Ask any business leader what their top goals are and the answers will likely revolve around the same couple themes: Company growth and increased productivity. There’s a million different ways to approach these goals and a million more ways to achieve them but there’s one specific, high-impact area that most leaders tend to overlook in pursuit of productivity and growth. It’s an area that is so vitally important that the effects of getting it right (or wrong) literally last years into the future and even have the ability to greatly increase the value derived from an employee’s work over the course of their tenure. Impact like that should have any growth-minded leader salivating. So, what’s the secret sauce?
A great onboarding experience.
Companies that desire to jumpstart productivity and engagement should invest in great onboarding experiences for new hires. Again and again, research shows that providing a strong onboarding process is crucial for employee growth, performance, and retention.
We Have to Talk About Retention
It may seem counter-intuitive that onboarding could have such an impact on an employee sticking around further into their tenure. After all, onboarding is really just about the start of an employee’s journey, isn’t it? It turns out that first impressions matter for employers, too, though. According to a study by the Society for Human Resource Management (SHRM), employees who experience a structured and comprehensive onboarding process are 69% more likely to stay with a company for at least three years. Three years may not seem like a long time but in a market where average turnover is well in excess of 11% YoY, greater employee retention also means greater knowledge retention, client retention, and–perhaps most important to business leaders–money retention.
Turnover is costly. The most conservative estimates put the cost of losing an employee at 33% of annual salary with most estimates putting turnover costs between 100 and 150% of annual salary.
Additionally, a well-designed onboarding process can lead to higher levels of job satisfaction and performance. In a Harvard Business Review article, author Michael Watkins found that employees who receive effective onboarding reach their full potential faster, and are more productive and engaged in their work.
Why is that so important? Any marketing professional can likely tell you the importance of CLTV and how it’s measured. But when it comes to ELTV, leaders are in the dark. Employee Lifetime Value is the concept of the ROI an employee delivers over the course of their tenure. The gap between employees who reach potential quicker and maintain (or even increase) over their tenure and one who takes longer to ramp up and never hits their maximum effectiveness is extreme when annualized.
In simple terms, companies with strong onboarding processes can see significant cost savings. A study by the Aberdeen Group found that organizations with a structured onboarding program experience a 54% increase in new hire productivity, and a 50% increase in new hire retention.
Making the Investment
Great onboarding may not be cheap but it certainly doesn’t have to be expensive. There are dozens of reputable apps and programs that are available and highly customizable (including our onboarding programs and templates!). While creating a great experience is time-consuming, the upfront investment is almost always worth the cost–as long as it’s done right. When weighing the costs associated with an onboarding overhaul and what time and resources are required to support completing the project correctly, leaders should also consider the cost of not taking any action at all.
The advantages of undertaking a big project like this are threefold. There’s employee engagement and retention, but there’s also the marketing potential a robust onboarding program is likely to boost. Great onboarding experiences boost a company's reputation and employer brand. Employees who have positive experiences during their first few months on the job are far more likely to recommend their company to others and also far more likely to speak positively about their experiences on social media and employer review websites. Any good marketer understands the importance of earned media and this is one of the easiest ways for a company to amplify their employment brand.
Google is widely recognized for their exceptional onboarding process, which includes a comprehensive training program, mentorship opportunities, team building activities, and ample opportunities to interact with other employees across all departments and levels. Sure, Google also has world-class perks and benefits, as well, but there’s no doubt that their investment in a great onboarding program is a leading factor in their reputation as a top employer. It’s no wonder they have zero issues attracting and retaining top talent.
Growth and productivity–they have to start somewhere. And with the right tools, good planning, and a little time, onboarding can be the secret to any business leader’s success. Investing in the first few months of an employee’s journey is not only beneficial for employees, but it’s smart for the bottom line. A great process leads to higher retention rates, improved productivity and performance, a strong employer brand, and ultimately, results in significant cost savings. As a company grows, so should the investment in the most critical time in determining just how successful a new employee will be. Investing in employees' onboarding experience is an investment in a company's overall success.
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