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The Cost of Not Onboarding

Kristen Buchanan

One of the reasons that so many companies skimp on onboarding is that it can seem expensive at first.

But at Edify, we find that not onboarding a new employee ends up being more costly over time.

The cost of an employee doesn’t just include that worker’s salary. It’s a combination of the salary paid, the money and time invested to train that employee, and the cost of replacing them when they eventually leave the position.

For employees that stay between 12 to 18 months, a company can pay anywhere from three to three and a half times a new hire’s salary to cover all of those costs.

How does investing in one person add up to such a high cost?

Since the employee stayed for a relatively short time, it’s very unlikely that they were working at full productivity; they weren’t necessarily doing 100% of their job without support from their manager or their team, and likely weren’t adding extreme value to the team and to the company.

That means that with each new employee a company pays a higher amount per hour (even though most of us in the tech industry don’t work on an hourly basis) as the manager and various team members work with the new hire to bring them up to speed.

So while it might seem like you’re paying for just the new hire at first, the cost incurred to bring on one new employee can quickly add up.

We know that proper onboarding can speed up an employee’s time to productivity, which means the rest of the team can get back to doing what they do best. We also know that effective onboarding can extend the time that the new hire stays in their role, so the company doesn’t have to hire (and onboard, and train…) as often.

Those are two important hidden costs of bringing on new team members, and good onboarding can reduce them both. So while onboarding might seem like a greater investment initially, it significantly improves the company’s financial efficiency overall.

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