A well structured induction program is critical for integrating new employees into a company. However, many businesses underestimate the costs associated with not having an effective induction process. The ramifications can be far reaching, affecting various aspects of the organisation.
Increased Turnover Rates
One of the most significant costs of neglecting a proper induction program is higher employee turnover. New hires who do not receive adequate orientation are more likely to feel disconnected and undervalued, leading to early resignations. According to the Society for Human Resource Management (SHRM), the average cost of replacing an employee can range from six to nine months of the employee's salary. This includes expenses related to recruiting, hiring, and training new staff . The Australian Human Resources Institute (AHRI) highlights similar concerns, emphasising that effective onboarding is crucial for retaining talent in the competitive Australian job market.
Decreased Productivity
Without a proper induction, new employees may take longer to reach full productivity. An effective induction program equips new hires with the necessary knowledge and tools to perform their roles efficiently. The lack of such a program can result in confusion, mistakes, and delays, ultimately impacting the overall productivity of the team. Research from the Aberdeen Group highlights that organisations with a formal onboarding process experience 54% greater new hire productivity . In Australia, companies that invest in comprehensive onboarding programs have seen substantial improvements in new hire productivity.
Poor Employee Engagement
Employee engagement is crucial for maintaining a motivated and committed workforce. A comprehensive induction program helps new employees understand the company's culture, values, and expectations, fostering a sense of belonging and purpose. Without this foundation, employees may feel isolated and disengaged. Gallup reports that disengaged employees are 37% more likely to be absent and have 18% lower productivity, affecting the company's bottom line . The Australian Government's Fair Work Ombudsman also underscores the importance of employee engagement in reducing absenteeism and improving workplace morale.
Increased Training Costs
Improper induction can lead to increased training costs in the long run. Without a clear understanding of their roles and responsibilities, new employees may require additional training and supervision. This not only strains existing resources but also diverts attention from other critical tasks.
Impact on Company Reputation
A company's reputation can also suffer from a lack of a proper induction program. Word-of-mouth and online reviews from disgruntled former employees can deter potential talent from joining the organisation. In today’s competitive job market, maintaining a positive employer brand is essential for attracting and retaining top talent. In Australia, employer branding is increasingly recognised as a key factor in recruitment strategies.
In conclusion, the costs of not having a proper induction program for new employees are substantial and multifaceted. Investing in a comprehensive induction process is not just beneficial but essential for the long term success and sustainability of any organisation.
Linq HR are Australian Employment and Workplace Specialists assisting organisations and employees be their best at work. Ph 1300234566.
References:
1. Society for Human Resource Management (SHRM). "Employee Turnover." Retrieved from [SHRM](https://www.shrm.org/resourcesandtools/tools-and-samples/toolkits/pages/keepingthelidon.aspx)
2. Australian Human Resources Institute (AHRI). "Effective Onboarding: The Key to Retention." Retrieved from [AHRI](https://www.ahri.com.au/resources/ahriassist/recruitment-and-termination/onboarding/)
3. Aberdeen Group. "Onboarding Benchmark Report: Technology Drivers Help Improve the New Hire Experience." Retrieved from [Aberdeen Group](https://www.aberdeen.com/research/6074/6074-RR-onboarding-benchmark-report.aspx)
4. Australian Institute of Management (AIM). "The Importance of Employee Onboarding." Retrieved from [AIM](https://www.aim.com.au/blog/importance-employee-onboarding).
5. Gallup. "State of the American Workplace." Retrieved from [Gallup](https://www.gallup.com/workplace/238085/state-american-workplace-report-2017.aspx)
6. Fair Work Ombudsman. "Managing Underperformance." Retrieved from [Fair Work Ombudsman](https://www.fairwork.gov.au/how-we-will-help/templates-and-guides/best-practice-guides/managing-underperformance)
7. HRM Online. "Employer Branding: Attracting the Best Talent." Retrieved from [HRM Online](https://www.hrmonline.com.au/section/featured/employer-branding-attracting-best-talent/)
