Stop Hiring Until You Fix Your “Onboarding Gap”

February 26th, 2014
Written by: Elizabeth Richards

OK, that headline might sound a bit extreme. It’s true that we are always in a hurry to fill that open position so we can get back to our regularly scheduled responsibilities. But I am concerned that companies continue to focus on hiring without having a quantifiable approach to what happens during their new employees’ first 90 – 120 days.

Several months ago, we posted a series of articles on the “Onboarding Gap,” the somewhat neglected interval between recruiting and performance management. The “Onboarding Gap” is where a profit-draining phenomenon known as Non-Productive Compensation lurks and where bad hires roam without being identified.

Since then, I’ve been even more aware of an interesting but alarming trend: Companies are continuing to hire, providing a few hours of orientation, some 401K enrollment forms and a company mug–and sending the new hires on their merry way. This is despite the fact that studies show the first 120 days of the employee lifecycle hold tremendous risk and opportunity–for both the employer and new hire:

• Lost productivity resulting from the learning curve for new hires and transfers is between 1% – 2.5% of total company revenues.¹
• New employees are 69% more likely to stay after three years if they’ve experienced a well-structured onboarding program.²

So here’s a suggestion: Every time you think about making a new hire–each time you post a job or speak to a recruiter–ask yourself if your organization is really ready. Think about how much it costs to find the right person. Then consider how much you could be wasting if the new hire (a) doesn’t become fully productive within a specific time period, i.e. 90 days (TPO calls this Non-Productive Compensation); and/or (b) isn’t terrible enough to fire (“She’s such a nice person.”), and lingers as a poor fit, setting the wrong tone with other employees and new hires. You could be talking about years of unproductive time.

Even though it might be tempting to keep hiring without a proper, measurable onboarding process, we strongly recommend you develop one. You’ll have new hires that hit the ground more quickly, and, when they don’t, you’ll have actionable information to make the best decision for your organization. 

¹ Source: Mellon Financial Corp © 2013 IHS

² Source: Ganzel, 1998, Cited in Fast Company Magazine