Hiring costs money. Even if you're able to reduce those costs by quickly finding the right talent, there is still that learning curve period when your new employee uses more resources than he or she produces. That learning curve means it can be weeks or even months before your new hire provides a return on your investment.
And, if your new hire is one of the 31 percent who quits within his or her first six months, not only do you lose your initial investment, but the estimated cost of replacement can equal up to three times that new hire's salary.
Why does such a high percentage of turnover happen? And what can you do to prevent it?
Research done by Aberdeen sheds some light: 90 percent of companies believe new hires decide to stay at a company within their first six months of employment. Those that undergo a structured onboarding experience are 58 percent more likely to remain with a company for at least three years. Such onboarding focuses on making the employee feel valued, providing the training and tools needed for success and forging workplace relationships.
Those with little to no onboarding often feel like they've been left to sink or swim on their own and are more likely to jump ship at the first opportunity.
Since onboarding encapsulates a new hire's first real interaction with your company, leveraging the experience becomes vital to preventing turnover.
Hunter Douglas provides the perfect case study: In an effort to find a correlation between turnover and product quality, the company's vice president of HR discovered that divisions with the highest percentage of damaged goods also had the highest turnover. Overall, 70 percent of the company's new hires quit within the first six months. After some investigation, she found that the biggest reason for such a high turnover was that new hires "felt a lack of connection when they were first hired." To remedy this, she changed their onboarding from a 10-minute video presentation to a mentoring program where new hires were paired with more veteran employees.
The turnover rate fell to 16 percent.
Onboarding doesn't have to be a big, elaborate experience (think Google). However, it does need to impress upon your new hires their importance to the company, equip them with the training they need to be successful and help them build relationships so they feel like they fit in.
Any less and you might find your new hires bailing before they contribute anything meaningful to your company--leaving you out several thousand dollars.