As the EU comes to grips with what looks to be a “recession of historic proportions”, economists are united in one thing - it’s likely to get worse before it gets better.
The Eurozone economy is set to shrink by up to 7.7% in 2020, and the ramifications for the US include a reduction in economic output by 3% through 2030, a loss of around $7.9tn.
So it comes as no surprise that HR departments the world over are tightening their belts.
Which brings me to my point - that good onboarding is more important than ever for HR departments juggling both employee experience AND budget.
Now, I know what you’re thinking, “Why prioritize new processes and technology during a global recession?”, and it’s a valid question. On the surface, securing time and resources for something that many consider a ‘nice to have’ seems counter-productive.
But the reality is that good onboarding is an essential tool that will reduce the costs associated with bringing new employees on board in the long term.
As Sandra Janbell, Bacardi’s Global Director of Learning & Development puts it; “onboarding is not something that's just nice to have, it's about setting people up for success.”
And successful employees are exactly what your business needs right now.
So with that said, here are just three ways good onboarding is great for your budget:
|1. Good onboarding builds engagement|
Employee engagement is the extent to which employees feel passionate about their jobs, are committed to their organization, and go over & above what is expected of them in their day-to-day role.
Organizations with strong onboarding programs boast a 33% increase in employees who are engaged with their work.
So how does having engaged employees impact your bottom line?
|Engaged employees are more connected with their work and consistently out-perform their disengaged counterparts. Put simply, they do more work, in less time.|
|Engaged employees are more invested in the success of the business, and so are more likely to be passionate about the quality of their output. They strive for bigger, better, and more comprehensive in everything they do.|
These are just two ways engaged employees can impact company financial performance.
And there’s plenty more, including the positive influence of a robust employer brand, not to mention the effects of a reduction of absenteeism.
What’s clear is that having engaged employees means only good things for your back pocket.
|2. Good onboarding shortens the time-to-productivity learning curve|
Time-to-productivity is a measure of how long it takes a new hire to contribute to an organization. It is influenced heavily by two main factors; the overall candidate experience and the effectiveness of an organization’s onboarding program.
Good onboarding is proven to decrease time-to-productivity by up to 70%, and organizations with a short time-to-productivity curve see dramatic reductions to their bottom line.
So how does shortening the new hire learning curve generate more revenue?
|Faster new hire contribution|
|A shorter learning curve means new hires can start generating revenue faster. They spend more time doing their job, and less time learning how to.|
|Reduced team support timelines|
|They say it takes a village to raise a child. Well, it takes a team to integrate a new hire. The sooner your recruit is productive, the sooner that team can get back to business-as-usual.|
A shorter time to productivity learning curve has additional wide-ranging implications for business including decreasing pressure on learning and development leaders, as well as easing the strain on line-managers time.
Both of which will save you money in the long run.
|3. Good onboarding positively impacts employee retention|
Employee Retention refers to your organization's ability to hold on to its employees. Retention is ‘cultivated’ by an employer by maintaining a working environment that supports current staff in remaining with the company.
Good onboarding is proven to increase new hire retention by up to 82%, and organizations with a high employee retention rate can save millions in net revenue.
So how exactly does retaining your employees save your business money?
|Reduction in recruitment costs|
|On average, organizations invest more than €4494 per hire in recruitment and talent acquisition costs. If you retain that employee long term, that’s money well spent. If they leave, then you spend it again. And again. And again. Until you get it right.|
|HR invests time, budget, and resources into the development of every new hire. To ensure a good return on investment, you need that hire to stick around and give back to the organization. If they leave you after 6 months, that’s money down the drain.|
A high employee retention rate will also minimize how often you have an output gap created by a vacant position. It can also affect the health of your employer brand and public recruitment perception.
The effects are wide-ranging. And financially critical.
If you do one thing this year to cut costs, consider reinventing your onboarding journey.
Done well, it will be a financial guard against a tumultuous post-COVID economic future.
It doesn’t have to be a fully-fledged digital solution tailored to your organization. It can be as simple as rethinking your approach and redistributing your existing resources to match.
We promise it will be worth your while.