Jobvite Blog: Today’s Recruiting Trends

Hidden Costs of Onboarding a New Employee

40% of businesses in the United States are currently reporting that they’re understaffed to some degree. This leaves many companies struggling to not only hire, but train new employees as quickly as possible.

Unfortunately, onboarding isn’t free! There are plenty of costs that go into hiring new employees beyond the obvious payroll increase. The average company spends over $1,500 on a new hire before they’re ready to be considered a fully integrated employee. As you pull more employees into your business, here are some of the costs to remember.

Paperwork and onboarding time

Paperwork feels like it wouldn’t be expensive, but the average employee takes at least an hour to go over the necessary information they need to read before getting hired. This time and paperwork can make costs add up over time. The more employees you’re onboarding, the more apparent this cost will be.

To avoid this, consider pre-onboarding. During pre-boarding, the company sends out vital information and forms ahead of a new employee’s first day. This allows a new hire to fill out and submit documents on their own time through an onboarding website. This saves time physically scanning and walking through paperwork with each new hire and also allows them to learn about their job on day one.

Cost of loss from turnover

Unfortunately, over a quarter of the employees that most companies hire will quit before they’ve been with the company for a full week. This means wasted resources and a loss of time and energy for any role that has turnover. When employees leave early on, it’s often because of poor training, poor cultural fit, or the role didn’t match up to their expectations.

Some of the top reasons for employee turnover are:

  • Poor training
  • Unorganized onboarding with no onboarding solution
  • Earning less than the industry standard
  • Management or supervisors don’t listen to employees
  • Being overworked or not getting the hours they were promised
  • Lack of recognition for their hard work

To avoid this cost, the best thing a company can do is be thorough with onboarding new employees. Ensure that they’re well trained, help them understand their importance in the company, and show them their growth path to show them the benefits of working for your employer.. Employee turnover isn’t something that can be completely avoided, but you can cut down on it by investing money and time into new hires.

Decreased productivity from training

Many companies skip any formal training and have their employees learn on the job or through job shadowing. Unfortunately, this is a quick way to lose money through a lack of knowledge of processes and best practices. In addition, experienced employees that have to take the time to train and talk through processes and procedures can slow down their own job responsibilities and frustrate them.

The best way to avoid this issue is to train new employees as thoroughly as possible. Receiving a hands-on education that’s well thought out from a trainer whose job it is to teach can ensure that your employees all have one uniform way to do their jobs. Although you may feel like you’re dodging a financial bullet by avoiding paying for a specific employee to train new employees, your company loses out through a lack of uniformity in training and production losses.

Cost of additional HR if you hire often

If your company has a call center or is in another industry with a high employee turnover rate, you aren’t a stranger to the cost of onboarding a new employee. This type of constant hiring might mean that you need an employee specifically for hiring new employees – also known as a recruiter.

This pro will be in charge of finding new workers, onboarding new employees, and reducing employee turnover. Although they’ll raise your costs because of their salary or hourly wage, they’ll be able to turn it around by ensuring their hiring process checklist can help them find the best employees possible.

This is a place where you want to invest and find the best employee possible since they’ll be directly responsible for future employee turnover and helping keep the average cost per hire lower. These employees can also help retain long-term employees by performing exit interviews and catching why some workers chose to leave to prevent this in the future.

Price of training and onboarding material

Whether your training requires a dummy version of a program your employees will use every day, or if it’s going to waste products as they learn to create whatever items the company produces, there will be financial loss from training. Although the minimum amount of money most companies spend is around $1,500, if your training material is more in-depth and needs more of an eye for detail, the training per employee can rocket up to over $4,000.

Onboarding is an unavoidable expense

There’s no way to avoid the costs of onboarding unless you never hire again. The best thing you can do is to find a way to make the onboarding experience as affordable as possible by training and working on retention. Poor training will increase your turnover rates and frustrate your current employees.

Take the time to ensure that every employee is the perfect match for your company, and invest the time and energy necessary to train them. The better you hire, train, and the more of a team you make the company seem, the lower the turnover rate.

More on employee onboarding

Jobvite offers a comprehensive software suite to help recruiters to bring on the best employees in the most efficient ways possible. We’re happy to be your partners in this endeavor. Contact us now for a product demo!


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