Onboarding sets the tone for the employer/employee relationship. Succeed and you boost everything from a new hire’s individual productivity to the company’s overall retention rates. Fail and you could find yourself with an exodus of early hires and spiraling recruitment costs.
With so much on the line, it’s prudent to continually measure onboarding efforts. Here are KPIs and metrics HR teams can use to quantify success — and discover opportunities to improve.
Why Is Onboarding Important?
The onboarding process is where new employees form their impressions of your company. A positive experience is vital to realize the full return on recruitment and hiring investments.
Done well, onboarding builds the “three C’s of success:” cohesion, completion and competitiveness. Cohesion inspires employees to work together to achieve business goals. When properly trained and outfitted, task completion is more likely. And a cohesive team that has the tools to succeed sets your company up to be competitive in the marketplace.
How Is Employee Onboarding Measured?
Talent acquisition is one of the three core aspects of human capital management. Within the acquisition bucket, factors HCM managers look at include cost per acquisition, time to fill a position, employer brand equity and onboarding efficiency.
For HR’s purposes, important onboarding metrics to track focus on how this process affects the employee experience, retention and recruitment rates, consistency and compliance, and other measures relating to both the HR team’s goals and business results.
7 KPIs & Metrics to Measure Onboarding Success
Improving the employee experience and business outcomes through excellence in onboarding is not a warm and fuzzy exercise that defies quantitative measurement. Quite the contrary: While there are certainly qualitative factors to consider, such as cultural fit and a new hire’s ability to quickly forge relationships with peers, even these can be quantified using indicators like involuntary turnover and engagement rates.
Let’s look at seven areas in which all HR teams should be gathering and analyzing data.
Data for evaluating new-hire satisfaction levels is usually obtained through the employee interviews and anonymous surveys that are key parts of an employee experience roadmap.
There are methods to cross-check satisfaction metrics, such as measuring correlations. For example, think about the link between employee connections and engagement. Companies that foster connections establish a culture of cooperation and cohesion and encourage more senior employees to proactively reach out to new hires; these efforts tend to pay off in engagement as employees find ways to work together to achieve business goals.
Just remember that these are correlations and not causes, so compute accordingly.
One of the best ways to identify satisfaction levels is with a net promoter score (NPS). Marketers will likely recognize this formula, as it’s used to track customer attitudes toward a company. And the same principles can apply to new hires. Ask new hires to rate on a scale from 1-10 how likely they are to recommend the company to a colleague or friend, based on their onboarding experience. Those who mark 9 or 10 are promoters, and those who mark 1-6 are detractors. The rest in the middle are passive. To calculate your net promoter score, subtract the percentage of detractors from the percentage of promoters. Benchmark against your competitors attracting similar talent pools if possible.
Net promoter score = Percentage of promoters - percentage of detractors
Voluntary and involuntary new-hire turnover
Voluntary turnover measures the number of employees who leave the company of their own accord. When this number is higher than expected, and/or if new hires are quitting very soon after their start dates, it’s a clear indication that something is amiss with either the hiring process or the employee experience. It’s also expensive, especially if the company is losing talent that is difficult to replace: SHRM estimates that replacement costs can equal six to nine months of the former employee's salary.
Note that while turnover is an important metric, it’s a lagging indicator. When an employee has quit, it’s too late to address dissatisfaction. Still, it’s essential to track who is leaving and look for patterns, such as managers, job titles or roles seeing more than average turnover.
Involuntary turnover means the department, or the company at large, either had to do a force reduction or managers found the new hire to be subpar in one or more performance expectations. A large number of the latter involuntary turnover category flags less-than-optimal recruitment, hiring and/or onboarding practices, so this metric should never be ignored. It is crucial to find out why you’re bringing in the wrong people or not equipping potentially good fits to succeed.
In both cases, the goal is to find and resolve problems so you can bring employee retention rates back into alignment. The U.S. Bureau of Labor Statistics tracks turnover by industry and is a source of benchmarking data. HR specialists might want to survey line managers and departmental staff for insights on why it’s difficult to retain employees in certain competitive and essential roles.
Use these formulas to calculate your new hire turnover rate.
New hire involuntary turnover rate = (Number of new hires who are forced to leave in a given period / number of new hires in the same period) x 100
New hire voluntary turnover rate = (Number of new hires who leave of their own accord in a given period / number of new hires in the same period) x 100
Retention is the flip side of turnover — it measures how many employees decide to stay for a defined period and should be calculated based on a set baseline. SHRM estimates that as much as 50% of employee turnover happens within the first 18 months of employment, so many firms use this as a standard. If a worker stays past that period, it’s a safe bet they’ll continue.
Maximizing retention rates begins with making a good first impression with new hires, but more important is maintaining a positive employee experience over time. A big part of that is making sure that reality lives up to the promises and branding that attracted talent to your company — the “employee value proposition.”
Answering the question of what employees expect from your company is crucial in both attracting and keeping good people. A foosball table in the office and pizza lunches are likely less important to a senior employee, for example, than a positive culture and commitment to career development and growth.
New hire retention rate = # of new hires who stay with the company for at least 18 months in a given period / # of new hires in the same period
Training completion rate
Poor training completion rates can flag problems, such as too little time allotted to complete the training or a lack of manager buy-in as to the need for the program. High training completion rates, in contrast, indicate employee interest in improving their job performance and realizing promotion goals.
It’s well worth investing in training, which is key to employee engagement. A well-designed program translates to higher productivity, improved retention and morale, more innovation and other advantages to the company. From the worker POV, it indicates that the company is willing to invest in skills development.
An onboarding best practice is to develop plans and checklists to make new hires aware of training requirements and upskilling opportunities. Checklists also hold both managers and employees accountable for training completion.
A straightforward KPI to calculate, simply take the number of new hires who complete training and divide by the total number of new employees.
New hire training completion rate = # of new hires who completed training in a given period / total # of new hires in the same period
Time to productivity
The whole point of onboarding is to assimilate new hires and equip them to achieve full productivity as quickly as possible. Measuring the timespan from a new employee’s first day to when the hire achieves expected productive output is a solid indicator of how well your onboarding processes are performing.
Time-to-productivity metrics can and should vary between teams, seniority and roles, but they should be within a range that’s applied uniformly to all individuals in the same jobs.
To get an accurate measure of this KPI, work with managers and ask them to help you identify at what point new hires are performing the expected tasks for their roles with little or no supervision and trainings are complete. Consider holding regular 30-, 60- and 90-day check-ins with managers to ask about training and performance of new hires.
Average time to productivity = Total # of days until new hires are performing at expected levels with little oversight for all new employees in a given period / total number of new hires in the same period
When outsiders become part of a cohesive group, they are then invested in the company’s success and engaged in contributing to positive customer outcomes. In effect, employer and employee now have an established relationship wherein both feel they are contributing to and benefiting from the other’s wellbeing.
When that relationship falters or fails to form, employees either never engage, or they become disassociated. Therefore, the degree of employee engagement is a strong indication of the health of the relationship and the drive to innovate and stay productive.
When calculating engagement, metrics to watch include absenteeism, turnover, your company’s ratings on employer review sites and, where possible, your average employee Net Promoter Score (eNPS). Like a traditional NPS, an eNPS provides a standard way to measure whether your employees are enthusiastic and would recommend the organization as a desirable place to work.
Here are a few formulas to calculate recruitment KPIs that can help you measure your new hire engagement with work.
New hire absenteeism rate = (# of workdays missed by new hires in a given period / total # of days worked by new hires in the same period) x 100
New hire turnover rate = (# of new hires who leave employment in a given period / #of new hires in the same period) x 100
To calculate the eNPS, survey new hires and ask them if they would recommend the company as a desirable place to work. Those who mark 9 or 10 are promoters, and those who mark 1-6 are detractors. The rest in the middle are passive.
New hire eNPS = Percentage of promoters - percentage of detractors
Return on investments
From an HR perspective, your company’s return on investments in recruiting, onboarding, training and talent management can be measured in several ways, including higher retention and recruitment rates, faster time to productivity, increased employee engagement, higher employee experience ratings and morale and increased productivity.
Identify the KPIs you need so you can measure onboarding ROI in terms of the business outcomes you seek. When onboarding is exceptionally well done, ROI tends to be fast and evident.
Here are some formulas and information for KPIs that can help you measure the return on investment made in onboarding efforts.
Offer acceptance rate = (# of offers accepted by applicants / total # of offers made) x 100
Retention rate = (# of employees who stayed for a given period / # of employees at the beginning of the period) x 100
Revenue per employee ratio = Net sales in a given period / average number of employees in the same period
To gauge employee satisfaction, consider deploying regular sentiment surveys. Include questions like, on a scale from 1 to 5:
- Do you feel supported by the company?
- Do you feel your contributions are valued?
- Do you have the tools and support to do your job well?
Track how your employees rate your company over time and zero in on problematic departments and areas to try and help make improvements.
Best Practices for Improving Onboarding
In contrast, mistake-prone onboarding is a top reason new hires fail to meet expectations. One common problem? A pile of activities that overwhelm. Think about how many documents and administrative tasks you throw at new hires in the first few days. Could you provide forms ahead of time and task managers with getting technology and workstations set up in advance? Does all training really need to be completed in the first week?
Even when companies present the right set of activities for completion by new hires, many fail to properly follow through. The Human Capital Institute cites inconsistency, competing priorities, lack of manager buy-in and accountability and insufficient internal resources as top challenges to onboarding success.
Once those issues are resolved, HR professionals can improve their companies’ employee value propositions (EVPs) by showing ROI and working to provide tangible benefits, like flexible work schedules, that will appeal to any demographics or job roles where KPIs indicate a need for investment. Also consider offering more challenging or exciting work, training managers to provide better support, increasing training opportunities and helping people see purpose in their jobs beyond a paycheck.
HR and Payroll
Manage and Measure Onboarding Metrics With HCM
Human capital management processes and HCM software are invaluable for measuring and managing the onboarding processes. HCM best practices can also help you identify additional KPIs that will pay off in increased insights.
With HCM or a human resources management system (HRMS), HR teams have a comprehensive collection of relevant analytics and tools, preconfigured with automated capabilities to ensure fast and accurate answers to important questions.
Remember that onboarding is not just paperwork to complete. It’s the foundation of a relationship between employee and employer. Given all the participants are humans, it is best to stay connected at a very human level. Use the processes to cement the relationship in a positive light rather than simply checking off items in a to-do List. Use automation to be more helpful to employees, and not to create emotional distance.