Creating a Solid Business Case for a World Class Onboarding System

Businesses are in constant flux and change and they must in order to stay competitive in a global market.  Technology is changing at a pace so fast that it makes keeping current practically impossible and unaffordable.  While Human Resource departments and functions hold value within their organizations, they are also not an income generating area for a company and bidding for new technology can prove to be an uphill battle.  Therefore, creating a solid and rich business case for new systems is vital to the success of Human Resource responsibilities.  Human Resources has moved from being just a “Personnel Department”, filing paperwork and making sure employees get paid, to being strategic leaders reporting directly to the CEO.  This is due to the evolution of technology and the value of the role and knowledge with compliance, ever-changing governing laws, and constant focus on the value of employee retention while consciously building your culture.

For some time now Recruiting, HRIS, and Payroll systems have been essential tools to maintain the basic functioning of Human Resources.  But once again, technology changes and onboarding systems are quickly becoming essential to growing companies and industry with high turn-over.  While world-class systems allow for more efficient and effective new hire paperwork collection and eSignature, they can do so much more.  This is where understanding the full functionality of the product and how it can reduce company expenses is imperative to bidding for the product.

So what does a world-class onboarding system do exactly and how can it save my organization money?  Keep in mind that onboarding is not just an internal tool for Recruiters and Human Resources to make their jobs easier.  It’s a vital piece of the new hires first experience with your company.  Let us start with what an onboarding system can accomplish.

  1. A robust onboarding tool should integrate with a recruiting model in order to pass vital data between modules without requiring manual data entry.  Manual entries take time, effort, and tends to lead towards human error.  This affects your bottom line.
  2. Offer a variety of process-flows to allow for variations in corporate set up.  As an example, you may be a small company just in the U.S. or you may be a global company in 20 plus countries with 15 different languages.  You must be able to leverage different needs for different areas of your company driven by location, employee level, and even job code.
  3. Socialization is probably the most critical part of onboarding.  It allows the new hire to feel engaged prior to their first day of employment.  Starting any new job is stressful, and allowing the employee to get a view and taste of the company’s culture is vital.  Allow them to know who their buddies are and that they have a support system before they walk in the door.  Let them see and learn the specifics of their job ahead time so they feel they will be making an impact and a contribution.
  4. Get all the new hire paperwork out of the way before they start.  Allow the new hire to do it in the comfort of their home where they can spend time on it and be relaxed without having someone wait for them to finish.  Think about shaving 1 or 2 hours of salary off your bottom line for every new hire.  This will add up in cost savings.
  5. Data comes into an onboarding system from an applicant tracking system.  Data is collected in onboarding as well.  Tax information, salary, job location, EEO data, emergency contact, and IT provisioning all get entered into an onboarding system and can be exported out to Payroll or an HRIS.  It might look something like this:

Before we can discuss how a world-class onboarding system can save your company money, we need to understand how turnover affects the bottom line.  It’s expensive to hire employees.  You have direct costs but you also have hidden costs that are not directly seen.  These costs can be variable based on the industry and level of the position.  Here are a few examples of both direct and indirect cost to examine while considering your own turnover losses.

Now, think about the cost effect of turnover and if you can significantly reduce it over the next 2 years.  How much could you save your company? estimates that the total cost of losing a single position to turnover ranges from 30 percent of the yearly salary of the position for hourly employees to 150 percent. Even at a moderate estimate, the loss of one person clearly illustrates the negative financial impact of employee turnover. For example, for a company with 10,000 employees at an average salary of $40,000 and a turnover rate of ten percent, the cost of that turnover equals $40 million excluding indirect costs which could be significant. A reduction in turnover of 2 percent would result in savings of at least $800,000 in direct bottom line savings.

We have reviewed the costs of turnover. Now, let’s discuss how a world-class onboarding system can help you achieve the actual bottom line savings.  Relationships with a new hire start before the first day of employment.  The new hire has already met several times with a recruiter, at least once with the hiring manager and possibly several times with other team members.  For better or for worse the hiring process represents the organization as a whole to the new hire and is very important and often forms the basis for their engagement and connection to others.  Onboarding doesn’t just start on the first day of employment.  It starts well before the employee sits at their desk for the first time.  They want to know about the culture, benefits, and their team members.  Learning the culture of the company is just as critical as learning the actual job functions.  Onboarding, prior to the start date can effectively demonstrate how the company operates both internally and externally.  This can help the employee get up to speed significantly faster while at the same time increasing their chances of long term success.  Effective onboarding of new employees increases retention by 58% in the first 3 years on the job and can also assist employees with deciding more quickly if they belong with an organization, which, according to the Bureau of Labor Statistics, occurs within the first 3 weeks.

An important part of a successful onboarding system is mapping out relationship mechanisms for the new hire.  Provide them a method and process for connecting to people pre-day 1 and for the first 90 days of work.  These mechanisms can be different based on each company’s culture.  However, consider the following:

  1. Assign a buddy/mentor the new hire can reach out to pre-day 1 and throughout the first 90 days
  2. Acknowledge valuable team members as strong resources
  3. Make sure to do key introductions within the first few days
  4. Change the focus to what the new hire can bring to the organization rather than “how great we are”
  5. Provision all technology day 1 or even before
  6. Allow early access to internal social networks
  7. Provide a clear understanding of 30/60/90 day goals 

These mechanisms for relationship building, networking, and early engagement are imperative to the success of a new hire.  But they can be difficult and perhaps impossible without maintaining communication and responsibility to internal team members, groups, and departments.  An onboarding system can preserve the structure for you while delivering the necessary steps in the proper sequence ensuring that nothing falls through the cracks.  The new hire’s start will be seamless and much less stressful for the Hiring Manager, Human Resources, IT, and Payroll, and the new hire themselves.  Less stress means higher productivity for all parties involved in the new hire process.