Enwisen Whitepaper Onboarding Technology Four-Thought Four Common Myths Four Key ROI Points for Building Your Business Case Four Steps to Onboarding Success Table of Contents By Barbara Levin, Director, Marketing & Customer Community Enwisen 2011. All rights reserved.
Table of Contents Page Onboarding business challenges 3 The role of technology in onboarding initiatives 4 Four common onboarding technology myths 5 Four key ROI points for building an onboarding technology business case 8 Four technology-driven steps to onboarding success 10 Summary 12 About the author, Enwisen and AnswerSource Onboarding 13 Additional resources 14 Onboarding Technology Four-Thought Page 2
Onboarding Business Challenges Is your organization challenged with: Streamlining onboarding costs and processes? Getting new-hires up-to-speed faster? Engaging new-hires and decreasing new employee turnover? Integrating all of the various software systems involved in the onboarding process? Simplifying onboarding administration for both HR and hiring managers? If so, you re not alone, as these numbers in Table 1 prove. Table 1 Onboarding By the Numbers 1 30 That s the number of steps that are involved in the typical onboarding process counting every form that needs to be filled out every approval every data entry into various systems, and the like. 14 Represents the average number of software systems that are involved in the onboarding process from applicant tracking systems to HR and payroll applications to benefits administration to documents management and provisioning solutions to training and performance management applications, and others sales incentive systems, for example. 45 That s how many days it takes a typical new employee to reach full productivity costly for employers and demoralizing for the employees! 8 Seems like a small number compared to the others, but not when you consider that it represents the percentage of compliance paperwork that s never collected and the costs associated with potential litigious situations. 4 Billion The amount of dollars North American companies spend annually on newhire orientations much of it lost after Day 1. In addition to the above administrative numbers, there are other even more important numbers to consider as well. According to AberdeenGroup s 2009 Onboarding Benchmark Report, 85% of new hires decide, within the first six months, whether or not they will stay with their new employer. And, according to Gartner, new people coming in to the workforce today will have an average of 20 jobs over the course of their careers. Given all of these numbers, the goal becomes clear: employers today must provide a better new-hire experience. With fewer steps. And lower costs. 1 Table 1 figures from University of Michigan Onboarding study and U.S. Dept of Labor Onboarding Technology Four-Thought Page 3
The Role of Technology in Onboarding Initiatives To achieve this goal, more and more employers are automating the most time-consuming, expensive and resource-intensive components of the onboarding process. There are three types of onboarding technologies: 1. Forms and Task Automation: These solutions automate most onboarding forms and provide checklists to manage associated tasks. They eliminate a fair amount of the paperwork involved in the process. Because they do not integrate data into the appropriate systems (i.e., HRIS, payroll, benefits administration) and do not provide for culture socialization these types of systems are most often deployed by smaller-sized employers, typically with under 1,000 employees. 2. Onboarding Orchestration: Onboarding orchestration technologies go beyond forms and tasks automation to include workflow, integration of data sources, electronic acknowledgements of policies, I9 e-verification, provisioning, stakeholder (new-hire, hiring manager, HR) dashboards and tools to extend onboarding past Day 1 during the critical six months when new-hires are deciding if they made the right job choice. These might include features such as new-hire portals to accommodate pre-boarding, a knowledgebase of policies/benefits info/work-life events, benefit decision support tools and social networking options such as the ability to chat online with mentors or hiring managers. Some orchestration solutions provide personalized tours, so that new-hires see only the information relevant to them in their job role, location, bargaining unit and other parameters defined by the employer. 3. Collaborative Options: For a complete new-hire experience, many employers integrate solutions such as Learning Management and Performance Management solutions into the onboarding workflow to show new employees what training options are open to them; and/or understand their 30, 60 and 90-day goals, for example. Best-in-class employers particularly in mid-market and large/enterprise-market organizations leverage both onboarding orchestration and collaborative options to improve the new-hire experience and retention, lower costs, ensure compliance and streamline the process for all stakeholders. Additionally particularly for employers with heavy seasonal hiring, such as retail or hospitality organizations automated onboarding eases the burden on HR Shared Services Centers, Call Centers and Helpdesks. Onboarding Technology Four-Thought Page 4
Four Common Onboarding Technology Myths Myth # 1 A blue collar or in-the-field workforce will not use online onboarding. This has been proven over and over again to simply be not true. According to Knowledge Infusion, only 1 in 5 adults do not regularly access the internet and they tend to be over the age of 65 and without a high-school education therefore not representative of the majority of most workforces. Additionally, according to the same Knowledge Infusion findings, there are more computers in homes today than cable TV. In short, even if your new-hires will not be sitting at desks with computers, chances are excellent that they have a computer at home and know how to use it. Case in point: Exelon. Exelon, one of the nation s largest electric companies with more than $17 billion in annual revenues, hires approximately 1,000 employees annually including many field workers, from truck drivers to maintenance crews. Almost 100% of all new-hires are able to pre-board online, upon accepting an offer letter, using personal computers and email addresses. Myth # 2 Online onboarding takes the human touch out of new-hire orientation or the human out of human resources. In fact, in speaking to dozens of employers about their onboarding automation experiences, anecdotal evidence would find the opposite to be true. Today, most face-to-face orientations are spent filling out forms, being told the rules and policies, and being overwhelmed with benefits information. This leaves very little time to talk about an organization s culture, or about the things that make working for it fun and exciting. This can be demoralizing and un-motivating dampening the enthusiasm (or increasing the anxiety) of new employees. By preboarding online, new-hires arrive at orientation with forms already submitted, and policies read and acknowledged. If the onboarding solution has benefits decision support, chances are they ve already elected their benefits. And if there is an integrated knowledgebase they ve been able to answer their own questions about things like vacation and pay. Which leaves the face-to-face time for the things that matter the most in getting your new-hires up-to-speed and engaged. Onboarding Technology Four-Thought Page 5
Case in point: Fox Entertainment Group (Fox TV Networks, Fox Interactive Media, including MySpace, Fox Movie Studios, Fox News Network and more). While surveys show that consumers believe Fox s movies, TV shows, etc. to be innovative and exciting, the opposite was true for new-hires, who spent their first days filling out forms and waiting for equipment. Given the competitive nature of the media business, Fox wanted to provide a new-hire experience that would reinforce the excitement of coming to work in the entertainment industry. Today, new-hires pre-board online. Because provisioning is also completed as part of the pre-boarding process, new employees have all of their equipment on Day 1, and the hiring manager is ready for their arrival. Most important, the first day is filled with studio tours and other exciting activities. Did it work? Yes. New-hire turnover is down, and productivity is up. And surveys show that new employees have a much higher level of satisfaction with their decision to come to work at Fox. Myth # 3 It is better to license onboarding software from your applicant tracking software vendor than from a best-of-breed vendor. While there is no right or wrong answer here, the trend has certainly pointed to this not being best practice. For many ATS vendors, although not for all, onboarding was an after-thought, and the applications tend to be more basic forms and task management. Additionally, many of these solutions are designed to integrate only with other applications from the particular ATS or talent management vendor vs. best-of-breed onboarding solutions, or onboarding solutions that are part of HR Service Delivery suites which more readily integrate with all of the HR, Payroll, Benefits, ATS, Performance Management, Document Management and other solutions in the typical mid-to-large enterprise multi-platform environment. To find the answer for your organization, you might start with some questions: 1) Which is the highest priority? For pre-boarding and onboarding to be: a) The end of the recruiting process? b) The beginning of an employee s life cycle with your organization? 2) Is it most important for your onboarding technology to: a) Integrate with your ATS solution? b) Integrate with your entire HR Service Delivery platform (employee portal, benefits administration system, HRIS, Payroll system, ESS, MSS, ATS, etc.) 3) Is your current onboarding practice (or planned onboarding initiative) to: a) End formalized onboarding after the first day or week? b) Have onboarding be a formalized process for Day 30, 60 or beyond? Onboarding Technology Four-Thought Page 6
If you answered a to two or more questions, an integrated ATS/Onboarding solution might be the right choice for your organization. If you answered b to two or more questions, a best-of-breed onboarding solution, or one that is part of an integrated HR Service Delivery suite, may be the better choice. Case in point: GartnerGroup and CedarCrestone: In its 2009 Hype Cycle for Human Capital Management Software, leading industry analyst, Gartner, separated onboarding from ATS for the first time, ranking onboarding solutions as technology triggers for HCM excellence and mainstream adoption. Additionally, leading industry consultants, CedarCrestone, also for the first time, in 2009, separated onboarding from ATS in its 11 th annual HCM Technology Survey, ranking it as key to HR Service Delivery excellence. Myth # 4 Onboarding solutions aren t a priority in a down economy when there are fewer employees being hired. Although most employers may hire fewer employees in a downturn economy, they are still hiring. And onboarding new-hires manually is expensive. It still takes people and time, and data-entry mistakes or lack of compliance paperwork drives cost even higher. More important, the cost of turnover is even more expensive than the cost of onboarding. The Society for Human Resource Management (SHRM) estimates that it costs 1 ½ - 2 ½ x salary to replace an employee, including hard-dollar costs, such as recruiting, and less tangible costs, such as lack of productivity while a position is vacant. Therefore, engaging new-hires from the day they accept an offer is even more critical when organizations can t afford avoidable turnover. The other situation where automating onboarding in any economy is important is with industries such as retail, services, healthcare or hospitality where there is heavy seasonal hiring. Whether a retailer is hiring 10,000 holiday season employees in a bad economy vs. 15,000 in a good economy automated onboarding will still be more efficient. Last, many onboarding orchestration solutions also offer off-boarding which provides efficiencies in terms of time, people and compliance during downsizing or at the end of a seasonal hiring period where the seasonal employees must be off-boarded. Onboarding Technology Four-Thought Page 7
Case in point: Alegent Health. Even in a downturn economy, Alegent Health, after automating onboarding, is still on track to save $1.4 million in 3-years via cutting processing time by more than 50%, reducing turnover by almost 12%, and consolidating five hiring locations into one. Four Key ROI Points for Building an Onboarding Technology Business Case There are many return-on-investment (ROI) points that can help build a business case for automating onboarding. However, in today s economic environment, many traditional HR ROI calculations have included too many soft or intangible costs. For the purpose of this paper, we will stick to four areas in which hard-dollar savings can be achieved. Further, a key consideration is that the cost of automating is a replacement of costs. Your organization is already spending dollars in these areas costs that can be eliminated, or resources realigned to other work. In fact, at Enwisen, many of our onboarding customers realize a positive hard-dollar ROI within the first year of deployment. ROI # 1 New-hire administration and labor It costs employers an average of $30 to print and mail full new-hire packets, including all forms, benefits information, handbooks and more. For an employer who hires 3,000 employees per year, that is a cost of $90,000 which would be eliminated with online onboarding. Data entry, at an average of $35 per hour, would take 6,500 hours to manually enter all data for 3,000 new-hires in to relevant systems. This, too, would be eliminated at a savings of $227,500. There are many other administrative and labor costs that would be reduced or eliminated as well. But just these two examples represent a savings of $317,500 which, in the case of the Enwisen SaaS-based AnswerSource Onboarding solution, for example is more than 3-times the cost of a 3-year license for an employer with 5,000 employees per year. ROI # 2 Reduction in turnover costs If 10% of new-hires leave in an organization hiring 3,000 per year that represents 300 new employees who will leave during their first six months. Using the most conservative number, let s assume this will be reduced by 5% with a more engaging onboarding process facilitated by technology. Replacing 150 employees, with an average salary of $50,000, and using the lowest figure of 1x salary to replace an employee this represents a savings of $7,500,000. This estimate, alone, represents a significant hard-dollar ROI for any solution over the lifetime of the solution. Onboarding Technology Four-Thought Page 8
RO1 # 3 Orientation and travel costs For very decentralized organizations, organizations that do heavy seasonal hiring, or organizations that just simply must cut costs wherever possible, some onboarding solutions offer the ability to do streaming videos and much more to acclimate new employees to corporate culture. This can significantly cut down the labor and travel costs associated with face-to-face orientations. If, for example, 30% of new hires travel to orientation, and that number can be reduced to 15% and using an average of $600 per trip for travel expenses, only this represents a savings of $270,000. In the case of Enwisen s AnswerSource Onboarding, this alone would more than pay for a full 3-year license for an employer with 15,000 employees. The savings are even more significant when adding in the cost of HR and other staff involved in the face-to-face orientation process. ROI # 4 Compliance-related costs Earlier we showed that in the typical, manual new-hire process, eight percent (8%) of new-hire compliance-related paperwork is never collected. This can be extremely costly when considering the cost of litigation. If 1.5% of 3,000 newhires (45) bring a complaint and at a cost of $5,000 in legal expenses per incident this represents $225,000 in compliance-related costs. These costs can be eliminated via onboarding technology, which, through workflow, automatic notifications and electronic acknowledgements, prevents a new-hire from coming onboard until all compliance information and completed forms are received in the system. To summarize the ROI hard-dollar savings that can be realized via onboarding automation, see Table 2: Onboarding Technology Four-Thought Page 9
Table 2 Summary of Onboarding Hard-Dollar ROI 1 New-hire labor and administration $ 317,500 New-hire turnover reduction $ 7,500,000 Orientation and travel costs $ 270,000 Compliance related costs $225,000 TOTAL HARD-DOLLAR ROI $8,312,500 1 Table 2 ROI based on an employer hiring 3,000 employees per year Four Technology-Driven Steps to Onboarding Success When the first generation of automated onboarding solutions first arrived on the industry scene, there were generally three components that were evaluated: Forms Management, Task Management and Socialization. Newer generation solutions, however, take this to the next level with four key steps for onboarding success. Step # 1 Acclimate new-hires to your corporate culture, policies, benefits and more. If your onboarding solution allows for pre-boarding, all forms and other tasks can be completed online prior to Day 1. This not only facilitates faster new-hire productivity, but allows for a more effective face-to-face orientation where you can better focus on culture, core values and more. Integration with a personalized, searchable knowledgebase is also important for this step allowing new-hires to ask questions about policies, pay and more before they come to work. Acclimation is further facilitated by solutions offering a workflow design vs. checklist. In this way, new-hires are intuitively guided through personalized tours based on job code, location and criteria you define to provide a robust, engaging experience. Features such as the ability to present streaming video and/or social media promote a new-hire s ability to see messages from the CEO, chat with mentors and more to feel welcome into the culture when they walk in the door. Further, remember that acclimation and engagement activities should not end when an employee walks in on the first day. To reduce new-hire turnover during the first critical six months, look for solutions that provide features such as: Onboarding Technology Four-Thought Page 10
Benefits decision support tools to roll-out during pre-boarding or 15 days before an employee becomes benefits-eligible. Collaboration with solutions such as Performance Management and Learning Management systems to help new-hires stay focused on their 30, 60 and 90 day goals, for example and/or sign up for required/optional training. Step # 2 Automate process workflow and management for key stakeholders. Through features such as electronic forms along with automated notifications to HR, hiring managers and new-hires the administration time and costs associated with new-hire processing can be significantly reduced. Next generation, easy-to-use dashboards that provide status and drill-down reporting capabilities can also simplify management for all stakeholders. Dashboard example from Enwisen s AnswerSource Onboarding 2011 Step # 3 Integrate all relevant data and systems. Onboarding administration can be minimized even further with solutions that provide for the pre-population of forms and automatic Day 1 triggering. This means that a new-hire, when they first log in during pre-boarding, can review forms populated with data received from the ATS and update their information. At this point the remaining downstream forms will be populated - eliminating duplication of effort by the new employee. Then, at the appropriate time when the employee arrives on their first day or when they become benefits-eligible, for example an automated data file can be provided to integrate the form data with all relevant systems such as your core HRIS, Payroll, Benefits Administration and other HCM systems on your platform. Onboarding Technology Four-Thought Page 11
Some solutions also allow for the integration of provisioning systems so the newhire has everything they need such as parking passes, name badges, safety equipment, email addresses, desk/phone/computer, etc. when they walk in the door. The end result is fewer steps for both the new-hire and HR, more accurate information, the elimination of manual data entry and, perhaps most important, new-hires have the equipment they need to begin working on their first day. Step # 4 Ensure compliance with policies, laws and regulations. As shown in the earlier ROI section, compliance-related complaints from as few as 98 employees can result in costs exceeding a half million dollars. Automated onboarding features such as electronic acknowledgement of company policies, electronic verification for I9 compliance and more can significantly reduce these risks and help avoid unnecessary litigation. Summary Adoption of online onboarding solutions is becoming more mainstream as employers break through common myths. Today it is clear that online onboarding will: Achieve widespread usage by even the most diverse workforces including blue-collar workforces. Facilitate even more effective face-to-face orientations. Be extremely important in any economy both up and down. Employers who achieve best-in-class onboarding status can achieve dramatic hard-dollar return on investment which can top $8,000,000 for organizations hiring 3,000 employees per year. And, given the wide variety of priorities and needs, there are onboarding solutions to fit all sizes. Onboarding Technology Four-Thought Page 12
About the Author Barbara Levin is the director of marketing and customer community for Enwisen. She has more than 25 years experience in working with employers to understand how to leverage human capital management technologies to meet business goals. She is a frequent author and speaker in the HCM industry. She can be reached at blevin@enwisen.com. About Enwisen Enwisen is the leading vendor of Software-as-a-Service based solutions that help employers provide better in-house service delivery with fewer resources and lower costs. Enwisen has provided proven hard-dollar ROI for employers such as Nissan North America, Unisys, Hershey Entertainment & Resources, State of Montana, Alegent Health and hundreds of others. Enwisen s AnswerSource Onboarding AnswerSource Onboarding is the industry s leading comprehensive solution that features the four key steps for nextgeneration onboarding success. AnswerSource Onboarding helps employers provide a better new-hire experience with fewer steps and lower costs. Onboarding Acclimate, Automate, Integrate and Comply is a registered trademark of Enwisen, 2010. Onboarding Technology Four-Thought Page 13
Resources: For more information on AnswerSource onboarding, including an ROI calculation for your organization: email your request to: events@enwisen.com Onboarding Technology Four-Thought Page 14