The business case for onboarding

Globally, onboarding has evolved into a mature HR practice. Successful strategic onboarding is especially important given the increasing pace of change and mobility. Research has shown, time and time again, that onboarding has the power to influence whether new employees decide to stick with or leave an organization. So, what is the business case for onboarding and why does it matter?

80% of new employees decide whether or not to stay with their new organization within the first few months, yet most organizations are aware they don’t execute onboarding well.

In fact, when Gallup1 asked employees about onboarding, 88% indicated that they didn’t think their organization was good at onboarding. And those in charge agree with 76% of HR leaders reporting that they believe they are ineffectively onboarding their new employees.

The three top reasons managers gave for neglecting onboarding are:

  • 57% noted not having enough time
  • 55% noted the absence of tools to measure its effectiveness, and
  • 39% reported the lack of digital onboarding technology to automate the process was challenging

There’s a strong correlation between the approach a company adopts to its onboarding and the results achieved by employees and businesses. We acknowledge that the more maturity a company has around onboarding, the greater chance of it investing in sound strategic onboarding practices.

What is the business case of engagement onboarding? 

Acknowledging the role that ‘engagement’ plays is also a key stepping-stone to understanding the business case of onboarding. It’s a popular buzzword in the world of brand marketing and is a word commonly used to benchmark our relationship to the world around us. So too, its significance should not be underestimated in the context of the workplace. Consider the following:

1) The importance of engagement in relation to providing employees with a sense of purpose and
2) Why purpose is critical to driving healthy engagement levels.

Let’s put it another way. To be truly productive in our work, we have to be engaged. To be engaged we have to have a purpose. The challenge for both is resources. Without appropriate resources managers are forced to be task-focused rather than purpose-driven which essentially sabotages engagement. Once disengaged, productivity suffers. It’s a vicious cycle.

As the below diagram shows - culture, connection, clarification, and the WOW factor are major contributors to employee engagement levels.

Business case of onboarding

People generally have no problem doing mundane and repetitive tasks as long as it leads to other intrinsic rewards. These rewards could include connecting with customers and colleagues, making the world a better place, feelings of accomplishment, seeing their part in something bigger, or perhaps even career advancement in the long run.

Whatever the reward, a good onboarding process recognizes these factors and helps employees understand why they are doing, what they are doing.

Give your people the CEO treatment

As part of our research, we spoke to a CEO of a large airline who noted that the best investment he made in the early days of joining the organization was getting to know the business.

It’s a normal and valid concern to be worried about a leadership change, this is why listening to people and creating reports is key for new CEOs and leaders to be able to make the changes they want. The higher you are in an organization the more time and effort is required for that individual to get to know the business and its people.

The question is - shouldn’t the same apply to the rest of us? Under the middle tier of management down to the ranks of junior employees, and especially frontline customer-facing employees, we consistently see examples of onboarding executed at its worst.

So have a think about this. What would happen to the frontline worker if they received the CEO treatment during onboarding? Do you think this would increase the chances of them staying with your company for longer? With a dose of CEO treatment, would a frontline worker be more likely to become a manager and a highly engaged fan of the business?

We know it is impossible to give new hires the CEO treatment. This analogy is simply used to drive your understanding of the CEO treatment idea. Exceeding new hire expectations and ensuring that employees feel valued should be factored into the design of your onboarding program. By doing so, employees’ success rates will be maximized. By continuously asking how these success rates relate to business success you will build the business case to introduce strategic onboarding.

Onboarding is good for your brand

A brand is a promise. Part of this promise is the delivery of service and quality standards that meet or exceed customer expectations. This in turn is carefully managed over time to build customer loyalty and positive brand perceptions. All great brands strive to exceed customer expectations. So, what happens when a new hire who has had bad onboarding, is customer-facing?

Redhead Karen GIF by moodman

Due to the link between the customer experience and employee experience, great onboarding is the solution. Our goal is for organizations to adopt an “exceeding expectation” mindset for their brands by integrating this way of thinking early on in their onboarding program.

It’s also worth noting that the lifetime value of each hire goes beyond the duration of that individual’s employment with you. Consider the thousands of employees that come and go after only a short time. It’s likely that they will tell their friends and family about your business, and that conversations about your organization and your brand will be both positive and negative. Optimizing these experiences so that each new hire talks positively about your company no matter how long they stay, is key to creating good employer branding.

When it comes to front-line onboarding, one of the best-in-class companies is Pal’s Sudden Service. CEO Thomas Crosby once said:

"We realized that we are in the education business, just like any school or university."  

This mindset has led to designing and implementing an onboarding process that results in highly engaged employees who stay. At the Assistant Manager level, turnover is 1.4%. At the top end, Pal has lost just seven general managers in 33 years. Meanwhile on the front lines, turnover is lower than the average rate in the industry sitting at 32%. 2

It is easier to convince the organization to invest more in the people you are hiring!


Get free cost of new hire onboarding spreadsheet

Do you want to know the cost of onboarding a new hire to your company?

  • The average cost of onboarding a new hire is 30% to 70% of their annual salary
  • Recruiting and training are major costs, but time to productivity has the highest overall cost
  • Companies can save up thousands of dollars per new hire hired by maximizing the onboarding success