What is the ROI of a good onboarding program?

But then, the new hires fall into the famous black hole. A pitiful introduction, day two months after your first working day, boring information on the Intranet, or worse still: a bulky manual for new employees. In which four phases of the employee journey can you save time as a HR employee by setting up a good onboarding program?

Preboarding

Preboarding, or starting the introduction as soon as the contract is signed, offers you the golden opportunity to keep that euphoria of a new job alive for longer. In that phase, just after signing, new hires often have questions and doubts. These are only discussed in the first few weeks of work. And that is a shame! Answering their questions, making them feel welcome and removing their doubts, is a good first step to improve the dialogue and keep them enthusiastic.

HR is already working on the required paperwork in the preboarding phase, Such as employment contracts, tax forms, certificates of conduct and company codes. In addition, there are also lots of logistic issues that needs to be sorted, such as passes, parking and staff numbers.

This costs HR around 5 hours in this phase. Your new employee needs an average of 16 hours to read the documents and arrange other matters.

The first day of work

Usually, new employees only get to see their new working environment and meet new colleagues on their first day of work. The introduction period comprises the first few weeks in the office, a lot of personal attention, and the obligatory tour of the building. Questions such as: ‘Where is the coffee machine?’, ‘What is the printer number?’, ‘How can I book a meeting room?’ are usually at the top of the list. Usually, HR will appoint a colleague (buddy) to show new hires the ropes. Although it can be quite a challenge for a new employee to familiarise yourself with the office, your new duties and new colleagues, it is as important and stressful for managers. To ensure that an employee is a successful and productive addition to the company team, it is crucial that the new employee feels at home from day 1, feels part of the team.

On average, a new employee spends around 4 hours on the tour and a welcome session with a senior manager, but more is also possible.

Onboarding in the organization

Onboarding is a broader term than introduction period, and focuses on shortening the time needed by the new employee to achieved the minimum expected level of productivity. The onboarding period starts on the first day and it can last between three months and one year, depending on the complexity of the function.

When onboarding starts (on the first working day), a new employee spends around 4 hours looking for the necessary information. In more complex environments, such as the professional service sector, this can be up to 20 hours or more.

Feedback

As a manager, you have to ensure that you pick up all relevant insights and points for improvement ‘along the way’, instead of waiting until the annual evaluation review. We see that employees, in an onboarding program of three months, spend around 2 hours on giving feedback. Because it is done that way… Nearly all our customers indicate that the feedback they receive from new employees is very valuable. New hires look at the ingrained company processes with fresh eyes, as opposed to the colleagues who have been there for years. They will look at the processes and think: Well, that’s how it’s done here… New hires are not burdened with this occupational blindness yet, so use their fresh eyes and request honest feedback. In their onboarding app, organisations such as Hunkemöller and Coolblue, for example, actively ask for critical feedback from new hires, and use this feedback to tackle their processes.

Functional onboarding as a new phase

Onboarding not only involves multiple departments and colleagues, such as recruitment and HR, but also multiple layers within an organisation. Dr John Sullivan outlines the five layers of onboarding at an organisational level, location level and individual level. We see that various high-performing organisations, after the regular onboarding program, focus on functional onboarding as a new phase.

• Organisational level
  This includes recruitment and organisation-wide standards and values.
• Location level
  This includes information and issues in respect of the country/region and the location where the new hire will be working.
• Departmental level
  This relates to the department where they will be working.
• Team/functional level
  This includes the team and the position of the new employee.
• Individual level
  This includes issues on a team level which relate to the unique and diverse needs of this person.

Onboarding looks different for the various function groups within a company. Suppose you regularly hire new sales staff, software developers, sales representatives and technicians. Although they all have different jobs, they need to be offered a basic introduction that includes information about, for example, the company where they will be working and the work location in particular. Once they have received this information, it is time for a functional training, depending on their role. This means that their onboarding has to continue.

This is the biggest challenge of a successful onboarding program. How do you create a consistent basis, with common denominators where possible and differences where necessary?

Functional onboarding requires approximately 11 hours per employee on average, excluding role-specific training.

What advantages does a good onboarding program have for your company?

Onboarding is a major focus for many HR departments, but the real question is: What’s in it for us? If you’re looking to make a strong business case to your leadership team, our ROI calculator can help you measure the financial advantages of implementing a solid onboarding program. This tool is pre-loaded with data from international surveys and customer insights, but it allows you to customize variables based on your company’s unique needs.

What is Onboarding ROI?

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Onboarding ROI refers to the return a company receives from investing in its onboarding process. It's more than just cutting costs; it's about driving long-term benefits like improving retention, reducing time to productivity, and enhancing employee engagement. Research has shown that effective onboarding can decrease turnover by as much as 25%, helping companies avoid the costly cycle of recruitment and training

Beyond retention, onboarding ROI also includes improving employee engagement and productivity. Employees who go through well-structured onboarding programs are more likely to be engaged, leading to increased job satisfaction and better performance. With employees more engaged, they tend to contribute positively to workplace culture and collaborate more effectively with teams.

By understanding the true value of a comprehensive onboarding program, HR departments can justify their investment and optimize resources more efficiently. It’s not just about saving money on hiring and training; it’s about creating an environment that sets new hires up for success, benefiting both employees and the organization.

Interested in learning more about how to measure the success of your onboarding program? Check out our blog on How to Measure the Success of Your Onboarding Program.

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What’s bad onboarding costing you right now? 

Bad onboarding doesn't just result in a few extra emails; it creates a quantifiable financial drain through three major channels.

1. The heavy price of early turnover 

A new hire's first few weeks are a critical window. It's when they form their most lasting impressions of your company. A negative or disorganized start doesn't just slow them down; it actively pushes them out the door.

Research shows that employees who have a negative onboarding experience are 2x as likely to look for new opportunities in the near future (Digitate). And it’s a decision they make quickly: 70 percent of employees form their long-term opinion of a new job within the first month, with 29 percent knowing within the first week (BambooHR).

The true cost of a failed hire is massive, coming from a combination of the salary paid, the lost output, and the cost to restart the hiring cycle.

2. Productivity loss: The true cost of slow starts 

A key challenge in onboarding is managing the Time-to-Full-Productivity (TfFP). The goal isn't just speed, but achieving effective integration. 

However, the clock is always ticking: research from MIT Sloan School of Management shows that the ramp-up period can range from eight weeks for clerical roles to over 26 weeks for executives. A poor, unstructured process drastically extends this ramp-up period, which means you're paying a full salary for only a fraction of the expected output.

A structured onboarding process is essential to guide new hires through this critical period, ensuring they become integrated, contributing members of the team as quickly and smoothly as possible.

3. The administrative overload (time is money) 

Think about the sheer volume of manual tasks and paperwork involved in setting up a new hire. This requires time from three high-value parties: HR, Managers, and the New Hire themselves.

The cost is substantial: Deloitte research shows that HR staff are spending as much as 57% of their time on administrative tasks.

This means managers and HR professionals are diverted from strategic work to chase signatures, provision accounts, and coordinate schedules. A process that is not only expensive but is a terrible first impression for the new employee.

What advantages does a good onboarding program have? 

Onboarding is a major focus for HR, but executives rightly ask: What's the bottom-line impact? The answer lies in a clear, quantifiable Return on Investment (ROI) that provides a strong business case to your leadership team.

Once you calculate the cost of bad onboarding, the ROI of good onboarding becomes undeniable. 

It delivers measurable returns by tackling core business challenges directly:

• Boost retention: Organizations with a strong onboarding process can improve new hire retention by 82% (Brandon Hall Group). This immediately tackles one of your highest hidden costs - early turnover.
• Accelerate productivity: Strong onboarding processes improve new hire productivity by 70% (Brandon Hall Group). Furthermore, organizations with technology-enabled onboarding are 33% more likely to see improvements in time to proficiency (Brandon Hall Group).
• Cut admin time: Modern tools automate and digitize manual tasks, allowing HR staff to focus on strategic work, not paperwork.

Ultimately, good onboarding transforms the function from an operational checklist into a strategic asset. But to make this case convincingly, you need to move from general benefits to specific numbers. The next step is to calculate your exact savings.

How to calculate your Onboarding ROI: Costs & Savings  

The first step in capitalizing on the benefits above is to understand the current damage. Our framework helps you do exactly that by breaking down your total onboarding cost into a few key areas:

• Productivity ramp-up: The value lost while a new hire is not yet fully productive.
• Admin overhead: The total cost of time spent by HR, managers, and new hires on administrative onboarding tasks.
• Early turnover: Replacement costs when new hires leave in the first year.

Analyzing these areas reveals where the most significant potential for savings lies. By inputting your data, you can move from a vague understanding to an informed strategy, identifying specific opportunities to reduce both time and cost.

How to get started

You can begin by gathering a few key data points:

• Your number of annual hires
• Average salary
• First-year turnover rate
• Current time-to-productivity

Using these inputs, you can estimate your total onboarding costs. The more accurate your data, the more useful and actionable the results will be.

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[.callout-small]🔥 Action step: Stop guessing at the numbers. Use the Onboarding ROI calculator to input your specific data and get a clear snapshot of your annual onboarding costs and potential savings.[.callout-small]

Conclusion

Stop letting hidden costs silently drain your resources. Bad onboarding is a budget liability. Good onboarding is a strategic asset that pays for itself in reduced turnover, faster productivity, and freed-up employee time.

It’s time to stop guessing how much you’re losing. It’s time to put a concrete number on the cost and the potential savings.