Employee Turnover Caused By Bad Onboarding Programs

by Sharlyn Lauby on May 22, 2012

(Editor’s Note: Today’s post is the second in a series being sponsored by Allied Van Lines, one of the world’s largest moving companies. The 2012 Allied Workforce Mobility Survey asked human resources professional about strategies, practices and performances related to mobility in the workplace.)

In the May issue of HR Magazine, SHRM President and CEO Hank Jackson talked about the next challenge for human resources being global talent migration. He cited that CEOs claim their biggest challenge in the next 10 years will be attracting and retaining talent.

You might be saying to yourself, “That’s nothing new. Attracting and retaining talent has been the challenge for the past 10 years.” And it’s true…it’s a never-ending quest.

But it’s really no wonder after I saw the new set of survey results in the 2012 Allied Workforce Mobility Survey. According to the survey, companies lose 25% of all new employees within a year. Shocked? I was.

onboarding, training, survey, Allied, HRIQ, Allied HRIQ, SHRMThe survey indicated that the average cost to fill one position was about $11,000. I have to think companies are more than a little frustrated when they spend $11K to hire an employee only to have them leave in less than a year.

What’s more shocking is the reason why – Onboarding.

  • Almost 30% of companies reported that it takes a year or longer for a new employee to reach full productivity.
  • 25% of companies said their onboarding program did not include any kind of training.
  • And 60% of companies indicated they don’t set any milestones or goals for new hires.

There’s an old cliché about never having a second chance to make a first impression. And it’s certainly true here. New hires are excited to join the organization. They want to show the company that they are the right candidate. Not providing a new hire with the tools and information to be successful, well…that makes the new hire wonder why they’re there.

The other aspect of the survey that surprised me was the amount of money dedicated to onboarding. Or more accurately, the lack of it. Approx. 35% of companies spend $0 on onboarding. That’s not a typo. They spend nothing, nada, nil. I understand budgets are tight and the economy still isn’t back to its old self.  But to spend $11K on hiring someone and $0 on making them productive…sounds like stepping over dollars to pick up quarters.

It only seems logical that one of the first ways to solve the “attracting and retaining talent” challenge is to focus on the onboarding process. If you’re wondering where to start, here are a few suggestions:

  • Know how long it takes for an employee to become productive. The purpose of onboarding is to give employees the information they need, when they need it.
  • Find out why people are leaving the company via exit interviews. Not just why an employee left but what caused them to go looking in the first place. And don’t just file away the information. Use it to create change!
  • Ask employees what they like about working for the organization. These are things you want to make sure new hires know about.

Needless to say, it would be great to have an unlimited budget devoted to onboarding. But we all know that’s not realistic. What could help get some funds in the onboarding budget is being able to show how much it costs to hire an employee, the average length of employment for new hires, and the cost of an employee resignation. I’ve never met a CEO who lets money fly out the window – show them the numbers.

onboarding, training, survey, Allied, HRIQ, Allied HRIQ, employees

I hope you found these results interesting because I really enjoyed sharing them with you. There’s a lot more great data available for review at the Allied HRIQ site.  Please check it out.

Competition for talent is heating up. Companies are struggling to find skilled workers. It would be a shame to hire the next company rock star only to see them leave…or worse, stay and be unproductive.

Oh and P.S. Fellow HR bloggers Steve Boese, Kris Dunn and Trish McFarlane are offering their own insights into this data as well. Find their posts here on the Allied HRIQ site. You can also check out their individual blogs here, here and here.

{ 2 trackbacks }

{ 10 comments }

Corey Feldman May 22, 2012 at 11:12 am

I think a lot of this depends on the size and type of company. Certain positions you expect them to hit the ground running, others, not so much. But they main reason people leave (other than money) is how well the get along with their coworkers and supervisors. So any onboarding program should include a mentor.
Corey Feldman recently posted..Psych visit and Mental Health Day

Dave Dart May 22, 2012 at 11:35 am

Sharlyn: Good info…thanks for sharing. Onboarding is so important in regards to retention because it sets the tone (good or bad) for the relationship between the new hire and the company. There are some things any good onboarding program should include. http://goo.gl/kMp7o

Sharlyn Lauby May 22, 2012 at 3:50 pm

I really like the idea of building a mentoring component into onboarding. Even the most experienced new hire needs some guidance – especially in cultures with a lot of unwritten rules. Thanks for sharing your thoughts!

Marianne Griebler May 24, 2012 at 4:27 pm

Fascinating post. I’m wondering if there’s any application to what sometimes happens after a restructuring. Quite often even experienced staff find themselves transformed into “new hires,” having been transitioned to a completely different position or asked to assume new responsibilities–typically without training and all the while absorbing the shock of a major transition that often includes layoffs. From my perspective, some version of onboarding might be necessary any time there’s a significant structural/cultural change in an organization.

rob coates May 24, 2012 at 4:58 pm

Good people always have options…its the not so goods that stay where they are, I see this a bit like relationships, when you have a very attractive girlfriend there’s always somebody just waiting for you to screw it up so they can step in…..

Kathryn Heltsley May 24, 2012 at 7:11 pm

Great post about an overlooked area of importance, Sharlyn! We are working on this issue in my company and have found that a good (and inexpensive) place to start is with a monthly Onboarding presentation. Part of what we do is staffing for technical positions, so we have several new people per month and it is helpful to have a regular meeting time so they can onboard together, meet people, learn about the company, ask questions, etc. Existing employees can join in for a refresher course as well!
Kathryn Heltsley recently posted..Don’t Overlook this Risk Factor

Sharlyn Lauby May 25, 2012 at 7:36 am

Thanks for the comments.

@Marianne – Very valid point about revisiting onboarding after major change.

@Rob – I tend to agree with you that talented people always have options…if they are open to them.

@Kathryn – Really like the monthly meeting. It gets everyone involved in the process.

Paula MacLean May 25, 2012 at 2:15 pm

Onboarding is but one reason that turnover happens in an organization. Some turnover is avoidable and some of it is not. There’s a great book called Taming Turnover – Creating Strategies for Employee Retention that helps managers understand, measure and analyze turnover and then create a practical plan to improve retention. Here’s the link.

http://www.silvercreekpress.ca/books/taming-turnover-creating-strategies-for-employee-retention.html

Ellie June 5, 2012 at 11:41 am

After doing some research, I was surprised to find out that 90% of new hires decide within the first 6 months whether or not they are going to stay with their current employers. This statistic indicates how significant onboarding is to any company. The way a new employee gets acquainted to his or her work environment is crucial. For this reason, onboarding has stretched far beyond simply teaching a new hire how to handle their specific role within the company. This process of organizational socialization also includes getting new employees in touch with the company’s culture. What is the attitude one must adopt to succeed in this organization? Who can they go to for help??

If these types of questions are answered effectively, new hires will be more likely to remain employed at their new workplace. Furthermore, they will feel more comfortable to form interpersonal relationships and achieve collaboration within their team. Once a new employee is aligned with the company’s culture, they will quickly become a successful part of the organization. A job has become so much more than a pile of files and a calendar full of deadlines; a person’s occupation is a defining part of their lives. Therefore, choosing the right work environmental is a meaningful decision and successful onboarding is a key element in this process.

Sharlyn Lauby June 8, 2012 at 3:51 pm

Your comments are spot-on Ellie. I just returned from a conference where one of the speakers said it takes longer to effectively socialize a new employee than to teach them their job. Thanks for sharing.

Comments on this entry are closed.

Previous post:

Next post: