Companies spend as much as $7,645 to onboard new employees, and then either overload them with too much training or neglect them during those first few critical weeks on the job. Here’s why these strategies don’t work, and what your distributorship can do about it.
A concept focused on putting in the least amount of effort in exchange for the highest possible levels of output, efficiency is a word that gets thrown around a lot on the manufacturing floor, in the warehouse or distribution center, and in offices worldwide. And while efficiency usually centers on the steps and processes that employees use to complete their day-to-day tasks, the workers themselves are also great candidates for efficiency improvements.
The problem is that companies often realize this fact too late—and long after they’ve spent money, time, and effort getting a new worker up to speed. “The productivity of new employees doesn’t match the time and effort spent by companies searching for the right talent,” ULTATEL’s Amr Ibrahim said in a press release. “While training and careful recruiting are important, business owners must look for additional ways to boost efficiency among new employees in order for them to properly organize, delegate tasks, and meet company goals.
Ignoring this reality can get pretty expensive. It also produces very few returns and can drag a company down in today’s tight labor market. According to ULTATEL, recruiting, screening, and training new personnel costs small- to medium-sized businesses anywhere between $4,129 and $7,645 per employee. And despite the high costs of the hiring process, actual productivity is on the decline, according to Ibrahim.
“Reports show that the average cost of a poor hire can equal 30% of the individual’s first-year salary, and $40,000 to replace a senior executive,” Ibrahim points out, noting that employees who underperform can have irreversible effects on the bottom line. In other words, even just one “bad hire” can impact business operations. “A recent report found that that 27% of employers who reported a bad hire said they cost more than $50,000,” ULTATEL reports.
30 Days to Prove Yourself
To improve their new-hire onboard process, electrical distributors need to think past some of the hiring norms that they’ve fallen into over the last 10-20 years. For example, putting new employees through a probationary period could actually be doing both entities more harm than good, and that does little to boost new employee efficiency.
“Most new employees have 90 days to prove themselves and many companies have 90-day probation periods for new hires,” SHRM reports. What many companies don’t realize is that the first few days on a job are a two-way street: new employees decide within the first 30 days whether they feel welcome in the organization, and whether they’re going to stick around (or not). SHRM also says that:
- Nearly 4% of new employees leave their new jobs after a disastrous first day.
- A significant percentage of new employees quit their jobs within the first six months.
- Half of all new hires in leadership positions last three or fewer years.
- One in 25 people leave a new job just because of a poor (or no) onboarding program.
- 40% of senior managers hired from the outside fail within 18 months of being hired.
- Fewer than one-third of executives are satisfied with the onboarding process – calling it below average or poor.
- 64 percent of new executives hired from the outside will fail at their new job – in fact, the average CEO is in the job less than four years
Some of these realities can be traced back to a lack of employee engagement—something that Gallup has been tracking for years. Right now, for example, 34% of U.S. employees say they’re engaged with their work, while 13% are disengaged and another 53% are generally satisfied (but not cognitively or emotionally connected to their work or workplace).
“Disengaged employees drag a company down,” Gallup points out. “But engaged employees show up more often, stay longer, and are more productive overall.” The organization goes on to say that the costs of ignoring lagging employee productivity—and the underlying unhealthy company culture—are steep. Disengaged employees have higher rates of absenteeism and turnover (which can drag down profits), it notes, and cost the U.S. $483 billion to $605 billion each year in lost productivity.
Getting Them to Stay
So, what can electrical distributors do to improve employee efficiency both for new hires and for existing workers who may be disengaged or otherwise uninterested in what they’re doing? Kelly Jones, NAED’s director of learning and program content, points to solid employee onboard programs as effective tools for covering those bases…and more.
“Onboarding is critical to staff’s future productivity and retention,” The Association for Talent Development writes. In fact, SHRM found that strong onboarding programs result in 69% of employees being more likely to stay with an organization for at least three years.
Circling back to those 90-day probationary periods, Jones says distributors need to understand that while their new hire may have three months to prove him or herself, the company itself has a month or less. “The way that you make an employee feel during those first 30 days, beginning on day one—from offer letter forward,” says Jones, “really is the biggest predictor of how efficient that employee is going to become.”
The good news is that you don’t have to “overdose” on information during the onboarding process. In fact, loading a new worker up with “too much too soon” can actually be counterproductive. “You don’t want them trying to drink from a fire hose,” says Jones, who also sees too many companies trying to deliver homogenous onboarding information and training, versus customizing the experience for specific job roles
“Other companies are skewing to the other side of the spectrum,” says Jones, “by not onboarding at all. They just throw people in and hope that they catch on.” Still, other companies neglect to weave their corporate cultures into the conversation—a fatal error in a tight job market where organizations have 30 days or less to prove themselves as “employers of choice.”
“In the end, it’s really about creating an employee experience which, incidentally, is directly aligned with the customer experience,” says Jones. “Crafting an intentional employee experience is critically important to new employee efficiency and overall company productivity.”
In Part II of this article series, we give electrical distributors some insider advice that they can use to improve employee efficiency—both for new recruits and for their existing workers—while also enhancing overall company productivity.
Tagged with best practices, retention