HR Management & Compliance, Learning & Development

How to Trim Onboarding Costs Without Impacting Quality

Onboarding is a make-or-break point in the employee life cycle. With the right approach, a fresh hire can establish meaningful work relationships, gain the right knowledge, and clarify expectations about job performance, reaching his or her full potential as quickly as possible. A poor onboarding experience, on the other hand, will only hamper job satisfaction and increase flight risk.

onboarding

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More than half of voluntary turnover happens within a year of new hires’ start dates, according to data gathered from Visier’s aggregated database of 3.5 million employee records. While many reasons (like poor job fit) may account for the high rates of new hire turnover, lackluster onboarding is likely a factor.
Studies have revealed a link between structured onboarding and retention, and according to Gallup, only 12% of employees strongly agree that their organization does a great job onboarding new employees.
Clearly, there is a connection between business impact and good onboarding practices. But for learning leaders, showing this link—for onboarding specifically and learning and development (L&D) in general—is easier said than done.
According to LinkedIn’s 2017 Workplace Learning Report, “talent professionals measure success based on qualitative feedback on in-classroom programs and quantitative data based on engagement with digital learning.” On the other hand, executives say that the best way to demonstrate the success of L&D programs is “by the impact of learning on retention and performance metrics.”
The pressure to deliver retention and performance metrics is only going to increase. Amid a cooling economy, more executives will inevitably shift to protecting profit margins. Unless learning leaders can convince senior management that parting with precious resources is worthwhile, getting support for new programs will become difficult, if not impossible. For existing programs, cost-cutting may become a new reality.
At the same time, the quality of onboarding programs can’t be ignored. And so, if you are a learning leader, chances are good you have a seemingly impossible task in front of you: Improve (or maintain) the quality of onboarding programs—but pull back on spending, too. The good news is that, with the right approach to measurement, you can be cost-conscious without sacrificing quality.

Go Beyond Your LMS to Improve Measurement

To get impact return on investment (ROI) and business impact data, it’s important to have good tools for tracking, measuring, and evaluating learning programs. According to one Deloitte report, 64% of organizations consider custom learning management systems (LMS)  or dashboards the most useful tool for this, but here’s the downside: An LMS is designed to help you efficiently perform certain tasks and keep records of those tasks—not analyze their impact.
To determine effectiveness, organizations need to take their onboarding data and connect them with the rest of their organizational performance metrics (engagement, performance, and exit data, for example). LMS data are only tied to a single system, providing metrics such as learner satisfaction, enrollments, cost of training, and learner demographics. Few LMS are able to capture data that are useful outside of the L&D function.
The best people analytics platforms, on the other hand, can connect data from multiple systems, helping you analyze data from across the employee life cycle. This allows you to do two things: a) Determine where you can cut back on spending, and b) justify where additional investments are required. Here is a closer look at how analytics helps with both:

#1. Determine Where You Can Cut Back

It can take an employee as long as 2 years before he or she is fully productive. The longer it takes a new employee to be productive, the more the organization has to invest before the individual starts contributing to important areas like revenue, customer satisfaction, or innovation.
Simply put: Time is money.
But shorten the runway too much, and performance will suffer. To balance the cost/quality equation, an analytics platform can help uncover a comparison of similar programs with varying lengths.
This way, you can determine if there is a measurable difference in outcomes like time to productivity, performance, engagement, and retention. A shorter program that engages new hires and sets them up for success will obviously win out over a longer program with similar outcomes.
The same approach can also be taken with other cost-cutting measures, like moving the training online or placing more cohorts together. There is always a threshold where cost-savings will impact quality, and knowing this is key. Having the capacity to determine how you can deliver the same quality of results—but for less money—is certainly an asset when budgets get squeezed.

#2. Justify Additional Investments with Hard Data

Most business leaders would be more willing to invest in a new onboarding program if they know it will help avoid costs in the long term, and not much can create a serious dent in the balance sheet like turnover: According to Bersin by Deloitte research, the total cost of voluntary turnover is $109,676 per exiting employee.
It can be difficult to determine whether onboarding is the main thing that is driving resignations at your company, however. When a new hire turns over quickly, it is not necessarily due to the onboarding content. It could mean the hire was bad and that he or she didn’t have the baseline skills needed to succeed or was misled about the job.
But when you reveal a trend (and not just point-in-time metrics), it is possible to show causation. With analytics, you can compare the percentage of turnover in the overall population and compare this to turnover among the program participants, which will help you gain a clear picture of whether a new program is working.
When you see that employees who have participated in new onboarding training have a lower rate of turnover, for example, you can demonstrate that it may be worth expanding the program.
Going one step further and quantifying cost-avoidance can help you gain attention from the CEO and the holder of the company purse strings: the CFO. Instead of saying turnover is at 19%, demonstrate that the upcoming increase in turnover will likely impact 3% of revenue or $3 million.
As HR expert John Sullivan, PhD, says in this blog post on influencing executives, “CEOs think of everything in terms of dollars because dollars are literally ‘the language of business.’”

Speaking the Language of Business with Learning Data

If continually assigning ROI and dollar values to your people makes you uncomfortable, you are not alone. But a shift in mind-set is imperative if you are going to get the resources you need to have a positive impact on your people through effective learning programs—especially when the focus shifts to protecting profit margins.
This way, you can speak the language of business while focusing on one of the more fulfilling aspects of corporate learning: ensuring new hires are nurtured in a way that connects them to the firm’s mission.

Nancy ZengerNancy Zenger is a Solution Manager at Visier, where she has spent the past four years constructing analytics solutions for HR. Nancy specializes in creating analytics for business users within the full spectrum of the HR domain and researching how organizations achieve value through adopting data-driven HR practices. Nancy earned a Bachelor of Communication from Simon Fraser University and a Master’s in Media Studies from Concordia University where she studied interfaces of the quantified self.