Note: This post was written in 2011. We’ve written more content with new research since then, including “5 Recruiting Metrics That Matter When Measuring Success.”
Business leaders are aggressively looking for strategies to increase their organization’s output while keeping staffing costs in check. HR metrics are a hot topic, as they have become the key to making the most of an organization’s people. Of all the potential strategies for maximizing ROI, an improved onboarding process is one area worth investing in. Why? Because ensuring the new talent you hire is prepared to succeed from day one is critical to engagement and productivity.
Some organizations spend valuable time and money acquiring new talent, only to have the onboarding experience be little more than a checklist of tasks to be completed in the first week. Orientation is limited to a tour of the employee’s immediate surroundings, training is reduced to “Holler if you need something,” and their workstation is semi-complete (the phone’s been ordered).
“On the other hand, an employee that experiences a smoother onboarding process will be better trained, more connected to the organization and quicker to produce.”
When determining ROI of the onboarding process, you need metrics that will help you determine how efficiently new hires can come in and make an impact on their team and your organization. While some things are easy to measure (i.e. costs per employee, terminations at 90 days, total cost of new hires), other things are more difficult to assess – such as average time to proficiency or cultural fit of those who quit.
Establish a Baseline for Measuring Onboarding ROI
The biggest obstacle many HR departments must overcome is working with company leadership to establish a baseline for how your organization will assess ROI. Not only can this be incredibly subjective, but it’s also time consuming. Unlike other company metrics, evaluating the true value of bringing on new employees and measuring their contribution to your organization is not always a straightforward process. Thus, the time spent with leadership establishing a baseline for measuring ROI is invaluable.
I recently spoke with Dave Wilkins, VP of Research at Taleo, about some best practices for enhancing the onboarding process and measuring ROI. Based on our conversation, there are a few key concepts to keep in mind when establishing your baseline to measure ROI:
- Onboarding should be consistent. All of your fancy data gathering will be for naught unless you can roll out a universal process for onboarding new hires. According to Wilkins, “Rather than have something that’s being done ad-hoc between different groups or divisions, you need a way to standardize the onboarding process.” At the small and medium-sized business level, the core ROI lies in having a solid onboarding process. Without it, HR professionals spend a lot of their time fighting fires.
- The onboarding process is just that: a process. Though checklists are great for staying organized, your new hires’ success depends on your ability to get them connected to your organization and keep them connected beyond their first day. A little food for thought: According to Leadership IQ, 46 percent of new hires don’t last more than 18 months. “The assumption that we can bombard people with everything they need to know in 90 days and not continually reinforce those things is a mistake,” explained Wilkins.
- The onboarding process is a lot like dating. Though the normal probationary period for new hires is 90 days, The Wynhurst Group reports 22 percent of staff turnover occurs in the first 45 days of employment. As you are getting a feel for your new hire’s potential within your organization, she’s sizing you up as well. So be sure she knows that your office door is always open, buy her lunch on her first day and let her know you’re committed to her success.
At the end of the day, your metrics will inform your ROI, but it’s up to you and your leadership to determine the true value of an improved onboarding process.
Brave the Metrics Madness
Once you have a grasp of what information will be most valuable to your organization, it’s time to strategically determine how to track it. While some of the data you measure won’t be cold, hard facts that fit nicely into a spreadsheet, there are still three key areas you can focus on that will provide you rich information: performance, experience and effectiveness.
Furthermore, I think it’s important to broaden your scope beyond your new hires to measure the impact they have on their teams, as well as the impact your organization sees as a whole. Here are a few ideas of what you can measure (as well as how frequently):
(30, 60, 90, 180, 360 days)
|Performance||Progress milestones||Change in overall productivity||Headcount vs. output|
|Experience||Employee satisfaction||Impact on team morale||Cultural fit vs. retention|
|Effectiveness||New hire time to proficiency||New hire time to proficiency vs. team average||Impact on retention (both quits and terminations)|
For Maximum ROI, Take Engagement Beyond Onboarding
The best metrics are not just FYI-this-is-going-to-be-archived-immediately reports. They should be forward-thinking analytics tools. According to Dr. John Sullivan at TLNT.com, “They tell you who’s going to win the Superbowl next year, not who won last year.” But let’s go one step further: Your metrics should provide the information you need to develop strategies to ensure you’re winning the Superbowl every year.
“Your ROI is answering one question above all: What is the value of onboarding new employees more effectively?”
Here’s a hint: the sooner they can begin making key contributions, the better. Take a look at your metrics and note improvements in employee performance, time to proficiency and increased retention. These are all major factors that will inform your organization’s answer to this question. And once you have this answer, move on to the next question: How can we maximize the value of a better-onboarded employee?
One way you can maximize this value is to keep the momentum going. “The hiring and onboarding process is really the start of the talent management conversation,” says Wilkins. “Engagement starts in the recruiting process, manifests itself in the onboarding process, and then continues on in how you motivate employees day to day.”
Many organizations leverage the tools and technology found in talent management systems to better manage the process of engaging and motivating their employees. Beyond core talent management functionality, these systems also offer reporting analytics and dashboard elements that provide the information you need to support your ROI analysis.
Regardless of the tools and metrics you have at your disposal, though, there isn’t one best practice for everyone to live by when measuring ROI. Rather, it comes down to having a clear conversation between HR and company leadership to determine the end result you’re going for.
What do you think? What metrics do you evaluate in determining onboarding ROI? Be sure to leave your comments below.