Calculating the ROI of Your Onboarding Program

Most organizations probably aren’t thinking about their onboarding process in terms of return-on-investment (ROI). After all, onboarding is just the annoying little bump in the road between offering a job to a candidate and having them do the real work that makes the company real money, right?

While it’s a common sentiment, it’s also pretty short-sighted–your onboarding process provides plenty of opportunities to save money and make your business more profitable, and it all starts with calculating the return on investment of your onboarding program itself. When you realize all the ways money can slip through the cracks of this process, you’ll be in a great position to seal it up and create a personalized onboarding program that ensures no money is wasted in building your team.

But how do you calculate the ROI of your onboarding program? Here are just a few areas where a strong onboarding strategy can save your organization money:


Reducing Onboarding Costs


Any onboarding naturally comes with an up-front cost. After all, your new hire will inherently not be 100% productive on their first day, and you’re spending money (via payroll hours, technology costs, time spent training by managers and other employees, etc) to bring them up to speed. 

It’s entirely possible to calculate the costs of onboarding a new hire by simply multiplying what you’re paying them by the hours spent in training–and you can get even more accurate by including hours spent helping them by other team members and the cost of the technology and materials involved in those calculations. When you run the numbers, it can be truly eye-opening! 

However, these numbers are important to run because they show you exactly where you can reduce these costs in the future. For example, the up-front cost of new onboarding technology can be offset entirely (and then some!) by setting up self-directed training modules and quizzes to test for comprehension and retention, allowing new hires to become more productive more quickly and freeing up time for existing employees and managers to focus on their regular work.


Improving Employee Performance


A truly successful onboarding process isn’t just about saving money on administrative costs, however. If that’s all that mattered, we’d just scrap the entire process and let everyone get to work! An onboarding process is, fundamentally, how you set up a new hire for success–that is, how you prepare them to do their best work as quickly as possible so that they’re making money and adding value for the organization.

 New employees typically take 1-2 years to achieve the same performance metrics as employees who’ve been in the position long term, and an effective onboarding strategy can speed up that process tremendously while giving you the tools to track performance. A new hire’s performance for their job can be measured before and after any given training task in the onboarding process, giving you useful data for refining the onboarding program itself.

 For example, if you’re spending the time and money to have them shadow an existing employee, you should be able to see a measurable improvement in the new hire’s performance after that task. And if you’re consistently missing that improvement, that may be a sign that the onboarding task is costing you more money than it’s bringing in down the road, and it may need to be re-evaluated!


Engaging Your Team


Smart organizations all know that for any new program or effort, you need to back it up with data. If you’re calculating the ROI of a new onboarding technology, then it’s also crucial to calculate if the program is actually working the way you intended, and that means getting strong feedback about the process.

 As it turns out, your onboarding technology can also help with this effort too. Your personalized onboarding strategy can make space (and schedule time) for 1-on-1 check-ins between new hires and managers, step interviews where employees meet with their managers’ managers, and even send out automated surveys about the onboarding process where data can be tracked and analyzed mathematically to show you exactly what’s going well and what may need tweaking to reach maximum potential.


RedCarpet onboarding technology sets your team up for success


SilkRoad Technology enables people to thrive in a changing workplace, and SilkRoad’s RedCarpet onboarding technology is an industry leader in engaging, training, and developing new hires and existing employees to ensure that your organization is running as efficiently and productively as possible every single day.

 For more information on calculating the exact ROI of your onboarding program, download our ROI Onboarding Guide. And to learn more about our talent management software and see how RedCarpet onboarding technology can help you hire, train, and retain the top talent in your industry, contact SilkRoad Technology today.