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A disorganized onboarding process costs your company a fortune. Here's how to fix it

The only constant in the business world is change. In case of the onboarding process, change can create opportunity and scope for growth. On the other hand it can also affect the profitability and viability of a business if not properly managed.

This is particularly true when it comes to managing the employment cycle. Not only because replacing established employees in a business is time consuming and expensive. But also because it can cause instability within the company that can impact both clients and employees.

Conversely, using structured onboarding processes to manage the employment cycle can improve employee retention. Furthermore it can dramatically decrease the costs associated with employee turnover.


Improve productivity and save money with our process, employee turnover and asset management software.

Paying the hidden costs of the employment cycle

Businesses can spend a lot of money in attempts to either retain departing employees or replace them with suitable new hires. However, many don’t consider how important the onboarding process is in avoiding the expense and disruption of employee replacement altogether.

While many companies have some sort of onboarding process in place, few actively invest in establishing structured, repeatable processes.

“Surveys of HR managers indicate that as few as 19% of all companies have a dedicated budget for onboarding.”

In effect those companies that avoid the expense associated with establishing sound onboarding procedures tend to find themselves paying the costs of failing to retain their new hires several months down the line.

Every time a company must replace an employee the overall costs of loss of productivity, recruitment and training pile up quickly. In fact, this process typically costs 200% of the departing individual’s annual salary.

Structured onboarding saves money

“It is estimated that 25% of new hires leave companies within their first year of employment.”

However, companies that invest in onboarding see the benefits in terms of employee retention. 

For example statistics compiled by a leading onboarding software provider indicate that over two thirds of employees who go through a professional onboarding process will stay with a company for three years.

And good onboarding doesn’t only improve employee retention.

It also enables employees to become fully productive members of a company as quickly as possible. This reduces the hidden costs of bringing in new employees. Having a structured onboarding process in place can improve new-hire productivity by up to 50%.

The relative costs of structured onboarding versus employee replacement are also important to take into consideration. Professional onboarding costs around $67 per employee. Compare that to the estimated $65,000 it costs to replace an employee.

See it from an employee’s perspective

The costs associated with replacing employees tells only part of the story when it comes to inadequate onboarding. Put yourself in a new hire’s shoes to get a different perspective of how procedures shape an employee’s life cycle at an organization.

“The reality is that joining a company is daunting for a new hire. “

New employees are faced with having to integrate into established teams. Simultaneously they have to adapt to a new office environment and handle any unfamiliar challenges that their role may demand of them.

During this stressful period employees are highly sensitive towards the way they are managed by the company. This can have a major impact on how the employee views the company well into the future.

A structured, planned onboarding process that thoughtfully integrates an employee into their new work environment creates confidence in the competence of the employer. Moreover it also up a positive perception of the employee’s future of the company.

By contrast, a disorganized onboarding process can permanently undermine an employee’s confidence in their employer.

Communication breakdowns, disorganized asset management and erratic task allocation are issues frequently encountered by new employees. So are a heavy reliance on the employee ‘self-onboarding’ themselves using generic materials or complex processes.

Any of these issues can create unnecessary stress and negativity.

The sense of chaos and uncertainty that a messy onboarding creates can quickly become a fixed perception of the company. And employees who feel uncertain, disoriented and insecure are much more likely to depart the organization for greener pastures as soon as an opportunity presents itself.

Setting up structured processes can be simple

It’s clear that having structured onboarding processes in place at your company makes sense.

However, if you don’t have an onboarding program in place, you can find yourself in much of the same space as a new employee without a good onboarding program. You’re facing a challenge without a clear roadmap of how to get to where you need to be to function optimally.

The good news is that turnkey onboarding solutions are available.

SOPHY gives you the tools you need to ensure that your employees have a great onboarding experience and reach full productivity as quickly as possible.

Our software provides:

  • best-in-class usability
  • no installation required – our solutions are fully hosted and secure
  • over 50 customizable onboarding templates
  • real-time access to process and asset data.

If you’d like to save money for your business and take the first step towards improved employee retention, you can start right now.

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