What is onboarding?

The average employee retention rate in the United States ranges from 70% to 85%. Considering that a "good" retention rate is 90% or higher, those figures offer room for improvement—that’s where onboarding can help. Onboarding is all about how organizations integrate and prepare new employees for new roles, and when done correctly, directly improves retention rates, employee engagement, and productivity.

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You might already be familiar with recruiting and employee orientation, but what about the employee onboarding process? Often, organizations feel that if their orientation seems good enough, there is no need to focus on or work to improve their employee engagement onboarding process. However, it is worth the effort, particularly If you're interested in retaining your employees, making them part of your company's values, and functioning as a productive organization.

Much has been written about the benefits of onboarding—the reduction in manual effort, the reduced time to productivity, and increases in employee retention. Published data builds the case for a strong ROI as well: UrbanBound estimates that UK and US companies spend $37 billion dollars annually to retain unproductive employees who don’t understand their jobs, while, amazingly, 35% of those companies spend $0 on onboarding.

These statistics show how much is wasted by poor or nonexistent onboarding, but what are some reasons for investing in more sophisticated onboarding processes? Through better onboarding practices, employees are more likely to see the benefit of working for your company. This ultimately leads to employees wanting to engage and contribute more to their work.

What is the difference between orientation and onboarding?

The differences between employee orientation and onboarding may seem insignificant, but they are not. Most employers offer standard, basic orientation for new employees but providing this alone isn’t enough to improve diminishing retention rates.

Orientation involves making sure the new employee is clear about start dates and times, assigning a workstation, reviewing human resources (HR) policies, and sorting necessary paperwork. An orientation session usually doesn't last more than a few hours, or in some cases, a few days. An orientation is minimal and addresses only what is necessary for a new employee to figure out what he or she is meant to be doing.

How long does the employee onboarding process take?

Employee onboarding is a much more extensive process that can last up to 12 months. While this might seem like an excessive amount of time to spend on new employees, it can prove valuable in the long term. Spending this prolonged period with new employees allows them to immerse themselves in how the company works. This immersion comes from training and exposure to resources that allow employees to understand the role they play within the company and not simply HR policies.

Through extensive training, employees become better in their roles, which in turn helps improve employee retention and employee satisfaction. So how can switching from orientation to onboarding make such a difference? Let's take a closer look at the employee onboarding process.

The best employee onboarding process immerses employees into company culture

Many employees leave their job because of dissatisfaction and feeling underappreciated by their superiors. If finding the best talent, employee retention rates and engagement are important to your organization, an effective onboarding process is likely in order.

With employee onboarding solutions, it is important that employers see employees not only as workers but as people too. This involves listening to your new employees, hearing their concerns, and making them feel valued.

By paying attention to the stories that your employees have, these employees are more likely to care about your company's story—and goals—in return. Doing so inspires employees to care more about the company they're working for and can increase their engagement while at work.

The onboarding process is also a great time to build trust with employees and make it clear what is expected from them. Informing what the company can do for employees is beneficial as well. This can include mentioning opportunities for advancement, incentives, corporate events, or company benefits.

By taking the time to show that new employees are valued, there is no risk of any employee feeling like they were left behind or unappreciated. In the long run, this can be very beneficial for your company.

Benefits of onboarding software

Engaged employees come with their own benefits, including higher quality and quantity of work production. Engaging employees via onboarding not only improves the work of your employees but your company's reputation and balance sheet as well. Specifically, benefits of employee onboarding include:

  • Reduced time spent on manual tasks
    Many companies still spend a great deal of time manually performing onboarding tasks (gathering, sending, and tracking down completed paperwork, creating employee files, etc.,). Automating and streamlining the onboarding process with cloud onboarding software reduces this manual effort and cuts costs.

    For example, one of our clients, a 60,000-employee health system, measured the time their onboarding team saved on what were once manual tasks after implementing Oracle Human Capital Management onboarding component. Onboarding with Oracle HCM reduced the onboarding time of each hire by more than 45 minutes. After breaking down this estimated time saved per “onboarder” into dollars using an average salary of $60,000 per year, along with the company’s average of 7,000 hires per year, the savings amounted to more than $150,000 per year. This not only contributed to the company’s ROI, but the reduction in time spent onboarding allows for 4,000 hours to be applied to more strategic HR activities.

  • Shorter time to productivity
    While there are many variables contributing to this metric, we will focus on two of them. One is what our healthcare client referred to as “time to get here.” In other words, how quickly can an organization get from “offer accepted” to “day 1” to begin training and get a new employee on the path to productivity?

    By streamlining and automating the activities between acceptance of the offer and the first day of work, the company was able to get new hires behind their desks a full week earlier than without Oracle HCM Cloud. What would an additional week of productivity look like in your organization, and how would that contribute to your bottom line?

    The other variable in time to productivity is the shift to “pre-day 1 activities” or taking those non-work-related activities (such as form completion) away from new hires on their first day on the job and instead handling these tasks as paperless onboarding before their first day. By doing so, the new employee can focus on job training and other more important activities on the first day rather than filling out forms. If we estimate just an hour of savings per hire and more than 7,000 new employees per year, we have now converted more than 7,000 hours of less-important activities to work that contributes to the bottom line.

  • Reduction in turnover
    Turnover is an obvious cost that adversely affects the bottom line. Going back to our healthcare client, retention data for both the first 90 days and the first year were available for the periods before and after implementing Oracle HCM Cloud. Turnover for new hires within the first 90 days decreased from 10.3% to 8.2%, and first-year turnover decreased from 26.1% to 22.5%. If we quantify the first-year improvements using a conservative estimate of $5,000 as the cost to replace an employee (many studies have this number as high as 1.5 to 2x annual salary per employee) and we hire 7,000 people per year, that translates to savings of more than $1,260,000.

  • Improved new-hire experience
    Finally, when onboarding is done correctly, it can be dynamic and engaging and provide a positive experience for new hires. Some of the more compelling reasons to consider Oracle HCM Cloud Onboarding include the ability to complete time-consuming forms electronically before the first day of work; a more seamless transition to onboarding activities; the elimination of redundancies in data entry; and the presentation of content that promotes the culture of your organization. As shown by the numbers above, these benefits affect ROI in the long term.

The consequences of a high turnover rate

When a company has a high turnover rate, it's a bad sign. A high turnover rate is often very expensive for organizations because of the time and money that needs to be spent to find new employees. When managers and senior-level employees quit, this can cost a company hundreds of thousands of dollars - something any organization doesn’t want to spend money on.

These expenses over time start to damage the company's work output due to an endless cycle of new employees that need to be trained. However, soon after training, if the employee is unsatisfied, they may already be thinking about leaving the company. With a workforce of mostly new and uninterested employees, a company's quality and reputation can suffer.

A great onboarding process can solve this problem.

Instead of spending money constantly hiring employees, a company can invest its money into onboarding. Onboarding is less expensive and in the long term, can save the company money.

Onboarding best practices

It is important to realize that every new employee is full of potential. By ignoring that potential, your company could suffer expensive and unnecessary losses. By valuing that potential, however, your company and your employees could be very successful.

It all starts with welcoming your new employee. By welcoming a new employee to the team, they will feel less nervous and uncomfortable. They will also be more likely to talk and ask questions.

After training the new hire for some time, it is important for the supervisor to speak one-to-one with the employee. This is an opportunity for the supervisor to review the work the employee has already done and provide constructive feedback.

Feedback is important to new employees as it helps them understand what they are doing right and what they are doing wrong. It also gives them the goal of having something to improve upon.

It is important that these feedback meetings take place at regular intervals, such as once a month. This illustrates to the employee that they are supported and not left to fend for themselves. These feedback meetings are also important for the company since they gauge how well new employees are doing at work.

Onboarding: career development and opportunities

Even if you follow all the onboarding practices mentioned so far, your employees still might become unhappy after a few months of work. Why might this be? Often, this is the result of employees feeling stagnant in their work and being unable to develop their career.

By discussing possible career opportunities with new employees, this will give them something to look forward to. When employees have something to anticipate, they often work harder to reach their goals. Overall, this is great for employee performance and engagement.