What’s the Real Cost of Onboarding a New Employee?

7049806_m-700x450Starting a new job can be a daunting process.

There are so many unknowns when you walk in that door on your first day. You have some words on paper with a promise, a phone call or two and the stilted theatre that is the job interview. Agreements are made and the first day arrives.

The problem is, there’s a lot of unknown on both sides. Both the employer and the employee are making a first impression on the other that will make or break their future relationship.

The University of Arizona in the US sits in the summer lands the entire time they’re in session. While the rest of the States are locked in a frigid winter, this university sits in a subtropical desert, making it quite the winter destination. The university itself offers a very comprehensive benefits package, with pension and all the bells and whistles.

Despite all of this, when the US national average for employee turnover stood at approximately 15%, the University of Arizona was experiencing a gigantic 45% turnover within the first two years, with an average of 28% within the first year. Obviously alarmed, the university began polling new employees to see what challenges they faced when beginning employment there.

Despite being academia, the results showed the same issues any new employee faces:

Figuring out the process for getting tasks done, who to ask, where to find forms

From the halls of higher learning to the lowly fry cook, everyone needs to be shown the ropes. There is no feeling more discouraging for a new employee than to be left with no idea what to do while on the clock, and it sets a bad precedent.

Not knowing who to call with questions or lack of help from specific departments

The overworked mentor’s bait and switch: “If you can’t find me, call Sam.” In the normal scheme of things, Sam would be a good choice for answers, but Sam is busy, too, and has little time for training someone. “That’s why we have mentors,” he grumbles.

For the first couple of months – feeling isolated and not meeting many people

The old adage “I didn’t come here to make friends. I came here to make money,” gets thrown around casually but humans are social creatures by nature, and we all yearn to connect with others. People will put up with a lot to work with their friends, and people will work alone if they know the employer is quick to take care of them. When both are missing, you’re going to lose employees.

Understanding, choosing and getting signed up for the benefits package

Of course. The benefits package! The carrot on the stick that made each of these people drop everything and move to the middle of the desert. Quick to offer, but seemingly slow on the provision, this can be one of the most detrimental to the employee relationship.

When you can provide your employee with all the answers they need, as soon as they need them, this builds confidence. When you bolster an employee’s confidence, you earn their loyalty.

More data on employee turnover

LinkedIn recently did a survey of people who had switched jobs and discovered that, out of the turnover in Australia (which stands at 12%) a full 7.7% was voluntary and preventable. Out of the US’s 15%, a full 10.3% was considered preventable.

This makes us think about the true cost of onboarding new employees, and the value of retention. It will cost you, on average, one and a half times the salary of the person who quits to find a new employee when you weigh up the time, effort and lost production.

The three main reasons that the employees cited in the LinkedIn survey listed for switching jobs were: better advancement opportunities, better leadership, and better benefits. These are all things that you would be able to offer with a better onboarding process because, in the end, the cost is far less.

To find out what your current employee onboarding practices are costing you, check out our calculator.