Digital employee onboarding
This blogpost is for you who want to learn more about digital employee onboarding and the benefits it offers in comparison to traditional onboarding. We have divided the article in 2 sections.
1: What are the benefits of digital onboarding?
2: What are the costs linked to traditional onboarding of new employees?
What is onboarding?
1: What are the benefits of digital onboarding?A positive onboarding experience results in higher satisfaction and motivation of the employee. The research suggests that an effective onboarding process needs to include technology to provide the employees the benefits of and convenience to interact with the learning materials whenever they want and at their own pace. Access from various devices, the ability to pick specific topics and bookmarking are all the more reason why digital onboarding is beneficial.
1. Ensuring consistency
Digital onboarding allows you to start the process earlier and unify it for distributed workforce, ensuring consistency. New hires can gain an insight into the organisation, get an overview of the various skills they are expected to master and start learning straight away. This will leave them feeling confident and motivated from the very start.
2. Strengthening company’s culture
Every employee will have the same experience as well as access to the same materials which contributes to embedding the company’s culture and communicating company values across the organisation. Clear values guide employees and give them an understanding of what they stand for establishing alignment.
3. Continuous improvement
Digital onboarding is a continuous process which helps to close knowledge gaps and improve employee performance. It gives the employee the opportunity to go back and refresh their memory or the employer the chance to update employees’ knowledge.
4. Increased retention rate
The real cost of losing a restaurant full-time employee is estimated at 5,864 $ (source). Some of the main reasons are poor leadership and unmotivated employees. Digital onboarding can help fix it all. Clearly defining expectations, setting milestones, and providing an overview of how the new employee’s work will contribute to the overall success of the company will help tackle lack of motivation
5. Reducing costs
Traditional onboarding incurs various costs which can be easily reduced with digital onboarding. Documents can be signed online, and paperwork can be converted too. This can save up valuable time which can be invested elsewhere. Digital onboarding enables you to have everything in one place ensuring accuracy.
2: The traditional onboarding of new employees.
Turnover costs include not only the costs associated with replacement, but also costs associated with errors made by overburdened workers, inefficiencies, and productivity loss leading to decreased service and work life quality.
Turnover costs include:
Separation costs such as paperwork processing and exit interview with the leaving employee.
Lost productivity costs such as peer disruption, learning curve and errors.
Lost knowledge and lost skill costs.
Attracting costs such as advertising the position online.
Recruitment costs such as interviews with the candidates, their workplace integration and training. Employee training is a great expense for every business. It covers both the structured training from the employer as well as the time that senior employees spend on teaching the new member. It is estimated that 66% of expenses in the hospitality industry are spent on training and productivity loss.
Employee turnover and retention rates are rough indicators of problems signalling issues with competitive salary, company’s culture, insufficient onboarding process, compensation schemes and others. High turnover rate can also have a negative impact on the employees who decide to stay, affecting their work morale. How can you calculate them?
Employee turnover rate calculation
Employee rate calculation is a simple measurement of how many employees are leaving a company in a year. It is important to bear in mind that the hospitality industry has a higher turnover rate than many other industries, around 74%.
Turnover rate = number of terminations per year + average active employees same year*100
Despite turnover rate being a useful ratio for industry benchmarking, it doesn’t provide us with detailed insight. It doesn’t take into consideration how long the employee worked there. A more telling calculation is a retention rate, showing how many new hires left during a specific time period.
Retention rate can be calculated for a specific period, for example a year. A one-year retention rate will show you the percentage of employees who still work in your organization after their first year.
One-year retention rate = number of specific people hired in previous year (x-1) still employed in current year (x) / people hired in previous year (x-1) *100
For instance, let’s imagine a company A hired 10 new employees in 2018.
- In 2019, 8 of them still work there
- In 2020, 5 of them still work there
- In 2021, 4 of them still work there
1-year retention rate = (8/10) * 100 = 80%
2-year retention rate = (5/10) * 100 = 50%
3-year retention rate = (4/10) * 100 = 40%
The retention rate for the third year is naturally lower than the first year’s one. The rate can never be higher than it was the previous year. It can be the same, if no one leaves the company, or lower. Low 1-year retention rate indicates problems that will continue in the future. Inspecting who leaves the company is therefore vital. Out of 100 hires 74 quit within the first year in the service industry (source). Losing high performers is a problem that must be addressed.
So why is digital onboarding better than traditional onboarding? First, it helps you to ensure consistency across the whole organization. All employees have access to the same up-to-date knowledge which enables them to deliver excellent customer service. Second, you can identify knowledge gaps that your employees have, provide them with the training they need and monitor how successful they are at closing them. Third, you can get your new hires on track from the start and hence reduce your lost productivity costs. Last, being able to calculate employee turnover and retention rates can help you identify how many employees are leaving you and act on it accordingly.