Onboarding tools grow in importance for retention, performance

Software users confirm what industry analysis shows: Employee onboarding processes can be a powerful weapon in the fight for talent.

A growing economy and fierce competition for talent are making onboarding software more important for HR leaders, such as Asha Aravindakshan, and vendors, including ADP, ExactHire and FinancialForce.

Analysis of data from payroll provider ADP from companies with approximately 24 million employees on their combined payrolls showed about 25% of employees leave their jobs after three months, either voluntarily or involuntarily, an ADP executive said.

Aravindakshan, the operations director for global talent at Ashoka, began using onboarding tools in FinancialForce cloud human capital management (HCM) early last year. She said the software is engaging new hires, establishing consistency, and improving the onboarding process by eliminating reams of paperwork and giving employees a greater role.

Ashoka, a nonprofit that finances social entrepreneurs and employs 400 people worldwide, uses the software in the U.S. to onboard one to eight employees a month, almost all in its Arlington, Va., office, she said.

The FinancialForce onboarding software as a service allows employees to complete 20 tasks spread out over their first day, week and month, according to Aravindakshan.

"The first day sets the tone of the employee's experience with the organization," she said. "All of the tasks help employees get settled in."

Onboarding is the candidate's first impression of the company. It tells the new hire, 'We value you and want you to be successful.'
Sharlyn Laubyauthor, speaker and consultant on training to engage and retain talent

In the first week, for example, new employees draft a list of goals. Over the course of the next year, they are allowed to update the status of their goals and add new ones.

"The employees are empowered to own their development," she said.

Aravindakshan said the software eliminated 10 different paper forms and checklists for new employees and made her job easier, partly by providing online answers to many questions about the company's benefits and policies.

New employees can also click through on the software to the company site or benefits carrier website to find out details about company health and dental insurance, tax deductions, social media, life insurance, and direct deposit, for example.

HR software vendors offer new onboarding tools

ADP in October is planning to release new onboarding tools for large organizations that the executive said rethinks the way people start new positions, and is partly geared to help employers retain new hires and boost bottom lines.

In a key sign of the increasing significance of onboarding tools, ADP is planning to demonstrate the new cloud onboarding software, which is part of its ADP Vantage HCM suite, at the annual HR Tech Conference in Las Vegas in October.

Alex Outwater, senior director of product marketing for innovation and technology at ADP, said the onboarding software is designed to build connections among a new employee, his manager, team, potential "buddy," and the company and its culture well before the employee's start date.

For example, the software includes text and video to allow introductions from a manager and team before day one on the job, according to Outwater. It is partly aimed at relieving some of the nervousness that typically affects new employees.

"When employees step foot in the office, they know their team, they know their environment, they have met their manager, they have learned about the company, they have taken care of their paperwork. They have figured out where the office is," said Outwater.

The onboarding tools are available as soon as the HR team creates a record for the new hire, maybe as much as a month or as little as a few days before the employee arrives at the employer's building, he said.

The software also covers administrative functions, including direct deposit and documents to sign, such as company policies or a federally required form that records a person's eligibility to work in the U.S. It also integrates with Google Maps for directions to a company site.

In developing the onboarding software, ADP spoke with more than 1,500 employees, managers and HR professionals, Outwater said.

"One of the things we found is that having a formal defined onboarding process is important not only for retention and to try to lower your new hire attrition rate but also to get new hires up to speed and productive right from the start," he said.

Onboarding 'vital' to employee retention

One big benefit of online onboarding tools is reducing paperwork.

Nicole Johnson, former HR director at Atlantic Pacific Companies in Boca Raton, Fla., which provides property management services, selected and helped implement ExactHire onboarding software.

The company went live with the software in August to onboard 100 employees at one time. Using the software, employees electronically read and sign numerous documents, including bonus and commission structures and policies for their jobs and divisions. The documents are vital for legal and compliance purposes, Johnson said.

The software emails a new employee with a link to a home screen that shows a list of documents. As an employee reads and completes the work, the software provides a pie chart of documents that are either overdue for signatures, approaching a due date or still have time for review.

The company also uses the software for its existing 800 employees in Florida, Texas and Georgia. "It has eliminated a lot of paperwork," said Johnson, now an HR consultant for the company. "Our filing cabinets were bursting at the seams."

Sharlyn Lauby, an author, speaker and consultant on training to engage and retain talent, said onboarding is becoming more important with hiring picking up and more competition to employ people with top skills.

Onboarding tools are key for retaining employees over the long haul, Lauby said.

"Onboarding is the candidate's first impression of the company," she said. "It tells the new hire, 'We value you and want you to be successful.' That message definitely has an impact on an employee's decision to stay with the company."

Lauby referred to a 2013 study of 230 organizations by Aberdeen Group that concluded onboarding software can help keep employees.

At "best in class" companies, which used world-class onboarding tools, 91% of first-year employees were retained, compared to 70% for average companies, the study said. Also at the best companies, 62% of employees hired in the last 12 months met performance goals on time, compared to 29% for the average, the study said.

Jennifer McClure, president and chief talent strategist at Unbridled Talent LLC in Cincinnati, said onboarding can be vital, considering the costs of recruiting and hiring top talent.

"Many companies are realizing that with all of that investment, probably the worst thing that can happen is to bring people on board and ... because of poor onboarding, they might leave because they don't feel connected to the company or they are lost or they don't feel like it is a good fit," she said.

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