How much do hiring and onboarding cost?

50% of hourly workers leave new jobs within the first 4 months. Learn how much hiring and onboarding new employees cost your company. Read more.


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money sign: cost of onboarding

Hiring and onboarding new employees are important steps to grow any business. And research shows that a company’s approach to these processes significantly impacts the average duration of employment.

According to SHRM, 50% of hourly workers leave new jobs within the first 4 months. With this in mind, it’s not difficult to understand why more and more companies are starting to invest in digital HR platforms that automate hiring and onboarding.

But how much do hiring and onboarding actually cost a company? To answer this question, we’ll need to first understand the difference between these two important employee stages.

What’s the difference between hiring and onboarding?

Hiring is the process a company uses to attract and employ individuals. Onboarding, the process that follow hiring, is the approach a company takes to get new employees up-to-speed on their expected roles. More eloquently explained by SHRM, “onboarding helps new hires adjust to the social and performance aspects of their jobs so they can quickly become productive, contributing members of the organization.”

Stages of Hiring

Stages of Onboarding

  • Development of job description
  • Publishing and distributing job post
  • Reviewing applications (ongoing)
  • Meetings to select top applicants
  • Initial email communications with candidates
  • Phone screens
  • Developing and sending skills assessments
  • Reviewing skills assessments
  • Onsite interviews
  • Travel costs for non-local candidates
  • Final interviews
  • Offer letters and negotiations
  • Initial paperwork
  • IT efforts and time
  • Costs of computer, phone, etc.
  • Workspace set-up
  • First-day orientation
  • Team introductions
  • Training on job duties
  • Setting high-level expectations
  • Training on company processes
  • Workplace culture exercises
  • Intros to clients, partners, consultants, etc.
  • Ongoing feedback & mentorship

Related blog post: 6 Reasons You’re Missing Out on Talented Hires

How much does onboarding a new employee cost?

The total combined cost of hiring and onboarding a new employee is different for every company – and for each role within a given organization. The cost of hiring will depend on the investment into the above considerations, which will likely vary for a given company based on the seniority of the open position.

According to HROnboard, onboarding each new employee costs around $400. This, of course, is an average that’s meant to provide employers with a benchmark.

When does the hiring process end and onboarding begin?

At Zenefits, the onboarding experience begins as soon as a person signs an offer letter. We know how crucial an employee’s first few months are to her or his success and happiness, so we don’t waste any time in integrating new employees with our people and processes.

For many companies, these two stages overlap. There isn’t a one-size-fits-all approach to successfully hiring and onboarding, but engagement is key. In fact, to highlight the importance of this stage, Harvard Business Review prefers to use the word “integration.”

“Integration” suggests a more aspirational goal—doing what it takes to make the new person a fully functioning member of the team as quickly and smoothly as possible.

How do we retain employees after onboarding?

According to research from the Corporate Leadership Council, companies that shift from a culture of disengagement to high employee engagement reduce the likelihood of departure by 87%.

To engage employees, a company must prove how each employee’s role contributes to the organization as a whole. Corporate Leadership Council expands on this:

“Most important among the 25 highest-impact drivers of engagement are a connection between employees’ job and organizational strategy and employee understanding of how important their job is to organizational success. Also critical for increasing engagement levels are numerous manager characteristics, as well as cultural traits—predominantly, good internal communication, a reputation of integrity, and a culture of innovation.”

Whether you prefer to “onboard” or “integrate” employees, it’s clear that there isn’t one path to successfully welcoming new hires. Despite this, taking a personal and compassionate approach will ensure that your onboarding experience won’t push a person out the door prematurely.

Related blog post: Top 7 Tips to Increase Employee Productivity in 2017

This blog post was originally published on May 8, 2017, and has since been updated.


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