Cost of onboarding a new employee: 10 recommendations to keep it low

Hiring and training new employees in today's competitive job market can be a significant business expense. The onboarding process, which includes all the tasks involved in integrating a new employee into the company, can be time-consuming and costly. However, there are ways to minimise these expenses and streamline the onboarding process. 

Effective onboarding is essential for setting new employees up for success. It helps them quickly understand their role, company values, and processes. A study also found that new hires are 50 percent more productive when they go through formalised onboarding. However, a poorly planned onboarding process can result in high costs in terms of time and resources.

One key aspect of successful onboarding is creating a welcoming and inclusive environment for new employees. This can involve assigning a mentor to guide them through their initial days, organising team-building activities to help them integrate into the company culture, and ensuring they have all the necessary resources to perform their job effectively.

Moreover, it is crucial to tailor the onboarding process to the individual needs of each new employee. This could include providing additional training for those who require it, offering flexible schedules for a better work-life balance, and encouraging open communication to address any concerns or questions.

This article will first examine the onboarding process and its associated costs. Then, we will discuss strategies to reduce onboarding expenses. Lastly, we will provide you with 10 recommendations to help you keep your onboarding costs to a minimum.

Understanding the onboarding process and its costs

The onboarding process involves numerous tasks crucial to ensuring a smooth transition for new employees. These tasks range from administrative paperwork to training and mentoring. While each organisation's onboarding process may vary, common elements contribute to the overall cost.

Firstly, direct costs include salaries and benefits for HR staff involved in onboarding activities. Additionally, there may be expenses related to paperwork, orientation materials, and training resources. However, indirect costs can also contribute significantly. For example, the time managers and colleagues spend supporting the new hire, and any disruptions to daily operations can impact productivity and profitability.

When evaluating the onboarding cost, it is important to consider direct and indirect costs. By identifying areas where costs can be minimised, businesses can create a more efficient and cost-effective onboarding process. According to one study, the average cost to onboard a new hire is $1830, while SHRM mention an average cost of $4425 to onboard.       

Moreover, a well-structured onboarding process helps new employees integrate into the company culture and plays a vital role in employee retention. Employees who undergo a structured onboarding program are 58% more likely to remain with the organisation after three years. This highlights the long-term benefits of investing in a comprehensive onboarding process.

Furthermore, the onboarding process is not a one-size-fits-all approach. It should be tailored to the organisation's needs and the new employee's role. Personalising the onboarding experience can lead to higher job satisfaction and engagement, ultimately contributing to increased productivity and performance.

10 strategies for reducing onboarding costs  

Reducing onboarding costs benefits the bottom line and improves the experience for new employees. By streamlining the onboarding process, companies can ensure a smooth transition while controlling expenses. Here are some strategies to consider:

1. Streamline administrative tasks

One way to minimise onboarding costs is by automating administrative tasks. Utilise HR software or online platforms for employee documentation, payroll setup, and benefits enrollment. This eliminates the need for manual paperwork and saves both time and money.

Streamlining administrative tasks is a crucial step in minimising onboarding costs. Companies can save time and resources by automating employee documentation, payroll setup, and benefits enrollment. This allows HR teams to focus on more strategic initiatives, ultimately improving the overall onboarding experience for new employees.

2. Leverage in-house training resources

Look within your organisation for subject matter experts who can provide training to new employees. Utilising in-house resources reduces the need for external trainers and associated costs. Additionally, internal trainers may better understand the company's unique processes and culture.

Leveraging in-house training resources is another effective way to reduce costs. By tapping into the knowledge and expertise of existing employees, companies can provide tailored training that aligns with their unique processes and culture. This not only eliminates the need for external trainers but also fosters a sense of camaraderie and collaboration among team members.

3. Implement a buddy system

Assigning a buddy or mentor to each new employee can greatly enhance their onboarding experience. This provides an opportunity for on-the-job training and support, reducing the need for formal training programs. It also promotes a sense of belonging and accelerates the integration process.

Implementing a buddy system can significantly enhance the onboarding experience for new employees. Companies provide an invaluable support system beyond formal training programs by pairing them with a mentor or buddy. This personal connection accelerates the integration process and helps new employees feel more confident and engaged from day one.

4. Use a cost-effective online training platform

Deliver basic training modules using affordable online training platforms. This reduces training costs and provides employees with a self-paced learning experience. Many online platforms offer a wide range of courses that can be tailored to specific job roles. If you have a large pool of deskless workers, consider a mobile-based training platform.

5. Optimise the onboarding schedule

Evaluate the onboarding schedule to ensure a balance between productivity and training. Consider staggering training sessions to avoid overwhelming new employees with too much information at once. By optimising the schedule, you can minimise downtime and maximise learning opportunities.

6. Focus on role-specific training

Avoid generic training that may not directly apply to the new employee's role. Instead, concentrate on providing targeted training that aligns with their job responsibilities. This ensures that the training is more relevant and reduces unnecessary costs.

7. Create reusable onboarding materials

Develop standardised onboarding materials that can be reused for future hires. This includes employee handbooks, training manuals, and orientation videos. Creating reusable resources saves time and money when developing materials for each new employee.

8. Evaluate and adjust the process regularly

Continuously review and refine your onboarding process to identify areas for improvement. Solicit feedback from new employees to gain insights into their experience and any potential inefficiencies. By making regular adjustments, you can optimise the process and minimise unnecessary expenses.

9. Encourage peer learning and collaboration

Promote a culture of peer learning and collaboration within your organisation. Encourage existing employees to share their knowledge and expertise with new hires. This fosters a supportive environment and reduces the need for external training resources.

10. Utilise feedback for continuous improvement

Regularly seek feedback from new employees and managers involved in onboarding. Learn from their experiences and identify areas where improvements can be made. Feedback provides valuable insights for continuous improvement and cost reduction.

Formulas for calculating your onboarding costs

Understanding the intricacies of your onboarding costs is crucial for maintaining a financially healthy organisation. By delving into the direct and indirect expenses associated with bringing new employees on board, you can gain valuable insights into your company's financial outlay and identify areas for potential savings.

Here are two formulas you can use:

Formula 1: Direct onboarding costs

1. Calculate the direct costs spent on onboarding activities (e.g., salaries, benefits).
2. Divide the total by the number of new hires during a specific period.
3. This gives you the average direct onboarding cost per new employee.

Direct onboarding costs are those expenses that can be attributed to the process of integrating a new employee into the company. These may include recruitment fees, salary payments during training, and any other direct expenses related to the onboarding process.

Formula 2: Indirect onboarding costs

1. Identify the indirect costs associated with onboarding (e.g., training time, productivity loss).
2. Divide the total by the number of new hires during a specific period.
3. This gives you the average indirect onboarding cost per new employee.

Indirect onboarding costs are often more challenging to quantify but are equally essential to consider. These costs can include the time managers, and colleagues spend training new hires and any productivity loss during onboarding. By consistently monitoring these costs, you can track the effectiveness of your cost-saving initiatives and make informed decisions to optimise your onboarding process further.

Minimising onboarding costs with Lingio

Minimising onboarding costs is essential for businesses to operate efficiently and maximise resources. By implementing the recommendations outlined in this article, you can streamline your onboarding process and reduce expenses without compromising the quality of training and support provided to new employees.

Every organisation's onboarding process is unique, so it's important to assess your specific needs and tailor these recommendations. By continuously seeking feedback and adjusting, you can create a cost-effective onboarding process that prepares your new employees for success.

Elevate your onboarding process with Lingio's AI-driven learning platform, which is designed to make employee training seamless and cost-effective. Lingio's innovative approach to learning offers personalised, interactive training sessions that align perfectly with your company's onboarding needs. Streamline your training expenses and enhance the onboarding experience for your new hires with Lingio. Discover how to onboard your team and keep costs low - try Lingio now.

FAQs:

1. How long should the onboarding process last?

The duration of the onboarding process can vary depending on factors such as job complexity and industry. However, it is generally recommended to have an onboarding process that lasts at least 90 days to ensure sufficient time for new employees to integrate fully into their roles.

2. How can I measure the success of my onboarding process?

Various metrics, such as employee retention rates, productivity levels, and feedback from new hires, can be used to measure the success of your onboarding process. Regularly assess these indicators to evaluate the effectiveness of your onboarding efforts.

3. Is it worth investing in onboarding if employees leave the company?

While it's true that some employees may choose to leave the company in the future, investing in a robust onboarding process is still worthwhile. An effective onboarding program can significantly improve employee engagement, productivity, and overall job satisfaction, increasing retention rates and potential cost savings in the long run.

4. Should onboarding be standardised across all positions in the company?

While certain aspects of onboarding can be standardised, it is important to consider the unique needs of different positions within the company. Tailoring the onboarding process to specific roles ensures new employees receive the training and support necessary to excel in their respective positions.

5. How can I create a positive onboarding experience for new employees?

Creating a positive onboarding experience involves providing new employees clear communication, support, and resources. Ensure they feel welcomed, set clear expectations, and offer opportunities to connect with their colleagues and understand the company's culture.

6. What are some common challenges companies face during onboarding?

While onboarding is crucial for successful employee integration, companies face challenges. One common challenge is the lack of a structured onboarding program, which can lead to confusion and inefficiency. Another challenge is the information overload that new employees receive, making it difficult for them to absorb and retain important details. Additionally, poor communication between different departments involved in the onboarding process can hinder the smooth transition of new hires.

7. Are there any best practices for onboarding remote employees?

Onboarding remote employees requires special attention to ensure a smooth integration. Some best practices include providing clear guidelines and expectations for remote work, virtual team-building activities to foster connections, and remote-specific training and resources. It is also important to establish regular check-ins and communication channels to address any concerns or questions that remote employees may have.