It’s exciting to hire new employees on your team as your startup scales. As a founder, you’ve done extensive research, interviewed thoroughly, found the best candidates, and are excited for your new hires to leverage their expertise to grow your startup.
But, wait...
There’s a crucial (often overlooked) step that comes between a new hire joining your company and delivering the results you’ve expected all along: Onboarding.
Onboarding is the process of getting a new hire set up with everything that she needs to do her job successfully.
Most startups (and even established companies) fail to onboard new hires optimally. Poor onboarding can lead to employee churn. The cost of replacing an average employee costs anywhere from $3K-$18K annually! The cost of poor onboarding is not only high monetarily but can have long-term implications on your company’s roadmap, culture, and future hires.
Having recently gone through the onboarding process myself at AbstractOps, I’m here to share my learnings and the onboarding best practices AbstractOps has put in place.
The Costs of Poor Onboarding
- Low productivity: New hires that aren't set up with the right tools and resources take more time to ramp up and hence, take more time to deliver results. This loss of productivity can cost you 1-2.5% of your revenues yearly.
- Higher chance of failure: Mismatched expectations and lack of clarity on what to do can result in failure to perform. An indicator of this can be when new hires have excellent credentials and track records from their previous experiences but fail to perform at your company.
- Churn: 20% of new hire churn occurs within the first 45 days of employment with 1 in 4 new hires leaving within their first year. Replacing a new hire costs you up to 20% of your new hire’s salary. The cost of churn is much higher if you look at time spent in training an employee and take into account the opportunity cost of a high performing employee.
- Low morale: Failure to meet expectations in a new job can drive down morale and motivation across the organization. Be wary as negativity that goes unaddressed can spread like cancer. Just like cancer, the sooner you catch it and heal, the better for the body and those around you.
- Poor branding: New hires that leave due to poor experiences can spread a negative image of your company outside. This can affect how potential candidates view your culture and hamper future hiring. Check out employee reviews of these companies to understand the real impact on branding: Loomis, Pomeroy, Frontier Communications.
On the flip side, a strong onboarding process can drive up new hire retention by 50% and show boosts in new hire productivity by over 60%.
Imagine a new employee getting up to speed in a third of the average time taken to onboard - let’s say 1 month instead of 3 months. Not only does this employee get 2 months that would have been spent on onboarding back, but an additional boost of ~156 days because of increased productivity - that’s almost 200 additional days of productive work in year 1!
So what entails a strong onboarding process?
We have for you the ultimate onboarding checklist so you can set up your new hires for mutual success. Download it here!
Conclusion
The time taken to onboard a new hire varies by the role and the startup and can take anywhere from a couple of days to weeks. At AbstractOps, we follow a 2-3 week onboarding process following this checklist. We’ve found that giving access to company wide tools and reading material before Day 1 helps in making the rest of the onboarding process seamless. Team members are then able to start off with some background knowledge and information, thereby making sure they are not lost*.
*Bear in mind that any work prior to the start date should be optional for the new team member. You want them to come rested and ready for their role and, since prior to their start date, you are not paying, you also cannot expect them to do any work.