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Published March 2008

Battle Retention Deficits With On-Boarding

Kevin Martin and Jayson Saba

 

As organizations place increasingly greater importance on retaining and developing talent, formal on-boarding strategies, processes and programs are becoming a competitive necessity. Ensuring new employees have a positive experience during the first weeks and months on the job is critical to overall workforce productivity and the satisfaction of the new employees and their managers. Thus, many organizations have some form of new employee orientation program that goes beyond ensuring a new employee simply has a building badge, employee ID and computer log-in.

From December 2007 to January 2008, Aberdeen Group studied nearly 800 organizations globally to understand best-in-class practices in on-boarding. For this benchmark study, data was collected via online surveys and follow-up calls with line of business managers, HCM and human resources professionals across all organizational levels. Using specific metrics or key performance indicators (KPI), the sample then was divided into three classes: best-in-class (top 20 percent), industry average (middle 50 percent) and laggard (bottom 30 percent). Geographically, North America had the highest representation at 87 percent. In terms of company size, 16 percent of respondents represented small companies with a headcount of less than 100, 46 percent from midsize companies with a headcount of 100 to 2,500, and 39 percent were from large organizations with more than 2,500 employees.

Retention Trumps Productivity as Top On-Boarding Driver

The results, outlined in Aberdeen Group's study, titled "All Aboard: Effective Onboarding Strategies and Techniques," show 70 percent of all organizations are pursuing on-boarding to impact new employee retention. This contrasts findings from Aberdeen's 2006 study, in which the driving force behind company investments in on-boarding was new-hire productivity.

This dramatic shift in focus likely is due to the ever-increasing realities of the global war for talent in which an increasingly global playing field competes for a shrinking and younger pool of skilled talent. However, new employee productivity is critical. It ranked as the second most popular factor driving on-boarding in this year's study. Ranking third was the company's brand or reputation in recruiting top talent, which aids talent acquisition and retention.

Most organizations face the same pressures to pursue on-boarding, but the manner in which these organizations address these pressures differs and provides the basis for their ability to achieve success.

Best-in-Class Performance

Aberdeen used year-over-year performance in three specific metrics as key performance indicators to separate best in class from the industry average and laggard organizations. Among those that achieved the best-in-class designation in on-boarding:

• 100 percent improved retention rate of new hires.
• 60 percent reduced time to productivity for new hires.
• 57 percent increased completion rate for on-boarding tasks/activities.

Other metrics measured in the study but not used to determine best-in-class status included workstation readiness, time from date of hire (DOH) to completing the training needed to do the job, time from DOH until individual goals are defined and documented, and turn backs, defined as form processing errors. While organizations that achieved best-in-class status were more likely to experience year-over-year performance improvement across all metrics tracked in this study, best-in-class achieved vastly superior results across the three best-in-class KPI.