Do the Benefits Outweigh the Costs?Mar 15, 2022
Now that we’ve got a pretty firm grasp on What Onboarding Is & Why It Even Matters, at least with regards to the overall picture, let’s take a look at how effective onboarding can have a tangible impact on our bottom line before we even bother mapping out any specific steps we should consider taking…
According to an article I read on Forbes.com called Onboarding Fail: How You Can Prevent Great Hires From Leaving To Soon, “The lack of effective onboarding is a major reason why companies lose 17% of their new hires within the first three months and why 20% of all staff turnover occurs within 45 days of employment.” Over the last several years, I’ve seen very few companies that have had far more great people asking for positions than they’ve had open spots to put them in! If there really are practical steps we can take to keep the solid candidates we do find, wouldn’t it make sense to do it?
Of course it would, and we’ll dive into that soon. But sometimes just knowing it’s so ain’t enough… Some of us have to understand just how much (financial) pain we’re experiencing before we’re willing to make a change, especially when we’re just not convinced (yet) that making the change really will yield the results we so desperately need!
With that in mind, let’s take a hard look at those turnover costs tied to poor onboarding. Before we even go there though, I think we also need to consider why we’re hiring to begin with. Other than the gubermint, I’m not aware of any organization that hires without having a very specific need; and that really boils down to adding team members because the company is growing or replacing team members who have left for one reason or another.
Let’s start with replacing team members who have left… If it was due to a retirement or promotion, we may have a chance of minimizing the time and expense of getting the new person up to speed, assuming we can keep them longer than 45 days. If we’re replacing someone who left the company for any other reason, it would likely serve us well to understand all we can about why they left if we want to have any chance of preventing the same thing from happening again in the near future. Either way, we can count on it hitting our bottom line! A recent article from Hireology called The Costs of Poor Onboarding estimated that “an employer will need to spend an average of 16-20% of an employee’s salary” just to replace them and that the “total cost of turnover per employee typically ranges from 100-300% of the individual’s salary.”
If we’re one of those companies that’s losing one out of five new employees within the first 45 days, those are some significant dollars to absorb! That’s an even tougher pill to swallow when we’re struggling to find talent to begin with. Since none of us are hiring just for the fun of it, these numbers make a pretty strong case showing why we should be developing an effective onboarding process. But just in case turnover costs alone aren’t enough, next time we’ll consider how long it typically takes to get someone up to speed, as well as how good onboarding can help with that too!