A previous article discussed the real value of a great onboarding program. The three factors great onboarding improves—job turnover rate, speed to competency and employee engagement—represent enormous value to any organization, each with a waterfall effect on the next. Measuring and tracking these KPIs before and after implementing or revamping your onboarding program will frame your understanding of the program’s value.
So, how do you measure the value of a great onboarding program?
Identify Your KPIs
Link the success of your new hire training program to measurable business results. This is where those KPIs come into play.
Ask yourself questions like these:
- How has turnover changed since rolling out the new program or revamping your existing training?
- With your new program, how much faster do new hires get up to speed and productive?
- What employee engagement metrics have improved, and by how much?
Keep in mind that numbers one and two are longer-term metrics, but you can still track incremental changes. Don’t underestimate the high value of employee engagement: Aon’s 2015 Trends in Global Employee Engagement Report links a five-percent increase in employee engagement to a three-percent increase in revenue growth the following year. You can track employee engagement with web-based apps like OfficeVibe.
For a complete fiscal measure of your onboarding program’s value, make sure you also measure the costs avoided. Remember, turnover isn’t cheap.
Eliminate Job Vacancy Costs
An expense related to both employee turnover and speed to competency is job vacancy cost: how much it costs your organization when a position is vacant and the cost incurred between day 1 and the day that your newbie hits the break-even point.
Decision Toolbox offers an eye-opening job vacancy cost formula. The daily revenue loss for an open position with a salary of $70,000, at 220 workdays per year, is $318 per day, or $1,590 per workweek. Industry analysts estimate that employees generate revenue at one to three times their salary. That’s around $3,182 per week in lost revenue due to a single $70,000 job vacancy. As the salaries of the vacant positions rise, organizations hemorrhage revenue even faster.
In Michael D. Watkins’ book “The First 90 Days,” more than 200 CEOs and presidents estimated an average of 6.2 months to be the time it takes a typical mid-level leader who was promoted or hired from the outside to reach the break-even point. That’s 26 workweeks or $83,000 in lost revenue, using our job vacancy cost example. If you have job vacancies, your organization is burning money.
If you’re tasked with calculating the potential value of a new onboarding program, these numbers are your biggest ally. But while many tangible benefits to onboarding can be objectively measured, what about the benefits that are less visible but are, well … priceless?
Tally the Intangibles
Onboarding should incorporate “WOO,” endowing new hires with a sense of how important they are to the organization. To foster confident employees who do what they’re asked and do it well, new hire training is crucial. But an additional asset generated by a high-quality onboarding experience is the intangible emotional piece—and that’s BIG.
CareerBuilder.com sums it up: “Effective employee onboarding has a positive domino effect: it ensures that new hires feel welcome and prepared in their new positions, in turn giving them the confidence and resources to make an impact within the organization, and ultimately allowing the company to continue carrying out its mission.”
How can you calculate the value of how someone feels about their job? It’s priceless. Employees with high job satisfaction are more likely to speak well of the organization, which reciprocates in immeasurable ways: social media shout-outs, Yelp reviews, increased customer satisfaction and friends who patronize the company. Employee evangelism is a powerful advantage.
Who knew thoughtful, personalized, 360-degree job training with an emphasis on human connection and company culture could so significantly impact your business bottom line? As it turns out, empowering employees to reach their A-game faster helps companies accelerate their end goals, too. It’s a win-win!