HR 101: What is a New Hire Probationary Period and Why Should You Have Them?

82% of hiring managers saw signs the new hire would fail. These numbers illustrate how valuable a planned probationary period can be to assess every new hire in your company.

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HR 101: What is a New Hire Probationary Period and Why Should You Have Them?

Here's what you need to know about new hire probationary periods and why you should have them:

  • Probationary periods protect both the company and th new hire.
  • There are three key performance indicators (KPI) you should be assessing during probation
  • The effectiveness of the person assigned to train the new hire is important.

You bring on new hires with the potential to be long-term, highly valued members of your organization. On their first day, they’re anxious, excited, and ready to begin. Your existing team members who onboard and train your new hires invest resources and energy to get them up to speed.

Some new hires simply don’t work out. Some don’t show up for their first day, others can’t get the hang of the work, still, others can’t find their place within the group. It’s frustrating for all involved and costly for your business. New hire probationary periods are one solution businesses use to assess new hires and cut their losses, if necessary, when the employee just isn’t going to work out.

What is a new hire probationary period?

A probationary period is a set amount of time you allocate to training and assimilating a new hire. Some companies have probationary periods as short as 30 days: others as long as six months or beyond. The work’s complexity should guide how long the period should last. The easier the job is to learn, the shorter the probation. The longer it takes to get up to speed, the lengthier.

For many companies, probationary periods are a hedge against unemployment claim benefits. For example, if your new hire isn’t working out within the first 30 days, separating from them before they meet the eligibility requirement to earn unemployment benefits through your organization’s plan is a best practice. You’ll want to access your state’s unemployment compensation website to determine what length of employment determines when your company will be liable for claims.

What is “at-will” employment?

Beyond mitigating unemployment risk, probationary periods structure ‘at-will’ employment. Employment-at-will is a legal term that outlines that the employee and the employer are under no contract to continue the business relationship. Employees may resign, and employers may terminate them at any time without providing a reason or just cause.

Most states are considered at-will employment states except Montana, which is only at-will during a probationary period. In 14 states, there is an implied contract exception to the at-will agreement. These implied contracts are difficult to prove, and the burden rests on the employee. But the exception means an employee can’t be fired when an implied contract is formed between them and the employer. Probationary periods are typically considered an exception to any at-will agreement – either legal or implied. They provide the employer with a grace period to assess the new hire and determine whether or not they’re a good fit for the work and the organization.

It’s vital to let recruits and new hires know there will be a probationary period, beginning on their first day and when it will end. Let them know you’ll be meeting near the end of the probation to discuss milestones and achievements.

What are the chances of success?

Pre-pandemic, about one-third of new hires resigned their position within the first 90 days. In today’s market, those numbers are much higher. When it comes to terminating new staff members, the metrics are troubling. A survey from Leadership IQ of over 20,000 new hires and 1,400 HR Executives found 46% of new hires will fail within the first 18 months. Of those, 89% will fail because of their attitude – only 11% because of lacking technical skills.

One of the most surprising metrics from the study revealed that 82% of hiring managers saw signs the new hire would fail. These numbers illustrate how valuable a planned probationary period can be to assess every new hire in your company.

How to structure probationary periods

A probationary period allows businesses to set performance goals for the new hire. If the goals are met, the employee continues past probation: if not, they are let go. New hire training factors heavily. Set realistic timelines for training that outline when they should be learning and when they should have mastered a skill or responsibility.

There are key performance indicators (KPI) you should be assessing during probation. These address:

  • Execution of duties
  • Emotional intelligence
  • Integration with the team.

Use the probation period to evaluate where the new hire rates in these areas.

Building a knowledge base

It starts with the most basic information – this is where you sit – and builds to the most complex tasks that need to be mastered.  Consider how quickly the fastest learner on your team got up to speed as well as the slowest. Then set a timeline somewhere in the middle. Depending on how complex the work is, the timeline will need to be adjusted. You can’t expect every new hire to hit the ground running, but you don’t want to have to keep repeating the same instructions over and over.

Make sure whoever is providing the training is competent, patient, and has the time to instruct the new hire without distractions or interruptions. Often new hires aren’t able to learn because they’re not being taught. Make sure the investment you’ve made in recruiting the newest staffer is met with an investment in proper training, or you’ll be starting the process all over again.

Two-way communication

Look for new hires that are strong communicators and listeners. They should be able to accept correction and feedback professionally and make adjustments accordingly. They should also ask intelligent questions and communicate with others effectively.

No one works completely alone. New hires will have to collaborate and cooperate with others successfully. New hires may be shy and unassuming. Still, they’ll need to develop productive communication methods with their peers, managers, and other stakeholders. If they’re unable, productivity will suffer. Look for effective communication skills that grow during the probationary period as their confidence and comfort levels increase.

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Independence

Evaluate how long it takes the new hire to become relatively independent. They won’t be running the department in a few short weeks, but they should have mastered most of their assigned tasks in a reasonably set timeline. If they haven’t, you may have to consider whether it’s the trainer or the trainee’s fault.

Beyond basic mastery, look for problem-solving skills. Independent workers leverage their existing knowledge to determine a course of action. If they encounter a situation they haven’t met before, are they able to work out how to resolve it? You won’t want staff members to reinvent the wheel, but you do want them to use the skills they’ve learned to resolve common issues.

Assimilation

The final probation point to consider is whether or not the new hire has become a member of the team. They may not be the most popular in the group, but they should be getting along well with others and building relationships. Team dynamics are easily disrupted. You don’t want homogeny – you want to build diverse teams that bring differing perspectives to the table –  but you don’t want disorder either.

Assimilation doesn’t mean blending in and staying under the radar. It means becoming a part of the group. Participation is key – employees who assimilate well know they can express a new idea or a different opinion professionally and respectfully, and it will be accepted. Look for new hires able to ‘read the room’ and find their valuable place within it.

Assessing milestones and achievements

Before the end of the new hire’s probation, or if there’s a significant issue, talk with them or their manager to discuss how things are working out. Assess whether they’ve reached milestones for:

  • Learning
  • Performance
  • Independence

Then discuss how they’re settling in with the group. Hopefully, the newest team member is on track to becoming a long-term employee.

If they need more training or development, you’ll want to assess whether it’s a worthwhile endeavor. Consider, if they haven’t mastered basic technical skills, whether more time will make a difference. If the issues are attitude-based, there may be very little you can do to correct the problem.

In either case, using the probationary period to your advantage allows you to recognize good hires and correct any bad ones more quickly in the employment cycle.

Wrapping up

New hire probation gives the staff member and the organization a grace period to assess whether or not they’re a good fit. They’re a best practice for businesses and employees.

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