We often get asked, “What is the cost of onboarding new employees?” There is no quick and easy answer to this question, but it isn’t hard to calculate. Every company is different and will have its own processes, policies and procedures for each new hire. Studies on the subject show that they all seem to point to various average costs to onboard a new employee.
High Cost of Onboarding New Employees
I recall that several years ago the Aberdeen Group published their findings of a survey suggesting that the average cost of onboarding a new employee is $110 dollars. I believe this number is high for small companies that run their business out of one office. That is if they can contain the onboarding process to one hiring HR administrator and the employee.
Other companies such as restaurants groups with many disparate locations and a centralized HR function may find this $110 number to be a fair estimate of their costs if everything goes exactly according to the book. For instance, many things need to happen for the $110 to be a good estimate. The following items need to fall in place:
- the employee completes all the paperwork 100% legibly
- the employee signs the paperwork everywhere they are required
- the Hiring manager completes all their paperwork correctly
- the Hiring manager timely overnights the completed paperwork to corporate HR
- HR correctly keys all the information into back end systems
- HR manually files the new employee onboarding paperwork efficiently
If all of this falls into place perfectly, then, yes, $110 might be a good estimate.
Calculating Cost of Onboarding New Employees
Employees time to complete forms and sign off on policies ($25), Hiring manager’s time to prepare, review and approve the onboarding packet ($30), UPS overnight ($25), Corp HR function to review, approve, file and enter info into backend systems ($30).
Often times though the exceptions to the book process can cause the average cost to grow significantly. For example, employees don’t complete all the paperwork, but the Hire Manager, who is also the GM of a restaurant, doesn’t catch the mistakes and sends the uncompleted packet to Corporate HR… Corporate not only can’t read the handwriting of the employee, but signatures are missing. They call the manager and a back and forth process ensues that costs all participants more and more time to complete the onboarding process.
While calculating the cost of what it should take to manually onboard a new employee is easy, calculating the cost of what it actually takes is a bit more problematic. It would be nice if nothing ever got missed and every new employee’s handwriting was pristine, but lets face it we don’t live in “Smallville” or “Lake Wobagon”.
An Automated Onboarding Solution
However, our automated onboarding solution does eliminate these issues, while reducing the cost of hiring new employees. The employees can answer simple questions specific to the company and Efficient Onboarding guides the employee through the entire process ensuring all paperwork is completed and all company policies are attested to.
In Efficient Onboarding a busy hiring manager never has to print new hire documents; they simply review online and approve.
Using Efficient Onboarding, a Corporate HR Administrator is notified when the employee onboarding package is complete with an opportunity to approve the data before the seamless integration into back end systems.
With Efficient Onboarding, our customers:
- No longer have any partially completed onboarding forms.
- Do not need to ship docs.
- No longer have data entry errors.
- Reduced time for all participants.
- Significantly reduced their compliance risk.
If you have more questions about Onboarding and are looking for a way to simplify the process and make it more cost effective, contact us today.