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The Cost of Onboarding a New Employee in 2024

August 29, 2023


Companies spend less on onboarding when they ally with onboarding experts like WillDom.

HR departments spend countless hours brainstorming and putting systems into place to properly onboard new hires, but why is this so important?

Effective onboarding is the foundation for long-term employment success. However, this process comes with its own set of costs, which can significantly impact an organization’s bottom line.

Case-in-point: Several industry reports from Glassdoor have indicated that it costs more than $4,000 to onboard an employee—such as filing paperwork, providing necessary technology, ramping up productivity, etc.—so getting it right the first time is imperative.

Keep reading to learn about the costs of onboarding a new employee in 2024.

Understanding Onboarding Costs

Onboarding encompasses a range of activities designed to equip new hires with the tools, knowledge, and connections they need to become effective and engaged team members. This phase incurs various costs, and understanding these costs is crucial for businesses aiming to streamline their onboarding processes and ensure they are investing wisely in their new talent.

Here are seven costs of onboarding every company should know about:

1. Recruitment advertising fees

This includes costs for online job boards, industry-specific publications, social media platforms, and recruitment agencies. The goal is to cast a wide net to attract a diverse pool of qualified candidates, often involving investing in premium listings and targeted ad campaigns to reach the desired audience effectively.

2. Background checks and pre-employment screening 

Ensuring that potential hires are a good fit for the organization can include criminal record checks, credit checks, reference checks, and verification of qualifications. These processes require specialized services and can vary in cost depending on the depth of the necessary screening.

3. Hiring event expenses

For many organizations, especially those filling multiple positions or seeking specialized talent, hosting hiring events such as career fairs or open houses can be an effective recruitment strategy. These events involve costs such as venue rental, catering, promotional materials, and staff time to organize and run the event.

4. Training materials and programs

New employees typically undergo a structured training program to familiarize themselves with their roles. Developing these training programs involves costs related to creating or purchasing training materials, such as manuals, e-learning modules, and interactive software, as well as the time spent by subject matter experts to deliver the training.

5. Relocation expenses

For positions that require the new hire to relocate, companies often provide relocation assistance. This can include moving fees, temporary housing, travel costs, and sometimes even spousal job search assistance, which can significantly add to the direct costs of onboarding.

6. Onboarding software and platforms

Many organizations use specialized software or platforms to streamline onboarding. These systems can include features for electronic document management, onboarding checklists, and interactive orientation programs and may involve setup fees, subscription costs, or per-user licensing fees.

7. Professional memberships and licensing fees

For roles that require professional licenses or memberships in regulatory bodies or industry associations, the organization may cover the cost of obtaining or renewing these credentials as part of the onboarding process.

The Hidden Expenses of a Mis-Hire

The consequences of a mis-hire extend far beyond the initial costs of recruitment and training and deeper into the financial fabric of an organization. These hidden expenses, although not always immediately visible, can accumulate and significantly impact the company’s bottom line.

Below are some of the most common hidden expenses that come with a mis-hire:

Severance pay 

When a mis-hire’s employment is terminated, the company often incurs the cost of severance pay. This expense is particularly significant if the employee has been with the company for a considerable period before the misalignment is recognized, as severance pay typically scales with tenure.

Recruitment costs for replacement

Finding a substitute for a mis-hire involves revisiting the entire recruitment process, including advertising the position, screening applicants, conducting interviews, and potentially engaging recruitment agencies. These costs can be substantial, especially for specialized or high-level positions.

Training and onboarding costs for the new hire

Once a replacement is found, the organization must invest in training and onboarding the new employee. These onboarding and training costs mirror the original mis-hire, encompassing training materials, staff time for training and mentorship, and any specialized training programs required for the role.

Legal expenses

In some cases, terminating a mis-hire can lead to legal challenges, particularly if the employee disputes the grounds for termination. Legal fees and potential settlement costs can escalate quickly, posing a significant financial risk to the organization.

Employees cost less with the help of digital transformation service providers like WillDom.

The Organizational Impact of a Mis-Hire

The repercussions of a mis-hire ripple through the organization, manifesting in various ways that can undermine the operational efficiency of a business. These are often overlooked because they are not immediately apparent or directly tied to a line item on a financial statement. However, they are real and can be significantly more detrimental than the direct costs of hiring and onboarding.

Below are three ways a mis-hire can impact a company:

1. Lost productivity

A mis-hire often lacks the skills, motivation, or cultural fit to perform effectively, leading to subpar productivity levels. The time it takes to address performance issues, reassign tasks, and ultimately replace the employee can significantly disrupt workflow and output across the team or department.

2. Impact on employee morale

An ill-suited employee can strain team dynamics and lower morale. Team members may become disenchanted or frustrated, mainly if they pick up the slack or correct mistakes. This can lead to a toxic work environment, affecting employee engagement and satisfaction.

3. Brand and reputation damage

Poor performance in customer-facing roles can damage client relationships and the company’s brand image. Internally, frequent mis-hires may lead to questions about the company’s competency in making hiring decisions, potentially affecting its ability to attract top talent.

3 Best Practices for Effective Hiring and Onboarding

Implementing best practices in hiring and onboarding is essential for attracting and retaining top talent, reducing employee turnover, and fostering a positive workplace culture. By focusing on strategic, inclusive, and comprehensive approaches, businesses can ensure that new hires are effectively integrated into their roles and the organization, contributing to overall success.

Here are three leading practices for effective hiring and onboarding:

1. Develop clear job descriptions and role expectations

The foundation of effective hiring is a clear and comprehensive job description outlining the responsibilities and required skills for the role and the company culture and values. This clarity helps attract candidates capable of performing the job and reduces misunderstandings down the line.

2. Utilize structured interviews and objective assessment methods

Implementing structured interviews with a standard set of questions for all candidates can help reduce bias and ensure hiring decisions are based on objective criteria. Additionally, incorporating standardized assessment tools can provide tangible evidence of a candidate’s abilities.

3. Foster continuous feedback and open communication

Regular check-ins with managers and mentors, coupled with open lines of communication, help new hires adjust more quickly, clarify expectations, and address any concerns or challenges early on. This ongoing dialogue supports continuous improvement and integration into the company.

How Long Should It Take to Onboard a New Employee?

The duration of the onboarding process can vary greatly depending on the complexity of the role and the specific needs of the organization. For some positions, a concise onboarding program spanning a few days to a week may suffice, especially for roles requiring less specialized skills or for employees with significant experience in the industry.

However, for more complex or specialized roles, the onboarding process can extend over several months, allowing new hires to fully understand their responsibilities, integrate with the team, and align with the company’s culture and values.

To optimize this process, partnering with a staff augmentation company can be highly beneficial. These companies specialize in tailoring onboarding programs to the specific needs of the role and the individual, ensuring a smooth transition and quicker time to productivity.

Hire WillDom's HR professionals to help you with outsourcing and onboarding.

WillDom Can Help You with Your Onboarding Process!

Outsourcing experts specialize in streamlining and enhancing onboarding processes, ensuring that new hires are integrated into the organization effectively. They bring proven methodologies, technology-driven solutions, and a wealth of experience in navigating the nuances of employee onboarding, making the entire hiring process more manageable and less expensive for businesses.

WillDom is a leading staff augmentation company ready to transform your onboarding experience. Our comprehensive approach ensures that new team members are aligned with your technical needs and fit seamlessly into your company’s culture, fostering a positive work environment. If the complexities of an onboarding program weigh you down, let WillDom lift the burden.

Contact WillDom today and ensure an effective onboarding process!

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