Implicit Onboarding Costs

Onboarding, or the process of onboarding new employees, is essential for any company that seeks to retain talent while ensuring optimal efficiency and productivity of its new hires.

In this process there are numerous implicit costs which can be significantly increased if it is not done properly. Many studies reflect the negative impact on an organization's financial health of poor onboarding.

However, this negative effect can be avoided if necessary steps are taken to ensure that the process is adequate. AYes, a good onboarding process can increase employee loyalty by up to 82%.

Next, let's see what are the costs that are implicit in this process:

1. Direct expenses

Onboarding involves a series of direct costs, such as training, the acquisition of the equipment and materials that the new employee will use, and administrative costs. According to a report from the Society for Human Resource Management (SHRM), andThe average cost of hiring and training a new employee can range from 6% to 9% of the employee's annual salary.

2. Time investment

The time spent by human resources staff, managers and co-workers to assist in the integration process also represents a significant cost. According to a study by the consulting firm McKinsey & Company, The time spent on onboarding can reduce the productivity of the existing team by 1-2% during the integration period.

3. Productivity

As is normal, the new employee will require a period of adaptation to reach their peak of productivity. If the onboarding process is not adequate, this adjustment period can be significantly extended.

According to a study conducted by the consulting firm McKinsey & Company, It can take an average of 6 months to 1 year for new employees to reach their peak productivity after being hired.

4. Staff turnover

If the onboarding process is not effective, there is a greater risk that the new employee will decide to leave the company, leading to additional recruitment and training costs to find a replacement.

According to a report by the Society for Human Resource Management, Companies with poor onboarding have a turnover rate of up to 50% higher in the first 18 months of employment compared to those that have a solid and well-structured integration process.

Onboarding, as a fundamental process in integrating a new employee into the company, has a crucial impact on their initial experience and on their long-term perception of the company. This process is the cornerstone for the newcomer to fully understand their responsibilities, the tools they will use, as well as for establishing meaningful connections with their co-workers. ‍

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The quality of the onboarding will determine the preparation and ability of the new employee to deliver their maximum performance and contribute to the company's success.

After having spent time and effort in finding the ideal candidate, it is imperative to properly care for and train that person once they have joined the team. Therefore, investing in a complete onboarding process that addresses all the needs of this period is a strategic decision that will optimize the resources employed and increase the company's chances of long-term success.