Onboard Well & Reduce Employee Turnover

Employee turnover costs your organization much, much more than you realize. It is not an operating cost you need to accept as a cost of doing business

 

I remember one of my very first assignments shortly after I began operating my consulting practice in 998.  A major employer in the Greater Philadelphia engaged us to help them better understand what was causing their high turnover rate.  Two of us were provided contact information for 300 people who quit their jobs during the previous eighteen months and told to interview one hundred of them in order to identify the reasons they left. 

After completing our interviews and discussing what we learned, we found that more than half of the departed employees had a negative experience during their onboarding that had left a bad taste in their mouths.  Few left because of it, but did cite it as an example of why they eventually left; some employees stayed for years but the experience never set well with them.  Here are some of their stories:

  • Tim P, who left after 2 years, recalled that when he arrived for his first day of work, he learned that his supervisor was on vacation for the week, and was told to watch what other people did there for the week to see what he could pick up.
  • Maria S said that when she arrived nobody, even HR, knew she was starting that day. It took more than an hour in the waiting room for someone to come and take her back to the area where she was to be working.
  • Selma A said that when she arrived, her new boss apologized that they had no place to for her to sit.
  • Tyrone J said he was placed into a conference room for three days with a stack of reading material to absorb.

 

The Cost of Failing to Consider the Cost of Hire

Some employers have come to accept that employees will have a limited working life before they leave. There’s a belief there is only a nominal cost associated with hiring and replacing people, and hiring means lower payroll costs for less tenured staff.  Yes, I’ve heard these very arguments multiple times!

 

I believe this is a very costly delusion.  In her article on the cost of hiring a new employee, Annie Mueller pointed out that there are several factors among those included below in those which contribute to the cost of hiring and replacing an employee:

1. The cost of recruiting candidates – includes any advertising; fees and time spent in sourcing, interviewing and selecting candidates; hiring costs such as background checks, pre-hire testing; and managing applicant flow. Mueller believes this cost can easily exceed several thousand dollars.

2. The cost of training – includes costs such as training programs; the soft costs of the trainer’s time; lost productivity if using an experienced person to train instead of him/her performing their regular assignments; and the non-productive hours where the new hire was not able to produce at full productivity.

3. The cost of salary and benefits and occupancy costs – includes actual salary, taxes, and benefits paid to a new hire prior to them being able to produce at an acceptable rate. If the new hire leaves before becoming productive, much of the cost is lost and will have to be spent again to recruit the his or her replacement and being him/her to full productivity.

4. The costs of occupancy and integration – the cost of tools, equipment, and materials required to perform the work; the cost of the physical workspace and what’s required to maintain it; and undoing mistakes made by a new hire. If customers are adversely impacted, the costs can include fixing mistakes and replacing customers who leave.

5. The cost of negative engagement – when someone is disengaged, it tends to rub off on co-workers who are negatively impacted by that individual’s disengagement. Disengaged employees produce less, so there is co-worker resentment at having to pick up the slack. A general fatigue with the situation sets in.  Where three highly trained and engaged people might be able to perform the full workload while maintaining high quality, it might take four of five less engaged people to do the work.

6. The cost of replacing more experienced people with less experienced ones. The thing about experience is that it takes time to get.  In most cases the knowledge and expertise lost when an experienced person leaves is not quickly recovered.

The total cost of making a hire can easily exceed 1X annual compensation. Replacing employees is not plug-and-play.  It is more likely to be plug-and-PAY!

 

Proper Onboarding is the Key

A significant percentage of people who quit their jobs point to a lack of onboarding as a key factor that directly or indirectly led to their leaving. 

What’s the solution?  A good onboarding plan!  Such an onboarding plan contains these areas, typically covering the new hire’s first 30 to 90 days on the job:

1. Preparation before the new hire starts, such as the new hire’s workspace made ready; equipment installed (phone, computer); staff notified of the new arrival; new hire paperwork and benefit packages assembled; and the supervisor scheduled to be with the new hire on his or her first day.

2. A First Two Days’ Events checklist, which includes activities such as meeting coworkers; meeting key company staff and management; a facilities tour and observation; policy and handbook review; overview of how the company is organized to serve its customers; orientation with HR; and being issued a copy of the onboarding plan.

3. Meetings for the new hire’s first 30-90 days are scheduled with an itinerary given to the new hire. This includes a series of supervisor touch-base meetings that start out as a daily occurrence for the first week or two, and become less frequent as the onboarding progresses.

4. All training sessions for the new hire’s first 30-90 days are scheduled with an itinerary given to the new hire. Training objectives are spelled out, and those doing the training are given an understanding of the objective for each session. Reading assignments are included in this plan.

 

Bottom Line

While getting a couple of chachkas at the start of a new career can make a new hire initially feel welcome, it is only through the investment a supervisor and organization makes in thoroughly onboarding that will communicate real commitment to the new hire.

Properly onboarded new hires get up to speed in about two thirds the amount of time it takes, versus a “toss them into the water and let them swim” approach. They are more engaged, make a greater contribution to the organization, are more likely to take on greater responsibility faster, and will remain an engaged employee longer as a result of proper onboarding.

This article was excerpted from Boyer Management Group’s award-winning leadership development and sales management programs, Leading Through People Module 5 and B2B Sales Essentials Module 26.

I love working with people and organizations who want to improve their effectiveness! Here are several outstanding resources that can help you and your organization to go to the next level:

I work with some of the world’s top employers by helping them get the most out of their talented people. My company’s extensive leadership development course catalog provides effective skills-building for everyone in the organization, from the new / developing leader to the seasoned C-level executive. My company’s coaching programs produce significant results in compressed periods of time. I also help job seekers, higher ed, and employment services connect people to better jobs faster. My company’s acclaimed career development tools help people navigate the ever-changing landscape of conducting a successful job search. To find out more, please visit us at www.boyermanagement.com, email us at info@boyermanagement.com, or call us at 215-942-0982.

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