I’ve been asked a few times in the past about the true cost of onboarding an employee. Of course, that answer will change with each company and how they interpret a cost associated with a new hire. Many studies have been done on the subject and they all seem to point to various average costs to onboard a new employee. To get some proper perspective, I went right to the president, David Kenney, of our partner in launching our great new platform, E-Hire:
I recall that several years ago the Aberdeen Group published their findings of a survey suggesting that the average cost of onboarding a new employee is $110 dollars. I believe this number is high for small companies that run their business out of one office and can contain the onboarding process to one hiring hr administrator and the employee.Other companies such as restaurants groups with many disparate locations and a centralized HR function may find this $110 number to be a fair estimate of their costs if everything goes exactly according to the book. (IE. If the employee completes all the paperwork 100% legibly and signs the paperwork everywhere they are required. If the Hiring manager completes all their paperwork correctly and timely overnights the completed paperwork to corporate HR. And if HR correctly keys all the information into back end systems and manually files the new employee onboarding paperwork efficiently… Yes $110 might be a good estimate.
(Employees time to complete forms and sign off on policies ($25), Hiring manager’s time to prepare, review and approve the onboarding packet ($30), UPS overnight ($25), Corp HR function to review, approve, file and enter info into backend systems ($30))
Often times though the exceptions to the book process can cause the average cost to grow significantly. (IE. Employees don’t complete all the paperwork, but the Hire Manager, (who is also the GM of a restaurant), doesn’t catch the mistakes and sends the uncompleted packet to Corporate HR… Corporate not only can’t read the handwriting of the employee, but signatures are missing, they call the manager and a back and forth process ensues that cost all participants more and more time to complete the onboarding process…
While calculating the cost of what it should cost to manually onboard a new employee is easy, calculating the cost of what it actually takes is a bit more problematic. It would be nice if nothing ever got missed and every new employee’s handwriting was pristine, but lets face it we don’t live in “Smallville” or “Lake Wobagon”.
However, our automated employee onboarding solution E-Hire does eliminate these issues, while reducing the cost of onboarding employees. The employees can answer simple questions specific to the company and E-Hire guides the employee through the entire process ensuring all paperwork is completed and all company policies are attested to.
In E-Hire a busy hiring manages never has to print onboarding documents, they simply review online and approve.
Using E-Hire a Corporate HR admin is notified the employee onboarding package is complete and they simply approve and the data is automatically exported to back end systems.
With E-Hire our customers:
No longer have any partially completed onboarding forms.
No longer a need to ship docs.
No longer have data entry errors.
Reduced time for all participants.
Significantly reduced their compliance risk.