use it.
  • Trainings on job responsibilities. We want to emphasize here that onboarding is not merely training, but training should be a part of it. Teach your new employees how to do their jobs, and how to do it your way. After the initial onboarding, the learning should continue on the job. But at least give them the basic knowledge they’ll need to succeed.
  • Socializing. Some companies take all their new hires out to lunch in their first week. Others might have monthly or quarterly happy hours. It could be as simple as encouraging other employees to make small talk with the new guy, but it’s always a good idea to incorporate some sort of socializing into your onboarding plan.
  • Opportunities to contribute something meaningful. If your employees feel like they’ve made a significant contribution to your company’s goals or their own careers, they are more likely to feel invested in their jobs. Create early opportunities for all new employees to contribute something substantial.

Employers know that high turnover can be detrimental to their organizations. Many factors could lead an employee to leave his or her job, especially poor cultural fit. By implementing a structured onboarding program, you can help your employees fit in from the beginning, and avoid that dreaded turnover.

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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