Strategic Employee Onboarding

The many obvious — and not so obvious — benefits of getting new hires up to speed quickly and into your organization's mainstream.

March 20, 2008
by Sukanya Mitra

Onboarding — the process, which includes interviewing, hiring, orienting and successfully incorporating new employees in your company's culture so they become productive faster — has become a hot topic for many companies, thanks largely to the recent talent crisis. Some eye-opening statistics from Cornerstone OnDemand, a firm that offers talent management solutions, include:

  • The 500 largest companies will lose 50 percent of their senior-level managers in five years;
  • The average tenure of company loyalty in the U.S. is three years; for employees who are 18- to 24-year-olds, it is only 18 months;
  • The U.S. will face a 10 million worker shortage by the year 2010;
  • 70 percent of companies report a moderate to severe leadership shortage; and
  • Replacement costs for management-level positions can exceed 150 percent of annual salary.

Prospective employees form opinions of their employers early in the recruiting process. They are most likely to leave a company within the first 18 months of their tenure and 90 percent of new hires decide in their first six months on the job whether or not they're going to stay with the company. Still think first impressions don't matter?

Definition and Purpose of Onboarding

As David Somers, Director of Consulting Services for Cornerstone OnDemand, pointed out at a recent HR.com Webcast, "Onboarding begins with the first contact you have with a prospective new hire and actually ends with the conclusion of their employment at the company." This includes the entire stay of the employee at the company. It shouldn't be just the first few weeks that an employee is on-board, but should continue throughout the time the employee is working at your company.

Why should you onboard? Simple. Onboarding welcomes new employees and gives them a sense of value, allowing them to fit into your corporate culture by using your corporate resources, such as business-specific methodologies and approaches, and it provides a consistent experience for all new employees.

What does onboarding entail? Most companies see it only as a new employee orientation, said Somers, consisting mostly of forms and checklists, usually lasting one day or less, and viewed purely as an HR function. Somers notes that onboarding has evolved into something far more complex. "It is really separate from the hiring and training process, it is more about the culture setting." According to Somers, in some of the more advanced cases, onboarding has become "completely integrated with the hiring process" and includes socialization, using company technology to facilitate that process and has largely become a business function. He emphasized that since this is the first experience that a new employee has with a company, it is very important that this be a positive experience.

Goals of Onboarding

"One of the tactical goals, but a necessarily evil is completing the required paperwork" that comes with every new employee, said Somers. Other strategic goals of onboarding include increasing employee retention, improving employee engagement, providing consistent company information to all new employees and providing relevant information, such as benefits information, to all employees.

Somers said this last part is especially important to many large companies these days that have decentralized their HR departments and, depending on where the new employee is hired, oftentimes are treated and trained differently from one location to another. And from your standpoint, it is just as important for you to understand each employee's expectations.

Benefits of Onboarding

Besides improving employee retention, "it also increases visibility for new hires," said Somers, especially now when many firms send out information to new hires and often lack tracking methods of who received what information. Onboarding helps in keeping information organized and determine where these employees are in the process. It can also improve customer satisfaction by bringing employees on board and having them be productive faster. "They understand the company better, they've been initiated into the company culture and this leads to customer satisfaction," added Somers. As some of your best recruiters are your own employees, Somers said onboarding also strengthens your company brand by giving new employees information about the firm that makes them feel proud of the company they work for.

How do employees benefit? As new employees become familiar and comfortable with their job roles and learn about company culture and job-related resources, they start to build relationships and grow their network. The faster they become familiar with the job and your resources, the more productive they are likely to be. Today, many companies are creating informal learning processes and a lot of the networking is being created in these sessions. It is an opportunity to align the employee's expectations and "once again, make them feel engaged and valued from the get go".

Last Thoughts

Onboarding does have a few low-hanging fruit that your company can go after such as administration, cost-savings and time-savings. When you delve into compliance and productivity, that is where onboarding comes into play and with continuous and consistent onboarding strategies, you can affect retention and morale. Bottom line: conducting onboarding continuously and consistently in your company will reduce employee turnover, lower processing costs, ensure compliance, especially with the immigration and nationality service and last but not least attract more top performers.

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Sukanya Mitra is Managing Editor of the AICPA Insider™ e-newsletter group.