Mark Stein: and Lilith Christiansen are vice presidents at boutique management consulting firm, Kaiser Associates. Kaiser is a ‘best of the best’ operation with team members who have established track records in the much larger consultancies. Stein and Christiansen are on a roll these days. Their book, Successful Onboarding: Strategies to Unlock Hidden Value Within Your Organization is putting substance behind the buzzword. You can learn more about their work at OnboardingMargin.com
This means that George Bradt, one of our Top 100 Influencers in HR, now has company and competition in the space. As companies try to maximize the return they get on hiring decisions, Onboarding (which is sort of an orientation program on steroids) has become a central bit of HR jargon. In a world with millions of hiring authorities, there’s plenty of room for a raft of competition.
I interviewed Stein and Christiansen last week. I asked them five questions. After I got their material, I asked George to take a look at it and respond. George’s piece will be online tomorrow.
Here’s the dialog:
HRExaminer. 60% of hiring managers are unhappy with their decisions 1 year after the hiring decision. How much of that buyer’s remorse can be alleviated with onboarding? What percentage of ‘infant mortality’ is a good thing and simply the result of a malformed hiring decision?
Stein and Christiansen: We think about attrition in terms of regrettable attrition, losing those employees that the organization wanted to retain, and non-regrettable attrition, the departure of employees which does not create a “loss” for the organization. The drivers of non-regrettable attrition are varied – performance problems, bad attitude, tapping out at current level, etc. To the extent that the issues could have been identified through a better hiring decision, it is beneficial to the organization, and the new hire, for these individuals to leave the organization.
Even the best onboarding programs cannot turn a square peg into a round one. If an organization is seeing a high number of departures, or a high degree of hiring manager dissatisfaction after 1 year, the best course is to determine what the drivers are, and where malformed hiring decisions are determined to be the cause, address them through changes in the recruiting process. However, enhancing the onboarding process is where you can address many of the other issues.
We estimate 20-40% of that “buyer’s remorse” can be alleviated with an effective onboarding program. The key elements of the program will be ensuring the new hire understands and learns how to navigate the culture, creates networks that support them personally and professionally, learns company culture and his/her role in executing it, and gains insight and support to achieve career progress. The hiring manager has a role in supporting or teaching the new hire in each of these areas throughout the first year, and through their participation the hiring manager will see better results.
HRExaminer. Retention is not always a positive thing. You only need to look at federal and state governments to see the consequences of high retention. It’s possible to argue that retention is the opposite of innovation. How can onboarding be used to strengthen a culture without turning it into a coddling bureaucracy?
Stein and Christiansen: Organizations have a unique opportunity to use their new hire classes as a lever in driving organizational change, which can be to institute a new or strengthened culture. (For organizations that experience attrition of 10-15% this nets into replacing over 50% of their workforces within 3-5 years).
It all depends on what you say and teach to the new hires.
Without a designed program, if your organization is currently a coddling bureaucracy new hires will pick up on that and they will perpetuate that culture. However, if you design into the onboarding program teaching new hires about the aspirational culture, and enlist their support and participation in making this change, you can over time transform the culture of the organization.
To be successful, though, you need to teach to new hires both the current culture and the one that organization aspires to. They need to understand where they may meet resistance and how to succeed in the current state as well as how they can begin to demonstrate the performance values the organization is moving too.
Similarly, onboarding cannot be the only tool being used to drive this organizational change. You cannot only rely on the class of new hires to make the shift; traditional change management efforts should be underway to reach the remaining employee population.
HRExaminer. There seems to be a spectrum of onboarding approaches. Most of the technology vendors call the process of filing out the initial forms ‘onboarding’. At the far extreme, George Bradt prescribes a 100 day plan including having the first two weeks of meetings prearranged. Obviously, this is not a one-size fits all game. How does one tailor onboarding to achieve the optimal effectiveness in a given setting?
Stein and Christiansen: That is right; it is not a one-size-fits-all game. There are a lot of best practices out there, but it doesn’t mean they will all work equally well within your organization. In order to tailor onboarding to achieve the optimal effectiveness in a given setting, you must begin with a detailed diagnostic of the current state.
Through the diagnostic you assess human capital data like attrition and hiring rates, analyze available surveys data like engagement surveys and exit surveys, and conduct polls of hiring managers and recent hires to uncover challenges and opportunities with the current program or experience. Armed with that information, the onboarding program designer establishes the objectives of the onboarding program.
It is these objectives that provide the parameters for what the necessary program elements will be to drive effectiveness of onboarding within a given setting. For example, if a specific business unit is experience a large growth relative to other parts of the company, the onboarding for those new hires may need to be more focused on training and development activities that get to skill building and job readiness.
Alternatively, if the company has higher than desired attrition at an early tenure, then the onboarding program likely needs to focus on cultural assimilation and early career support activities. Programs should also be tailored to different audiences – the experience of newly hired experienced executive and a new college hire, for example, should not be identical every step of the way.
While there will be many variances of the program content depending on the unique circumstances of a given organization and its objectives, our research and experience shows that the most effective onboarding programs are one year in duration.
HRExaminer. Is there a reasonable ratio of time to invest in a new employee? Do you do onboarding differently based on your expectations for attrition? Asked differently, what is a good per employee budget for onboarding?
Stein and Christiansen: We believe the most effective onboarding programs are (at least) a year in duration, or the period of time commiserate with one complete business cycle. When we talk about a year-long program, this should not be misinterpreted to mean we are talking about formal, classroom training that lasts a year.
While there may be components of the program that look like traditional training delivered in a classroom or virtually, these most often occur at the beginning of the program and periodically throughout. A year-long program ensures the new hire has an opportunity to experience all of the “firsts” associated with his/her new role and company that occur during a business cycle within the context of the onboarding experience.
By “firsts”, we mean the first time the new hire experiences an action – the first budget submission, the first disappointed customer, the first satisfied customer, the first sales call, the first earnings report, the first presentation to senior staff, the first quality control inspection, etc. Within the onboarding program, the new hire will have these experiences and can incorporate the learning from them into his/her development.
Most of the “content” delivered during the onboarding program can come from the on-the-job experiences and the learning and discussion that follows with the new hire’s manager, mentor, onboarding advisor/buddy, new hire cohort or other participants in the onboarding program.
This latter form of content does not have much of a direct cost associated with it (other than the time associated with them). This is one reason why investing in onboarding should be considered low hanging fruit to drive improved business performance along a variety of dimensions.
After an initial investment in developing the program, much of the ongoing cost would be the “per new hire” costs associated with travel and formal training. So what is the right budget? It is difficult to say as each program should be designed to meet specific business objectives and is tailored to unique business circumstances. However, looking at your expectations for attrition can give you some estimate of what the organization should be willing to spend, or at least can help support a key element of the business case.
One part of the calculation is to look at is your organization’s cost-to-fill vacant positions – particularly the tangible costs of recruiting. Generally speaking, each person who leaves the organization is going to result in at least this much cost to backfill the position.
In reality, though, the costs to the organization are much greater; there is the loss of productivity while the individual was job searching or otherwise not engaged in performing their role, the loss of productivity while the position remains vacant, and often additional cost associated with other employees affected by the departure.
Some of these can be real costs in the form of overtime to compensate for needed to take on the responsibilities of the individual who left. This sum total of real and soft costs represents the “size of the prize” – what an organization could save by implementing a program like onboarding that can reduce attrition rates.
We are not suggesting that onboarding alone can take attrition down to 0, but it can reduce attrition and it can reduce new hire attrition in particular. And to achieve this effect, the benefit of the cost avoidance represented above yields a significant amount to cover new costs associated with the onboarding program.
HRExaminer. Could you offer a couple of examples of companies that do effective onboarding? How much do they spend on their programs? What is the return? Do they have attrition that varies significantly from industry norms? Does that really drop to the bottom line?
Stein and Christiansen: Booz Allen Hamilton is an excellent example of a company with an effective onboarding program by our definition. It is a year-long program, with customization to different audiences, adhering to an overall program design that attends to cultural mastery, interpersonal network development, strategy immersion & direction, and early career support.
Even though the firm did not have attrition rates that were different from the consulting industry norms, they believed they could have a more positive effect on attrition if they improved the “valued connectedness” the new hires felt toward the firm. Since implementing the program Booz Allen has seen results directly to the bottom line as much administrative burden was eliminating with the automation and process streamlining addressed in the program design.
More importantly the firm saw productivity gains associated with increased new hire job readiness levels. As Doug Carter, SVP at Booz Allen remarks “new hires emerging out of this new onboarding program are some of the most prepared I’ve seen in years. Their understanding of the complex Booz Allen structure, our service offerings, and our methodologies and approaches ensures that we are able to deploy them swiftly to client engagements with the assurance that they will be able to effectively meet client demands.”
Based on early data, Booz Allen expects its program will improve the firm’s retention rates as well. In 2010, the firm won a Bersin Learning Leaders Award for Excellence and an ASTD Excellence in Practice citation for this onboarding program. As reported in Business Week, Average spend on training per new hire during the first year is $6,550 (2008).
Some additional companies with notable programs:
Cisco Systems has a very through, effective program. Since launching Cisco Choice in 2006, one component of the onboarding program, Cisco’s retention of new engineering hires is 98% after 2 years – much higher than industry norms. As reported in Business Week, Average spend on training per new hire during the first year is $5000 (2008).
Deloitte & Touche’s program is a year-long program that begins with new hires coming together from across the businesses then is tailored to the needs of the audiences within the different US based businesses. The program design adheres to the key tenets necessary to have an effective onboarding program. As reported in Business Week, Average spend on training per new hire during the first year is $6464 (2008).
HRExaminer. Thank you for taking the time to talk with us. Tomorrow’s piece will include George Bradt’s commentary on this conversation.