When we think of onboarding, we often think only of the impact it has on a new hire’s first weeks and months on the job, when in reality, good onboarding goes far beyond this. And it can go even further with good onboarding software.
Good onboarding processes positively impact key HR metrics, safeguarding recruitment investments by saving time for HR teams and improving employee experience and performance.
So what exactly is the ROI of onboarding software and how do you communicate its value to your management?
Digital onboarding is not a new concept - HR professionals have long been aware of the positive benefits onboarding software can bring to the new hire process.
Unfortunately, HR rarely has the final say when it comes to budget and approval for big-ticket software investments. These decisions are usually in the hands of upper management, and it becomes HR’s responsibility to build a compelling business case to convince decision-makers.
Decision makers need a clear understanding of what they’re getting with as few ‘I don’t know’s’ as possible to feel confident, HR needs to be able to prove that the onboarding software they are looking to use is a smart investment.
Calculating the ROI of onboarding software is as simple as answering these three questions:
→ #1 Will it save our organization money?
→ #2 Do the rewards outweigh any risks?
→ #3 Is it better than what we currently have?
Calculating the financial ROI of digital onboarding software can be a little complex.
You first need to calculate your baseline - what your CURRENT onboarding set-up is delivering in terms of ROI. Then you need to look at what you want to achieve to see if the investment is worth it.
Sounds complicated? We thought so too, so we put together a free interactive tool that will help you calculate the return on investment that digital onboarding software could bring to your organization.
By investing in good onboarding software it is possible to safeguard your recruitment investments by facilitating HR teams, improving employee performance, increasing new hire retention, and boosting employer branding.
A budget-conscious effect of good onboarding is that it saves time for HR in the long run, allowing you to utilize your team’s valuable skills in other crucial areas.
A streamlined onboarding process, supported by future-friendly tech, will minimize tedious administration, and centralize your new hire journey for easy application.
On average, HR professionals without a digital onboarding tool spend upwards of 10 hours per new hire on administrative tasks alone. This includes everything from coordinating paperwork, ordering equipment, and answering emails - to tedious data entry.
With a digital, integrated tool, those 10 hours can be reduced to 3.
Good onboarding drives positive employee engagement, and organizations that onboard effectively have 33% more employees who are engaged in their work.
In a good onboarding process, long-term engagement is fostered through value-based story-telling that shares the why behind what your company does in a way that inspires new hires to want to come to work. It also comes from setting clear expectations, following through on promises made during the recruitment process, and of course making strong, one-on-one connections with new hires.
So if you want more engaged employees (and all the business-critical impacts that come along with them), good onboarding is a GREAT place to start.
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.
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.
The financial drain of replacing a departing employee can amount to more than 50% of the leaver’s annual salary. That is an incredible expense for any organization, let alone one with a high turnover rate.
Good onboarding is proven to reduce non-starters and boost retention - which in turn reduces the need for costly recruitment processes.
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 non-starters
Good onboarding minimizes the risk of pre-start ‘ghosting’ (when an employee accepts a job offer but pulls a no-show on day 1) by building strong connections with recruits throughout the pre-start (or preboarding) period.
Activities here can include the delivery of bite-sized pieces of content, introductions to other team members, exposure to need-to-know company information, and check-in meetings with key contacts such as a direct manager or buddy.
ManpowerGroup UK has been so successful with this that they were able to reduce non-starters (‘ghosters’) by 37%.
A strong employer brand can reduce the cost per hire by as much as 50%. And good onboarding is shown to positively impact your employer brand by creating a positive impression on new hires.
Onboarding software facilitates a faster, easier, and more reliable onboarding process, while also promoting the organization's culture and values. Successful onboarding through software can result in fulfilled new hires who may become brand ambassadors, spreading positive word-of-mouth about the organization as an employer.
The final aspect you’ll want to consider is whether implementing digital onboarding software will be an improvement on your current onboarding processes. Are you meeting your new hires needs, do they have all the tools they require to get started, and is anyone falling through the cracks?
Our study of recent joiners revealed that 64% struggled with role clarity during onboarding, and 25% thought that technology was missing entirely from their organization’s new hire program.
What do your new hires say? To really understand the potential value of onboarding software for your own organization, we suggest surveying recent employees about their experiences. This will equip you with a clear overview of your onboarding process, your organization's strengths, and the areas you can improve.
Not only will this feedback provide your HR team with valuable insights, you’ll have another compelling reason to convince your C-suite of the ROI of onboarding software.
Onboarding (or lack thereof) has far-reaching consequences.
Done right, onboarding can inspire positive long-term organizational growth. You’ll have happier HR teams, highly engaged employees, and more money in your back pocket.
Take your first step toward organizational excellence and calculate your onboarding ROI with our free calculator.