Effective onboarding drives engagement, retention and performance

Employee onboarding, in former times associated with a TV playing VHS compliance tapes on a loop, is a critical component of a modern, effective corporate L&D strategy. Whether or not employee onboarding is effective can be distilled into three interrelated measures: engagement, retention and productivity. Each builds on the former, and all contribute significantly to the employee experience in today’s talent constrained environment.

Impact 1: Higher engagement

You never get a second chance to make a first impression. A deliberate and positive onboarding experience funnels the enthusiasm of starting a new job into early and ongoing engagement, which can create brand ambassadors and higher performance. In fact, effective onboarding increases discretionary effort by up to 20%. 

Impact 2: Higher retention

Engagement flows into retention: Creating early and ongoing engagement is key to retaining employees, particularly high-potentials. Those are typically the employees you most want to keep, and they can be expensive and time-consuming to replace. Josh Bersin uses the commonly-cited statistic that the cost of losing a employee can be 150% to 200% of that position’s annual salary. 

To increase retention, onboarding is a proven lever: 69% of employees are more likely to stay for at least three years after a great onboarding experience. 

Impact 3: Higher productivity

Productivity is the “why it matters” for the measures we just mentioned--it’s the outcome that engagement and retention have on the business. Research supports this: Companies with engaged employees outperform those without by 202%. And teams with high employee engagement rates are 21% more productive than those with low engagement. 

Thinking about productivity in the context of onboarding, consider about the time it takes to ramp up as well as the level of steady-state productivity an employee reaches. The longer an employee spends taking more from the organization than she/he returns, the higher the waste of time and productivity. This is particularly relevant for organizations who need to ramp up employees very quickly due to a business constraint. Structured onboarding, including facilitating learning, relationships and connections, builds a success framework for new employees, fast-tracking them to positive ROI.

A stronger foundation can also lead to higher steady-state value. Therefore, in addition to benefiting organizations with churn or constrained ramp-up time, effective onboarding is an excellent investment for organizations who expect employees to stay beyond a few months.

Current onboarding programs don't exist or are poorly designed

Many organizations realize the need for onboarding, however the majority of existing programs aren’t designed with the elements to support rapid employee growth and lasting impact. In fact, only one in three companies has a formal onboarding program. And as many as 4% of employees leave after a disastrous first day--an extreme example of poor onboarding (and likely hiring). 

Clearly, a better approach to onboarding is needed. Read the ebook 'Set your new hires up for success' to learn how to make onboarding more productive.