Why The Onboarding Experience Is More Important Than Ever
By
Chase Squires
Why It Matters:
More than 47 million Americans quit their jobs in 2021.1 Enhanced employee onboarding can help with retention.
A third of new hires quit within the first six months.2
Onboarding is more than “orientation,” it’s welcoming new hires to the organizational culture, making them part of the team, and fostering relationships.3
The boss can't even recall my name. I show up late and I'm docked, it never fails. I feel like just another spoke in a great big wheel, like a tiny blade of grass in a great big field. – Bob Seger, “Feel Like a Number”
Onboarding: Key To Retaining New Hires
As The Great Resignation shows no signs of abatement at the start of a new year — 4.3 million American workers quit in December — it’s not enough for employers to hire. They’ve got to do better at retaining those hires. Potential employees are scarce, they’re valuable, and they’re increasingly rare as the unemployment rate could dip below 3% in 2022.4,5
If retention is the goal, it starts with onboarding, those critical first weeks or months when a new hire becomes part of the team. Employees notice this. Onboarding is more than HR forms, tax information, and a visit from IT. Real onboarding can involve a combination of mentors, supervisors, HR, and coworkers and can last up to a year as new hires learn the mission, scope, and purpose of the position while training and gaining new knowledge and skills.6,3
Is it important? A third of new hires quit within the first six months. A recent Harris Poll survey found nearly 10% of employees reported leaving a job because of poor onboarding. The workforce is seeing a significant shift in power from employer to worker. Some 93% of employees say a complete onboarding process is critical to their decision to stay with the organization, yet nearly 30% of organizations admit they don’t do it well. And each employee who gets away costs the organization money, time, and productivity. 7,2 Yes, this is important.
What’s Going On?
As 2021 began, an MIT Sloan School of Management study found about 40% of workers said they were thinking about quitting. As the year rolled on, the numbers mounted. Some 24 million Americans walked off their jobs between April and September — blue collar, white collar, across the board. Over the year, a record-breaking 47.4 million Americans quit. But the survey found some companies did better than others. Workers at companies with a strong culture — Johnson & Johnson, Southwest Airlines, LinkedIn — fared better. If some companies do better, others could, too. Those who quit cited “toxic corporate culture” and poor response to COVID-19 among the leading reasons. 8,1 Culture and corporate effort matter.
By many accounts, the COVID-19 pandemic changed everything, shook us up. Workers reevaluated their lives. That adds pressure to retain the new hires a company attracts and give them a reason to stay.1
And if a third of all new hires quit or look for a new gig within the first six months of hiring, there’s bound to be a consequence. It can cost up to 33% of an employee’s salary, on average, including the time and costs associated with recruiting and hiring, when they leave. For perspective, imagine qualified workers making $50,000 a year leaving; that’s $16,500 leaving with them. And when employers have to find a replacement, there are more costs. A recruiter helping to find a skilled employee can cost up to a quarter of the starting salary. Even the DIY mode for lower-skilled positions — with job boards, internal staff, background checks and training — can cost about $4,000.9,2,10
If finding the right employees matters, then an onboarding process that makes sure they stick around should, too.
Beyond Pay: Benefits
Employees don’t only value pay and culture, the other “what’s in it for me aspect” are benefits. A hasty onboarding process focused only on company needs — the background check, the tax information, proof of legal work status, and the ID badge — and the benefits part of the employment package, a part companies spend a lot of time and money on, can get lost. Does the employee understand the total compensation package?11
In a recent survey, 64% of workers said poor workplace benefits were a cause for quitting. But did they understand the benefits they had? And 77% said better benefits attracted them to a new position.11
Under the stress of the pandemic, employees value “financial wellbeing” tools more than ever. Half of American workers in a sweeping survey sponsored by major financial institutions said they were at least moderately concerned for their family’s financial wellbeing both for today and tomorrow. That means health insurance for today, retirement plans for tomorrow. Those two benefits are the ones most often selected by workers. But nearly a third of surveyed workers said they didn’t fully understand their health benefits, and 46% said they didn’t completely understand their financial benefits. What’s worse is only a quarter said they could rely on HR to help them make decisions.12
Financial benefits can include a well-run, efficient retirement plan including 401(k) offerings, potentially both traditional and Roth and often with a matching employer contribution. But insurance protection, in addition to standard health insurance, could be overlooked during an incomplete onboarding. For starters, there’s life insurance for family protection as well as disability insurance. Then there are flexible spending accounts and health savings accounts (and the “use-it-or-lose-it” vs. tax-advantaged investment approaches), tuition reimbursement, childcare, and fitness and commuting offerings.13,14
If employees aren’t overwhelmed yet, there can be supplemental benefits such as accident insurance, hospital indemnity, dental, vision, critical illness, and cancer insurance. And it’s not unheard of for a new hire to miss information about a floating “use-or-lose” holiday or misunderstand a cash pension plan offering.15,16
Workers say they want more benefits, more flexibility, and more help choosing them. Is a half day of "orientation” with HR cutting it?12
Welcome Aboard: Better Practices
A robust onboarding process could be a valuable business advantage as the Great Resignation rages. Rewards can include better productivity from loyal, experienced employees, cost savings from lower turnover, regulatory compliance, enhanced corporate culture, and more effective management and leadership.17
But how? Even in the COVID era of “online onboarding,” there are steps that may help build a “sticky” onboarding process, a program that can help new hires become longtime hires. Global analytics firm Gallup, with the depth of 35 million respondents in its employee engagement database and more than 80 years of experience,18 developed a few pointers.19
People: Organizations don’t hire employees, they hire people. Build a human connection. The workplace experience is about relationships, not time sheets and W-4s.
Teaching: A list of duties isn’t onboarding. Help a new hire understand the role, the mission, the goal. The overall outcome is as important as an individual task.
Process: Create a deliberate onboarding process. It’s a journey, so where is the start, middle, and end? Go beyond a checklist.
Culture: A company’s culture is more than a mission statement or slogans. Don’t tell new team members about the culture, show them. Create events that demonstrate “your way.”
Engagement: Help long-time employees and coworkers get involved by encouraging mentorship, informal chats, and positivity. A welcome package from the team can make the first day a memorable one.
Managers: A new hire’s supervisor or manager is going to spend a lot more time with them than HR, so why is HR solely responsible for onboarding tasks? Get managers involved.
Metrics: Don’t wonder how you’re doing, know. Attracting new employees is expensive. You keep track of inventory, supply chains, EBIDTA, why not your hiring process?19,3
2022: The Year We Do Better?
Virtually all organizations have an onboarding process. But maybe 2021 demonstrated that some are doing it wrong. Working from home, scarce workers, and stressed workforces may have exposed some cracks in the process. The numbers are there. Companies are stressed, and power has shifted to the employee. It’s time to recognize onboarding is more than orientation.7,20,21
There is help through onboarding software, studies, and surveys that explore what organizations have been missing. The information is available, and there are ways to tailor the onboarding experience for different workers, including executives, managers, front-line, differently abled, and veterans. When onboarding is part of a mindful process, it can lay a foundation for success and build engagement and loyalty. Maybe 2022 is the year everything changes.22,3
Things to Consider:
Organizations that spend time and money recruiting new hires may want to consider putting more thought into an intentional, purposeful onboarding process.
Onboarding a new employee should go beyond tax forms and an ID badge.
Helping new hires fully understand the organization’s benefits package can help them see how much they are valued and demonstrate the organization’s commitment to them.
Transamerica Resources, Inc. is an Aegon company and is affiliated with various companies which include, but are not limited to, insurance companies and broker dealers. Transamerica Resources, Inc. does not offer insurance products or securities. The information provided is for educational purposes only and should not be construed as insurance, securities, ERISA, tax, investment, legal, medical or financial advice or guidance. Please consult your personal independent professionals for answers to your specific questions.
