Onboarding strategies are becoming more and more common in HR (Human Resources). In fact, HR leaders are in an ongoing process of hiring new tools to optimize retention, engagement and performance from new hires. However, a survey made by Gallup, a global analytics and advice firm, shows that only 12% of employees strongly agree that their organization does a great job onboarding new employees. Besides, in other data, it shows that onboarding programs are inconsistent and last less than a week. But if HR believes in the strategy, why does it happen? According to a survey made by Aberdeen Group:
“One reason that onboarding has not advanced beyond the early adopter phase is that organizations find it difficult to discern the return on investment (ROI). Instead, onboarding focused on basic orientation activities or, more recently, socializing new hires into the company culture — an initiative that, while important, has been difficult to measure. As a result, many onboarding programs have fallen short and become little more than a transition from recruitment to employee development. Organizations looking to gain competitive advantage must adopt a new approach to onboarding — one that not only engages new hires but also drives business outcomes.”
The ROI, or Return on Investment, is a performance measure to evaluate the profitability of an investment. Ir rates the amount of return you will accomplish relative to the investment cost, and you can calculate the ROI of an investment by dividing the return by the cost of the investment.
This is an usual math that entrepreneurs and managers do before hiring a new machinery or service. For example, if you have a bakery, and you invest in a bigger oven, you can conclude that your production will increase, leading your company to sell more and have higher profits. But after all, how a strategy focused on integrating a new hire into the company’s culture can perform on ROI results?
Measuring the ROI of an Onboarding strategy
When you hire a new employee to your organization, you need to think strategically and have the necessary tools to ensure clarity on roles and expectations of the employee, while you integrate the new hire into the working force. This is when the onboarding process can really make the difference. You can see from 2 different, but correlated, perspectives:
- Better the process, faster the production: once the new hire knows what are its responsibilities on the job, and all the information is clear, faster it will adapt to the company and accomplish the expected results. In fact, a good onboarding process can improve employee’s productivity by up to 70%.
- Less turnover: a recent Harvard research showed that replacing an employee can cost up to 300% of its salary. Employees that had a good onboarding are more likely to stay in the company.
Only to reduce turnovers and improve the production you can have an idea of how it can improve the ROI of the company. Although it is hard to discern what initiative had those results in the company, some HR groups are recommending evaluating both quantitative and qualitative data about the onboarding process.
- The quantitative data is the numeric information which shows engagement, production and retention rates
- The qualitative data is more subjective, and can be analysed through surveys and interviews made with the employees..
Once you have both data you will be able to analyse how the onboarding strategy went and calculate the ROI of the strategy. One thing is right: results can be achieved only if strategies are tested. Therefore, if you don’t have an onboarding strategy, you can see here 4 Easy Steps to start your onboarding strategy today.
