Financial Analysis To Support Your Employee Onboarding Case
Staff attrition can prove to be a costly problem. For example, according to research from Brightwave, the cost to the UK economy of staff attrition was likely to have hit £1 billion in 2010 at great expense to a company's bottom line.
Onboarding is a key way in which organizations can combat this and for HR departments to prove their strategic worth to a business.
Yet, convincing senior management to invest in an onboarding program while economic times are tough requires the building of a strong business case, including the financial benefits which will come with the initiative.
Previous research from Aberdeen Group has shown factors standing in the way of the development of such a program include a lack of knowledge about the benefits of onboarding, budget issues and businesses not believing their turnover of staff is high enough.
Kevin Martin, vice president and principal analyst of Aberdeen’s Human Capital Management research practice, explained: "The ability to engage new employees early and ensure they are aligned with the goals of the organization is essential to compete in today’s dynamic business landscape."
It's up to HR departments to convince senior management of the benefits of onboarding through supportive financial analysis, which speaks in the language they understand – money.
Making the financial case for onboarding
Translating the known benefits of onboarding into measureable business metrics can prove a challenge.
Onboarding, if done well, is known to reduce the time it takes an employee to become competent, reduce the time hiring managers spend orienting new employees, and boost employee engagement – which has been shown to increase productivity.
Placing an exact financial figure on the benefits of creating a technology-focused employee onboarding system can be difficult, but a report by Taleo suggested a company which hires 2,000 new staff members per year could save $2 million from an optimized onboarding process.
The analysis took into account lost productivity of 40 hours, costs relating to offline printing and delivery forms, the time taken by HR employees to process the forms and the cost of mistakes which come as a result of making mistakes in manual data entry.
Accounting for the productivity gain from onboarding, the elimination of offline processing costs, a 50 percent cut in the time HR spends on administration and a reduction in mistakes due to improved data integrity, Taleo estimated the sample company could save $2,296,200.
These costs were obviously based on estimates for a large company without a clear and optimized onboarding process. However, they demonstrate that savings are there to be made.
Using Technology to Improve the Financial Case for Onboarding
Sky is among the companies which has successfully implemented a technology-driven onboarding process, and produced the financial results which demonstrate it can add money to the bottom line.
The broadcaster'sGet Up To Speed process has been recognized as best practice in the industry, claiming a highly commended accolade in the HR Excellence Awards 2011 within the Most Innovative Use of Technology Category.
Judges at the awards were satisfied the system, which begins before the employee starts their first day at work, proved its business case and brought about measureable financial results.
The shift from the paper-based system to the automated version saved the company on average £20 per recruit. With the company employing on average 5,000 new members of staff a year, this could potentially lead to an annual saving of £100,000 if rolled out across the entire company.
Kenny Henderson, head of talent development operations at Sky, said: "This onboarding portal makes new starters feel part of the team and puts them in touch with others doing the same role and peers starting at the same time.
"It also already helped improve sales conversions for new starters, sped-up time to target performance and improved engagement."