Nick Roi: Cost-effective onboarding

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If you are not familiar with the word ‘onboarding’, the chances are you will have come across the concept under another umbrella term such as ‘orientation’ or ‘induction’. However each word does have a slightly different connotation; while orientation refers to a hire’s first day in their new role, onboarding is the practice of integrating that employee successfully into an organisation, a process which can take days or even months.

Onboarding can be broken down into two distinct types, though often both will be used concurrently. They are acculturation and transactional onboarding.

Transactional onboarding involves preparing team member for day one of their new job. This includes completing all data transfers, tax or benefit forms, policy documents and company contracts. Once finalised, the employee is cleared to begin work. The second phase of onboarding is acculturation; the process of transferring an employee into their new position. The aim of acculturation is to raise a staff member’s understanding of the organisation so that they can reach full productivity as quickly and smoothly as possible.

How a business implements effective onboarding will depend on its size and structure as well as location – does it have bases in multiple global territories? Transactional onboarding, for instance, is particularly beneficial for companies distributed across multiple locations. As a basic rule of thumb, a company that hires regularly throughout the year and has an HR department spending a sizeable amount of their time on onboarding practices will benefit from the use of automated onboarding software that manages both phases.

An online onboarding tool can have immediate cost benefits for a business. It instantly negates the need for a costly paper system, offering simple and automatic solutions instead. Aside from being eco-friendly, onboarding software can cut down on the administrative costs of postage, storage, down-time (while documents are in transit) and, of course, labour.

There are four key areas in which businesses can save money through successful onboarding:

Reducing administration

Often, the first day at a new company is spent filling in forms and reading policy documents or contracts. It is a task that can take hours or even days, with some individuals affected more than others.

Every hour an employ spends signing forms and reading handbooks is an hour which could be spent getting familiar with their new role, and is an hour in which HR teams lose valuable time to paperwork and administrative procedures

A case in point is McLeod Health. The American healthcare organisation reviewed its onboarding process, finding that new hires had to sign their name 33 times during their orientation day. To streamline the process, the company implemented a web-based onboarding solution which made it possible to manage and track forms electronically. They subsequently reduced this number to zero. They also shortened orientation sessions by eliminating rudimentary information.

Using onboarding software, employees can be invited to access the tool before their first day, reviewing important information in advance and signing off crucial documentation without eating into the time of existing staff members.

Eliminating errors and omissions

The greater workload a person has, the greater chance there is for errors to occur, so when a company is hiring hundreds, if not thousands of people each year, it would be surprising if mistakes didn’t creep in. The opportunity for fault increases further with the inclusion of labour laws – which vary between territories – and internal company policy.

New hires also make errors, leaving out vital information or incorrectly completing forms. Ensuring accuracy is time-consuming, and those mistakes that aren’t noticed can easily be distributed in the system and repeated again. An incorrect tax code can be a costly error for the employee and an extra burden for the accounts team.

One global engineering and consulting firm reviewed its induction method when it noted frequent logistical breakdowns in the information and technology portions of its onboarding process. It used onboarding software to allocate and track roles assigned to various staff members. The result was a 70 per cent reduction in administration plus the elimination of process inconsistencies.

Software smoothes the process of recruitment, eliminating the use of unnecessary documentation and ensuring that new hires fill out online forms correctly and completely.

Improving time to productivity

The longer a new starter takes to settle into their role, the more they will cost their employer: an IDC report stated that new employees who don’t understand their role cost US and UK companies approximately $37 billion every year.

But people are often busy and this can impede their ability to help an employee settle in. It’s a stressful situation for everyone involved but efficient onboarding can regulate the process. It can ensure consistency from one hire to the next and next and vastly improve their time to profitability. For example, after investing in an onboarding system the previously mentioned engineering and consulting firm reduced the time new hires took to become fully productive by 40 per cent.

Life events such as maternity leave, transfers and offboarding can all be managed far more effectively if a proper onboarding process has been followed. Planning for these periods can be handled through online learning programmes and by creating and storing all training documents and user guides online where staff can easily access them. It can also be used to manage those people who struggle to fit training into their already busy schedules.

Reducing staff turnover

It is just as much the role of an employer to impress their employee as it is the employee’s responsibility to make a positive impression. The impact of a new hire’s onboarding can be illustrated by statistics which say 70 per cent of employees decide whether to stay at a company within the first six months. Employees that are happy with their new company are likely to stay at least 18 to 20 months before reassessing their role.

With the use of onboarding software to ease the transition of new hires into their roles, the aforementioned engineering and consulting firm decreased its turnover of recent employees by more than 6.5 per cent. Conversely, one high-profile organisation we came across exhibited an extraordinarily high turnover of 22 per cent within the first three months. New staff would turn up and find they had no computer, no office and, sometimes, no desk. Understandably they were unimpressed.

This is an extreme example of the importance of “day one” readiness and illustrates the value of both first impressions. Onboarding software could have provided the company with a checklist for existing employees to ‘tick off’ in preparation for the new hire, and would have reminded anyone who had forgotten to complete their tasks. If any one person had an extra heavy workload, this would have been flagged so that the HR team could redistribute responsibilities and ensure a well oiled process.

With the cost of recruitment reaching 50 per cent (sometimes more) of the person’s salary, boosting retention is surely worth the investment in automated onboarding software.

While some businesses can manage onboarding manually, our experience suggests that only the smallest and most static companies fail to reap benefits from automating through software – making it a resource most organisations can’t afford to be without.

By Nick Roi, managing director of SilkRoad UK, providers of talent management solutions

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  1. We use technology in the context of on-boarding in a different way. We create on-boarding simulations which take experienced managers just joining firms through the whole business process/cycle on their new employer. New employees are put into teams and make a series of decisions about their real business. Mentors provide feedback to each team. The whole thing is delivered on-line and feedback has been terrific. Costs compared to flying people all over the world to an induction programme are minimal and the outcomes are important. Managers understand where “their bit fits” in the context of the firm they now work for and how their decisions impact on other parts of the business and on financial outcomes. The simulation also builds a sense of community that helps retain employees and builds networks across the business. Deborah Cardwell, Learning Dynamics Ltd

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