Onboarding – how to get the greatest ROI in the shortest amount of time

February 21, 2012, by HR à la carte | Employee Onboarding

Whether you have moved a current employee into a new department or hired a new employee from externally, it is important to have a solid onboarding program in place.  An effective onboarding process will enable your employee to contribute value in his/her new role as quickly as possible, and will lower the risk of turnover within the first year of hire.

A recent white paper from Drake Beam Morin (DBM) and Human Capital Institute (HCI) on this topic highlighted the business imperative behind a successful onboarding program.  The paper cited Michael Watkins’ concept of the breakeven point in hiring new employees in terms of the value they contribute versus the value they consume, from his book The First 90 Days.  The concept is simple:  for the first 3 months, a new hire is consuming more value than he is contributing.  It is only at shortly after the 6 month mark that the breakeven point is typically reached.  At this point, the contribution of the new hire is equal to the consumption from the first 3 months, and the employee begins to add exponential value to the company.  

That should give every employer food for thought.  How can we as employers move this timeline up in order to achieve a return on our investment (ROI) earlier on?  Or, as our finance colleagues like to put it, how can we shorten the payback period of our hiring investment?  The cost of turnover of new hires is equally thought-provoking.  Watkins estimates that turnover amongst new hires earning less than $100K can be up to 14 times their base salary. 

Clearly, a successful onboarding program for new employees is critical to ensuring a company is obtaining a fast ROI without the added costs of a failed new hire.

Elements of a successful onboarding program include:
• For employees new to the company, a pre-boarding system or process whereby the employee is set up in payroll, benefits, business cards are ordered, laptop/desktop and office are setup, etc., ideally prior to the employee’s first day;
• A buddy or mentor to help a new hire navigate the new company’s culture and unwritten norms, as well as assistance with the day-to-day workings of the business;
• An orientation schedule that ensures the new hire meets with all the key stakeholders within the first few weeks; and
• A 30/60/90 day plan with specific goals and targets to be accomplished within those timeframes, with monthly meetings between the new hire and his/her manager to discuss progress on these goals and targets.

By incorporating the above elements into your onboarding program, you will obtain a faster and greater return on your new hire investment and increase the probability of retaining your new hire beyond the first year.