With turnover rates rising and many employees leaving their jobs within the first 2-3 years, employee retention is a challenge for most enterprises. Retention programs need to start on day one of employment, making effective onboarding critical to your business’ success.
The impact of effective onboarding is profound. It serves as the engine behind key business metrics such as employee engagement, productivity, and retention. A positive new hire onboarding experience accelerates a new hire’s transition to full productivity and fosters a sense of belonging, understanding of company culture, and clarity about job and career expectations. When done right, onboarding turns new hires into brand advocates and can lead to significant cost savings by reducing turnover and boosting retention.
In this article, we’ll look at why onboarding needs to be taken seriously as a strategic business activity, highlight the benefits of a well-organizing new hire onboarding program, and show how to measure its impact on your organization. By implementing a streamlined, effective onboarding process, you can set your employees up for success, ensuring they quickly adapt, grow, and contribute to your company’s goals.
What is employee onboarding and why is it important?
Employee onboarding integrates new hires into a company by familiarizing them with their job duties, the organization’s culture, other team members and their roles with the organizational structure, and established policies and processes. A well-executed onboarding process helps new employees feel welcome and quickly become productive.
Unfortunately, poor onboarding is one reason why 28% of new hires leave their jobs within the first 90 days. A disappointing outcome, considering the time and resources spent recruiting and training them. And given the rise of hybrid work, it’s critical to have a structured, technology-driven onboarding process. Not one dependent on traditional 20th-century in-person classroom work. Optimizing onboarding training boosts retention and enhances employee satisfaction and performance by helping new hires build relationships even when remote, clarify expectations, and adjust to their roles more quickly.
What are the key benefits of implementing an employee onboarding program?
An effective employee onboarding program offers many benefits, from cost reductions to improved productivity and longer-term employee retention. Here is how a well-designed onboarding process can positively impact your organization:
Longer employee retention
Effective new hire onboarding directly influences the length of time an employee stays with the company. For example, companies that invest in a thorough onboarding program often report lower first-year turnover rates. By establishing a clear path for growth and development early on, onboarding encourages employees to see a future within the company.
Cost savings and ROI
About 50% of hourly workers leave their new jobs within the first four months, and half of senior external hires depart within 18 months. Early turnover is costly and disruptive, often leaving organizations struggling with productivity gaps and additional recruitment expenses. Hiring processes are expensive on their own, so the costs of repeating them unnecessarily can stack up fast.
However, a strong new hire onboarding process can help reverse this trend. Research shows that organizations with an effective onboarding program can improve employee retention by 82%—this reduction in turnover results in significant cost savings by avoiding the need for repeated recruitment and hiring. For example, imagine a business that spends six weeks hiring an ideal candidate, only to lose them within a few months due to poor onboarding—resulting in wasted time, resources, and reduced productivity.
Time to productivity
A well-organized onboarding experience sets the stage for learning and development, helping new hires feel supported and motivated. Ensuring that new hires are equipped with the right knowledge, access to tools, and ongoing support during and after onboarding builds confidence and accelerates their ability to perform. The quicker new hires reach full productivity, the greater the positive impact on the organization’s overall performance and growth.
Improved employee experience and engagement
Well-executed onboarding training demonstrates that the company is invested in the success of its new hires, making them feel welcomed and valued. By focusing on employee experience and engagement, organizations can create a strong connection between the new hire and the company’s culture, goals, and values. When employees feel aligned with the company’s vision and supported in their growth, they are more likely to remain engaged and contribute their best work.
What are the main challenges in employee onboarding?
Many organizations will face the same challenges when developing a new employee onboarding process.
Some of the most common impacts of a successful onboarding experience include the following:
- Lack of structure - New hire onboarding programs without a clear structure can leave new employees feeling confused and unsure about what to expect and the company's overall expectations.
- Unclear on progress - When there’s no clear tracking or feedback on progress, employees can feel uncertain about how well they understand the scope of expectations.
- Lack of clarity on job expectations - One of the most critical aspects of onboarding is setting clear expectations for new employees regarding their roles and responsibilities. For example, new hires should understand the KPIs leadership will use to monitor their performance. Without this clarity, new hires may feel unsure about what is expected, leading to confusion, mistakes, and frustration.
- Unengaging program - Dull onboarding training can rapidly cause new hires to lose interest. “If this is what onboarding is like, what’s the day-to-day going to be like?” they may be left thinking. Employees may struggle to retain vital information without interactive or stimulating content, slowing their adjustment and productivity.
- Slow integration into the team - If new hires do not feel part of the team, they may struggle to build relationships and a sense of togetherness, negatively impacting their engagement with the organization.
What are the consequences of poor employee onboarding?
Hiring processes are already time-consuming, but the costs of hiring the wrong person and seeing them leave prematurely are even higher. Inadequate onboarding can leave new hires feeling isolated and unprepared. Across an entire organization, this increases turnover rates, disrupts team productivity, and adds to recruitment costs.
How do you measure employee onboarding effectiveness?
Getting quantifiable results from such a human-centric process as onboarding can appear difficult. Still, effective ways exist, especially if you’re using an employee training LMS that captures relevant data.
Here are key metrics and methods to help you evaluate the success of your onboarding process:
- Define new-hire productivity for each role - Define "full productivity" for each role in your organization. For a salesperson, this could be when they make their first sale. Track how long it takes new hires to reach this milestone by subtracting the start date from the date they achieve full productivity. This helps gauge the efficiency of your onboarding process in getting employees up to speed and contributing to the business.
- Employee attrition rate - Monitor the attrition rate of new hires at 3, 6, and 12 months after implementing your onboarding program. Compare year-over-year (YOY) data to see if your new hire onboarding efforts are reducing turnover.
- Learner progress and course completion - Track new hires' progress through their onboarding journey. Use your LMS to get a clear view of where employees are in their training and which modules they have completed. This helps ensure that all new hires move through the program as expected and receive the necessary information.
- Testing through quizzes and assessments - Incorporate quizzes and assessments to confirm employees' understanding of new hire onboarding content. This is especially useful for compliance and policy-related courses where knowledge retention is regulated. Regular testing allows you to identify areas where additional training might be needed and helps ensure that new hires are well-prepared.
- Interviews and feedback tracking - Conduct stay interviews at key milestones, such as 30 or 60 days after hire, to gather feedback on the onboarding experience. Managers can ask new hires about their overall goals, challenges, and improvement areas.
Findings from the recent Forrester Consulting Total Economic Impact™ Study commissioned by Absorb showed a composite organization representative of interviewed customers saw:
- Reduced onboarding costs of $2.4M
- Faster employee onboarding time savings of $1.2M
- $200 Reduced onboarding costs per employee
- 40% faster onboarding time
What type of content do you need for an employee onboarding program?
What type of content should be included in your new hire initiative? And should your team be creating or curating the content? It’s a delicate balance to find, and each company will work out what works for them. But here’s a framework that will work for a lot of use cases:
Build content that covers:
- Company or brand overviews
- Mission, vison and values
- Department specific onboarding
- Resources and tools
- Processes
- Company specific policies
- IT specific resources
Buy content that covers:
- DE&I
- Compliance
- Workplace safety
- How to use Microsoft Suite/ Google Suite
- Data/Security
- Leadership
Watch webinar: Build, buy or both? The ultimate LMS content library
How can you use AI to maximize the value of your employee onboarding programs?
AI can significantly enhance your employee onboarding program by personalizing learning paths, automating repetitive tasks for instructors and HR personnel, and providing real-time insights. With AI-powered tools, onboarding content can be tailored to each new hire's specific roles, ensuring they receive relevant training. AI can also track progress and flag areas where additional support might be needed, helping managers identify employees who may require extra attention. Additionally, AI chatbots can provide 24/7 assistance, answer common onboarding questions, and offer guidance, allowing new hires to get support while learning on their schedule.
New employee onboarding checklist to foster engagement
Your onboarding program can either help new hires envision themselves at the company long-term, or just as quickly turn them away and drive your employee turnover rate. Consider the following new hire checklist for more successful onboarding.
- Pre-boarding communication and form completion - Your HR team should reach out to a new hire before their start date to provide the necessary information and answer any questions they might have. This part of the process includes removing the job posting online and gathering all of the documents that the employee has to fill out on their first day — such as employee handbook acknowledgments, benefit enrollment documents, and compliance forms.
- Workspace and equipment setup - Ensure the new employee’s workspace is prepared and equipped with the necessary tools and technology to set the stage for a smooth transition and immediate productivity. The same is true for remote employees, who must be set up and given necessary access. HR professionals should contact the IT team, facilities manager, and accounting department to add the hire to any relevant systems.
- Team introductions - Introduce new employees to the team as soon as they arrive to foster a sense of belonging, encourage collaboration, and help establish relationships from day one. HR leaders or people managers can schedule a team welcome meeting, assign an onboarding buddy, or organize team-building activities to do this effectively.
- Company overview -Provide a comprehensive company overview, highlighting your organization's unique mission, values, culture, and strategic goals — helping new hires align with the company’s vision.
- Policies and procedures - To set new employees up for success from the start, clearly communicate organizational policies and procedures to ensure compliance and set expectations of behavior and conduct.
- Job-specific training - Deliver targeted training tailored to the employee’s new role, boosting their confidence in having the skills, knowledge, and resources needed to ensure a smooth job transfer. A learning management system (LMS), for instance, provides structured and customizable training programs with valuable resources to support an improved experience.
- IT systems and security - Cybersecurity is a growing problem across industries. And, because 88% of data breach incidents are caused by employee mistakes, ensuring new team members receive proper training on IT systems, data security protocols, and cybersecurity measures is a critical onboarding activity.
- Benefits and HR processes - To foster satisfaction and reduce confusion, explain employee benefits, payroll, leave policies, and other relevant HR processes to new employees — helping them navigate administrative aspects.
- Set goals and expectations - With hires eager to take on their new role, be sure to establish clear performance goals. This not only helps individuals understand what’s expected of them but also enables them to align their efforts with the organization's objectives.
- Continued support and check-ins - Provide ongoing support, mentorship, and regular check-ins with your HR department and managers, so new hires feel supported throughout the onboarding process and beyond. This offers the opportunity to address any concerns and promote continuous growth and development.
LMS’ vs. HCMs: Which software is the best for delivering employee onboarding programs?
New hire onboarding is one of the most common uses of a learning management system (LMS). That’s because onboarding becomes increasingly complex, especially for large, dispersed organizations with varying regulations and standards.
But some of the big name HCMs are building out learning tools alongside their traditional HR capabilities, and organizations choose to go with them because they don’t want to pay for multiple systems. While this is a reality of business, it can be short sighted as HCMs tend to have a one size fits all approach, which can go against organizational efforts of building people-centric learning experiences.
An LMS for employee training is highly effective for creating structured, personalized learning programs that focus on skill development and knowledge retention, while HCMs are designed to help HR teams manage broader HR functions like payroll and performance management. However, for a new hire onboarding program to truly reach wider business goals, it must be a well-thought-out, robust learning experience that integrates seamlessly into the company's broader training initiatives.
The importance of integrations can’t be overstated. Using an LMS with built-in integration capabilities allows you to streamline the LMS onboarding process, ensuring that training, compliance, and performance tracking all happen in one system. Instead of relying on multiple separate tools, running your onboarding through your LMS allows for a more cohesive, efficient onboarding experience that aligns with long-term business objectives.
HCMs also don’t cater to learning beyond your employees. With more organizations looking to onboard, train, and enable their customers, partners, and members you want to be using one platform to offer streamline and effectively administer learning.
Absorb LMS: An AI-powered LMS onboarding solution
By fostering engaging learning experiences, Absorb LMS drives employee development and business productivity, helping companies meet their training goals and deliver measurable outcomes. Whether for internal or external learners, the platform is designed to prioritize the core purpose of learning - outcomes. It is built with an understanding of the challenges that hinder effective learning and the best ways to learn.
For employee onboarding, Absorb LMS focuses on the specific needs of new hires, providing tools that make onboarding tasks easier to manage and measure. The platform is equipped with the capabilities to streamline the onboarding process, ensuring that employees are set up for success from day one.
