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Employee Onboarding Has Powerful Results, Yet Remains Overlooked By Many Organizations
Employee onboarding, defined by the Society for Human Resource Management (SHRM) as “the process of integrating a new employee with a company and its culture, as well as getting a new hire the tools and information needed to become a productive member of the team,” is an integral part of the employee experience.
Good employee onboarding increases employee engagement, productivity, satisfaction, and retention—data from the Brandon Hall Group found that great onboarding increases employee retention by 82%—yet 88% of companies admit they aren’t great at executing a solid onboarding experience.
It’s our professional opinion that organizations should dedicate more time and resources to ensuring they can plan and execute a strong onboarding experience. And what will we, as a company with a core tenet of being data-driven, use to try and convince you to do the same? Statistics, of course.
This blog will share the most pertinent and up-to-date statistics surrounding the state of onboarding, how stronger onboarding could benefit all organizations across all industries, and why more resources should be dedicated to strengthening the overall employee onboarding experience.
The 2023 Onboarding Statistics You Need to Know
- The Current State of Onboarding
- Onboarding from the Candidate’s Perspective
- The Effects of Bad Onboarding
- Onboarding Benefits
- Onboarding Technology
The Current State of Onboarding
The statistics in this have been curated to portray the current state of employee onboarding:
- According to data collected and reported by Glassdoor, the standard cost of onboarding a new employee is almost $4,000.
- Kronos conducted a study to see the primary goal of onboarding programs. They found that 62% of companies listed the top priority as acclimating employees to company culture, while 57% said it was to complete compliance requirements. They also found that more than half of organizations don’t measure the effectiveness of their onboarding programs, which is a real missed opportunity.
- The average new hire has 54 activities to complete during their onboarding experience (employers doing the onboarding often have many more steps!).
- 58% of organizations report that their onboarding primarily focuses on processes and paperwork and rarely lasts more than a month.
- In 2023, only 43% of employees reported having an onboarding experience longer than a day.
- 36% of companies don’t have structured onboarding, and 41% of their employees feel this is harming those companies. More surprisingly, 35% of companies spend zero dollars on onboarding.
- 47% of companies struggle with onboarding employees because they don’t have the correct technological infrastructure to do so, and 42% of HR managers who don’t capture onboarding information electronically spend three or more hours per employee manually collecting and processing onboarding data—we have a section below dedicated solely to onboarding tech stats!
This data shows us that there’s a lot to be improved in this current state of onboarding. Companies should be allocating more time, money, and resources towards this vital process and leveraging technology to make it stronger. HiringThing is excited to announce that we’ll launch our onboarding solution in 2024! If you’re interested in updates about this product, sign up at the link below.
Onboarding From the Employee's POV
A Work Institutes report found that 37.9% of employees who leave an organization will do so within their first year of employment and that two out of three of these employees decide to leave their organization within six months. Retention and onboarding are intrinsically linked, so the stats in this section are all about onboarding through the lenses of the new employees experiencing it.
- Only 12% of U.S. employees believe that their company has a good onboarding process. Gallup collected this data and found that 1 in 5 employees has a “bad” onboarding experience. Conversely, Gallup found that employees who reported “exceptional” onboarding experiences were 2.6x more likely to be extremely satisfied with their organization.
- It’s not just everyday employees, either. SHRM found that 32% of global executives reported poor onboarding experiences.
- 83% of employees believe having an onboarding program would be helpful, and onboarding helps new hires feel 18x more committed to their employer!
- A strong offer letter helps, too: a strong offer letter drives a 17x more emotional connection to a company for new employees.
- 90% of employees decided to stay or go within their first six months. Gallup finds that worker productivity reaches its peak after one year of employment.
- Historically, only 20% of companies asked employees for feedback on the onboarding process, even though new hires are 91% more likely to improve their connection with the managers right away when asked for meaningful feedback.
The Effects of Bad Onboarding
We’ve alluded to it earlier, but bad onboarding can devastate a company's retention rate, which could negatively impact finances—it costs 90% to 200% of an employee’s annual salary to find their replacement. Yet, only 10% of companies have done anything recently to improve employee onboarding. Hopefully, these stats inspire that number to rise.
- It bears repeating that 88% of companies don’t onboard well.
- Following a negative onboarding experience, 20% of new hires decide they wouldn’t recommend their new company to friends. It also doubles the chances of a new hire looking for a new job.
- SHRM finds up to 20% of worker turnover happens during the first 45 days of employment. CareerBuilder found that organizations lose an average of $14,000 per hire that leave during their first year.
- 43% of employees wait more than one week to get basic workstation logistics and tools. 18% of employees wait more than two months.
Onboarding Benefits
While this post might seem like it’s been a bit doom and gloom, the good news is that great onboarding has many more positive benefits!
- It’s worth repeating that good onboarding increases employee retention by 82% and increases retention for new hires, specifically, by 52%. Additionally, businesses with structured onboarding see an average of a 60% revenue increase yearly.
- Organizations with effective employee onboarding have an average of 33% higher employee engagement. They also see a 70% increase in new hire productivity.
- SHRM found that great onboarding ensures that 69% of employees stick with a company for at least three years.
- Companies with a lengthier, structured onboarding program help employees reach full proficiency 34% faster than those with shorter, administrative onboarding programs—77% of new hires who went through structured onboarding hit their first performance milestones faster and show a 62% higher time-to-productivity ratio.
According to The American Society for Training and Development, if companies invest in training employees, they can benefit from a 24% higher profit margin, showing that an onboarding process involving some training and development is a savvy idea.
Onboarding Technology
According to a recent report, 27% of HR professionals say that technology is the missing ingredient from their organization’s onboarding program, and 68% plan to use some onboarding technology in the future. As we’ve seen from these stats, onboarding is too often an overlooked part of the HR cycle, and somewhere, organizations can quickly strengthen with some structure and technology, especially since high-performing organizations are 2.5x more likely to use technology for their onboarding process.
- The onboarding software market is forecasted to experience a CAGR of 2.5% up to 2026, bringing the total market value up to $1.7 billion.
- Automating onboarding tasks resulted in a 16% increase in retention rates for new hires and an 18% improvement in initial performance.
- Companies can save money by automating their document management: an average of $20 per paper on filing, $120 spent on looking for lost documents, and $220 spent on recreating lost documents.
The following stats are from the Aptitude Research 2023 Talent Acquisition Buyer’s Guide:
- Companies are twice as likely to spend on talent acquisition and employee experience than onboarding.
- 42% of companies don’t have dedicated onboarding technology.
- Only 26% of companies fully automate onboarding.
- 90% of companies are using or would like to use their ATS for onboarding capabilities.
- 70% of companies think onboarding should be part of recruiting.
- Only 50% of companies want to increase their investment in onboarding tech.
A New, Automated Onboarding Solution is Coming
Onboarding has powerful financial, retention, and performance benefits for organizations that take the time to structure it. It could give companies a competitive edge since so many organizations seem to need to dedicate more resources towards it. Want to gain all the onboarding benefits and competitive advantage? In January, HiringThing will be launching our brand-new onboarding solution.
Are you an HR tech vendor that isn’t offering your customers a dedicated, strategic onboarding solution? We can help you, too! HiringThing is the premier private label recruiting software in the market today. Private labeling is a form of white labeling that allows organizations to go beyond branding and customize the solution to fit their business goals. We can help your organization offer customers a proprietary onboarding solution without building it from scratch. Interested? Set up a chat with one of our business development representatives today.
About HiringThing
HiringThing is a modern recruiting and employee onboarding platform as a service that creates seamless talent experiences. Our white label solutions and open API enable technology and service providers to offer hiring and onboarding to their clients. Approachable and adaptable, the platform empowers anyone, anywhere to build their dream team.
