A bad hire costs $80.000 according to Randstad (2015).
... but potentially the cost can be higher if you look closely at the numbers from a study made by Muehlemann & Leiser (2018). It shows that especially training of the new hire is what is causing the costs to increase.
New hire training costs takes up more than 79 percent of the total costs when hiring a new employee, and thus it is not the initial recruitment costs that carry the most weight.
During the new hire training, ressources needs to used in order to make the new employee effective, and that also applies when the employees have to familiarize themselves with new workflows, but also when existing employees have to help during the process.
Structuring the onboarding can help bring down the costs, and in the section below you can learn more about the specific categories of costs.
Categories of costs:
- Recruitment costs: Search for the candidate/selection, screening, interviews, and evaluation.
- Adaption costs: Training new employees, lack of productivity.
- Interruption costs: When existing employees have to help new employees and end up moving further away from their own tasks
Kilde: HR Guiden online
There is big variation in costs - depending on the profession you wish to employ. Read more about the differences in professions, marginal costs per new hire measured in weekly salaries and other factors that influence employment costs in this article from HR Guiden Online.
Onboarding decreases costs
Structured onboarding can decrease the cost of hiring a new employee. That minimises the time-to-performance with up to 60 percent. Simultaneously, effective onboarding optimises the employee engagement by more than 20 percent, and when the employee is engaged there is 87 percent less risk that the employee leaves the organisation within 12 months.
Another benefit is that onboarding creates retention, and will prevent you from having to spend more money on starting a new recruitment process. This is very important to remember, as 25 percent of all new hires quit within the first 12 months.
Create a structured onboarding programme
Onboarding covers both practical, personal, and relational factors, and it is the process where a new employee goes from being an outsider to becoming an insider.
It is not enough to just put some nice flowers on the new hire's desk and let them start their tasks straight away. Onboarding is more than that.
Beyond the administrative tasks that needs to be in place when you have a new hire, it is also important that the new employee experience becoming a part of the social work environment and community.
A buddy-programme is a good tool to introduce a new hire to the organisational culture and community. The new hire will be assigned a professional buddy, who will help out with specific work tasks, but also a social buddy from another department, who will take the new hire out on coffee-walks, and introduce the new hire to the wider organisation and its culture - and become a part of the organisation.
Digital onboarding is another tools that can be used to create a successful onboarding programme. In the digital onboarding you can present the organisation's history, mission, and goal in a fun and engaging learning universe, which could be based on gamification for instance.
That way the new hire will feel like a part of the organisation faster, but also be able to understand how their skills can contribute to help the organisation achieve its goal.