Onboarding is Critical to Business Success

No matter how old we are, how many jobs we have had, or the level of our position in the organization, the questions we have on the first day of work remain the same. Where do I park my car? Where do I put my stuff? Where are the bathrooms? Where can I get something to eat or drink? Where do I begin?

Every time we start a new job, we revisit Maslow’s Hierarchy of Needs. In every new situation, we must learn again how to satisfy our basic needs of physical and emotional well being before striving to meet our higher level needs of personal and professional fulfillment.

In the workplace, that means we need to satisfy our biological and physiological needs for air, food, drink, and shelter before we can satisfy our safety needs (e.g. security, order). Once secure in our basic needs, we seek to satisfy our need to belong (e.g., work group, relationships) and our need for esteem (e.g., achievement, managerial responsibility). Once we have met those four needs, we attempt to satisfy our need for self-actualization as we work to reach our full potential.

What helps us meet these varied needs? In years past, new hires would attend a new employee orientation where leaders shared the structure, mission, and key policies and procedures of the organization. New hires would acknowledge receipt of a New Employee Handbook, complete paperwork for payroll and benefits, and show up at their office, wondering what to do next.

The current trend, as you may have experienced yourself, is a process called onboarding, a comprehensive approach to joining an organization that starts during recruitment and continues well into the first year on the job. Pioneer Staffing describes onboarding as a “strategic, deliberate business process to enable, facilitate, and assure that each employee is successfully immersed into the company culture, quality, and operational systems.”

“Onboarding is about culture setting,” according to David Somers, Director of Consulting Services for Cornerstone OnDemand. “Onboarding has become completely integrated with the hiring process and includes socialization and using company technology to facilitate that process. Onboarding is a business function.”

Onboarding has become a strategic approach that gives those organizations that use it a competitive advantage. Think about it. New hires lack knowledge about the culture and politics of the organization, the challenges they will face, and what they will need to do to be successful.

A comprehensive plan to address those areas is a win-win for everyone; the new hire gets a thorough understanding of what the company is about, who’s who, and what’s really what, and the company gets an employee who is quickly knowledgeable, socialized, and productive.

“It’s a bit like starting high school; those early impressions, right or wrong, can really stick. And, the stakes are high,” states Michael Watkins, Ph.D., author of The First 90 Days. “Building credibility and securing some early wins lays a firm foundation for longer-term success.”

Why is this early support of new hires so important? Time and resources invested in recruitment are high; the recruitment cost to the company when filling a position averages about $11,000 per employee, according to the Allied Workforce Mobility Survey. Results from this same survey reveal that companies lose, on average, 23% of new hires before their one year anniversary; and about 30% of new hires do not meet productivity expectations in the first year.

In a recent issue of HR Magazine, Hank Jackson, President of the Society for Human Resource Management and CEO, noted that the challenge for human resources in the next ten years is to attract and retain talent. Studies show that employees who participate in onboarding initiatives are much more likely to stay with a company after three years than those who receive no such support as a new hire.

Mark Scullard, Director of Research, and Jeffrey Sugerman, President, at Inscape Publishing, worked with a human resources group to conduct an onboarding survey, as reported in Training Magazine. In this survey, new hires who received a summary of the organization’s mission were able to “significantly contribute to the organization” four weeks earlier and they were able to figure out “how important decisions were made in the organization” six weeks earlier than those who had not received the mission statement. And, individuals who received a thorough overview of their job responsibilities from another person in a face-to-face meeting were able to “significantly contribute” 25 days earlier than those who received no such orientation.

“Onboarding isn’t just a human resources exercise, it’s a business imperative,” notes Justin Bourke, research associate for the Aberdeen Group and co-author of their report, OnBoarding: The First Line of Engagement. “Organizations with a formal onboarding process saw a 60% greater annual improvement in revenue per full time employee and a 63% greater annual improvement in customer satisfaction than those with an informal onboarding process.”

A formal onboarding process should have milestone activities at 30, 60, and 90 days; and some organizations extend the initiative up to two years for executives. Formal initiatives integrate onboarding activities – from hiring paperwork to scheduling, technology, benefits, and training. Then, onboarding surveys are conducted to gauge the effectiveness of the program and implement any needed improvements. It is important to include all new hires from outside the organization, as well as those promoted from within, in onboarding activities, since different areas within an organization can have very different cultures.

At its most basic, onboarding includes an overview of the company and department, reminiscent of the old employee orientation. Job expectations, goals, objectives, and the performance appraisal system are reviewed, as are policies and procedures. Additional housekeeping items include employee security, parking cards, dress code, work hours, inclement weather policies, company handbook and directory, help desk numbers, and a tour.

Making the new employee feel welcome on day one is a given and might include a company mug, pen, or T-shirt containing the company logo. Providing a schedule that gives structure to the first week gives new hires the impression you put some thought into their arrival. And, making each day interesting and fun gives the person something to talk about at the dinner table other than, “I filled out more papers and spent hours watching online webinars about policies.”

As part of an extended initiative, onboarding should involve human resources, multiple departments, and the manager of the new hire. If weekly meetings between manager and new hire are unrealistic, check in points at 30, 60, and 90 days should be set. On the first day of work, it should be evident that the arrival of the new hire was expected with supplies and working technology in a clean office or workstation. Introductions should be made to a ‘go to person’ that knows the organization and is approachable.

In the first 30 days, employer-employee develop a professional development plan, detailing objectives and strategies towards results as a basis for the performance appraisal, discuss how the employee fits into the big picture, and share what it takes to be successful on the job. Policies and procedures are clarified during uninterrupted meetings to communicate that the employer-employee time is valued. Assigning the new hire a mentor promotes organizational socialization and acclimation.

“A mentor offers insights into the corporate culture and helps the new employee understand why things get done in the way they do, which is a major contributor to increased productivity and lower turnover,” states Kevin Wheeler, President and Founder of Global Learning Resources, Inc.

In the first 60 days, the new hire completes small projects that ensure success, receiving timely and consistent feedback. Introductions are made to multiple stakeholders. Initial experiences are discussed and assessed against employer expectations and employee concerns.

In the first 90 days, additional systems or job specific training needs are identified while refining the professional development plan. Clear accountability guidelines and reporting structures are established. The employer-employee identifies what is working and what is not, making changes to support success.

Onboarding initiatives that provide opportunities for new hires to learn in their preferred style are most successful. Examples of varied methods include interactive real time webinars, classroom style learning, asynchronous online learning modules, one on one meetings, mentoring relationships, work buddies, handbooks, checklists, retreats, e-binders, and company websites and integrated intranets. Posting photos of key stakeholders with names and titles on either an intranet or onsite bulletin board may help inform the new hire who just helped them navigate use of the copier.

The intranet or access to a secure section of the company website is a logical place to post required forms for completion and to access online modules on policies like sexual harassment, ethics, corporate culture, safety, emergencies, and grievances.

Some companies give new hires, at all levels of the organization, a list of questions that must be answered during the onboarding process. Answering the questions often resembles a scavenger hunt or solving a puzzle, as new hires ask themselves, leaders, their manager, key stakeholders, direct reports, and others for information. What is a recent management decision you did not understand? How is success measured? How are my goals tied to the mission? How do you feel at the end of the workweek? What do our customers need from us? What is my role in emergency evacuation? How do I find out about required training?

A new manager might be asked to do something that requires a visit to the manufacturing plant, talk with workers, and gather information. This increases their visibility, provides an opportunity to establish a relationship with some of their employees, and get a feel for the context in which they work.

The benefits of onboarding, especially as they pertain to retention, would seem self evident. With some careful planning to integrate existing resources, an organization can offer a buffet of learning opportunities for new hires in an efficient, informative way.

Onboarding provides new employees with a solid foundation upon which they will continue to build. It promotes a culture of continuous learning and an environment in which it is acceptable and encouraged to network and ask questions.

Onboarding activities help new hires feel they are valued and important to the larger organization. New hires in onboarding programs better understand the company and are more quickly initiated into the company culture than those in more traditional orientation programs. Onboarding activities lead to customer satisfaction, which generally feeds the cycle of increased employee satisfaction, higher productivity, and engagement with low employee turnover.

Within 30 days of hire at IBM, for example, new employees are invited to an orientation to Succeeding@IBM, a two year learning continuum organized to instruct the new hire about IBM’s products and services, expectations as an IBM employee, IBM values, resources, and how to work effectively in a global environment.  IBM also offers extensive information about career paths within the company. Employees learn using learning suites, videos, work-based practice sessions, virtual events, and expert resources, including the employee’s manager, to make the new employee productive as quickly as possible.

And, formal onboarding initiatives are not just for large corporations.

Rochester-based LECESSE Construction, a professional construction management firm with 65 employees, went from a half day orientation to an intensive, three-week onboarding initiative. Results from a recent employee engagement survey showed that 89% of LECESSE employees were highly engaged, far above the industry average. Elizabeth Franz, the company’s director of human resources and strategy, attributes this to the strong supervisor-employee relationship developed during the onboarding program.

The human resources department at the Purdue University-Calumet offers an onboarding program through an integrated website for both supervisors and the new hire. Part of this initiative includes assigning a new employee ambassador who makes the new hire feel welcome in addition to assisting him or her in securing a computer, and building and parking access.

Research shows that role clarity, self efficacy, social acceptance, and knowledge of organizational culture are strong indicators of well adjusted employees from an onboarding initiative.

“Hiring employees is the biggest investment most organizations make. Understanding how to make sure that investment sticks is what onboarding is about,” notes Peter Cappelli, Director, Center of Human Resources, The Wharton School, The University of Pennsylvania.

Onboarding is the first opportunity your company has to make a first impression on a new employee. Who says first impressions aren’t important? Solid hiring decisions and an integrated onboarding initiative will support a return on your recruitment investment.

If you would like to learn more about how NBRI can help you conduct an employee survey to measure the impact of the onboarding process in your organization, contact us at 800-756-6168.

Terrie Nolinske, Ph.D.

Research Associate

National Business Research Institute