Onboarding plays a critical role in a company’s long-term success. This is especially true in today’s remote and hybrid work style. With many employees out of the office nowadays, it’s challenging to keep track of how well your onboarding process is performing.
It’s for this reason that you should keep a close eye on relevant employee onboarding key performance indicators (KPIs). In this article, you’ll learn what KPIs to focus on and why they’re so important for your broader business goals.
Disclaimer: The information below is accurate as of March 5, 2024.
Why is the onboarding process important?
Well, let’s start by looking at the numbers:
- 87% of new hires state they get nervous before starting a new job.
- Only 12% of employees state their company did a good onboarding job.
- One in five states they received poor onboarding or no onboarding at all.
- Only one in three stated they felt ready for their new role after onboarding.
- 70% of those who had an “exceptional” onboarding experience state they have “the best possible job.”
- One in three new hires quit after only 90 days.
This high level of voluntary turnover puts a great strain on human resource departments to optimize their onboarding efforts. The aim should be to maximize top talent retention, alleviate new hire anxieties, avoid workplace disruption, reduce churn, and save time. With a well-established onboarding program, new recruits stand a far better chance of being more engaged over the long term, ultimately shortening their time-to-productivity period.
So, if you want great new-hire retention rates and performance, you need an effective employee onboarding process that provides the necessary training, resources, and foundation to set new employees up for success.
Why measure onboarding success?
To get an exceptionally effective employee onboarding process, you need to measure its performance level. Onboarding is not a set-and-forget process where you build up the methodology and let it run its course unimpeded. You need to keep a watchful eye on what works, what doesn’t, why, and which areas need improvement. This is where those key performance indicators come into play.
KPIs gauge your program’s overall effectiveness. Data generated by these metrics help you understand what problem areas exist during the onboarding phase of an employee’s life cycle and what improvements need to be made. This, in turn, helps you empower new hires to perform from their first week, if not their first day. Not to mention spotting potential employee turnover early and what strategies can help prevent it.
A clearly defined methodology that’s backed by important onboarding metrics will generate measurable results in several areas. By measuring onboarding success, you will be able to:
- Reduce new employee stress
- Shorten the ramp-up time
- Increase new hire productivity
- Minimize employee turnover rates
- Improve retention rates
- Easily identify onboarding successes and failures
- Improve decision-making
- Empirically measure employee satisfaction
- Offer relevant guidance and feedback to new employees
Now, let’s take a look at the nine most relevant employee onboarding KPIs to track.
9 KPIs to measure new hire onboarding
You can measure the overall quality and strength of your onboarding strategy by tracking KPIs.
When you’re incorporating such metrics into your processes, also consider your goals. If the overall aim is to improve retention, for example, prioritize the KPIs that address this goal first. This way, you can better align your onboarding strategy with your larger objectives.
#1: Time to employee productivity
One of the main goals of onboarding is to bring the new hire to peak efficiency as soon as possible. Easier said than done, some might think.
It’s a short walk from pushing an employee too hard, too soon and having them quit only a few months after starting. Nevertheless, the time frame between their first day and when they reach their expected output is a good indicator of how effective your onboarding strategy is.
This metric will vary based on roles and seniority levels but it should be uniform for all new hires applying for the same positions. One caveat here is whether the new hire will be part of a remote, hybrid, or onsite team. Those in remote posts typically have the flexibility to manage their workflows. But with remote teams often spanning multiple time zones, it’s harder to keep track of new hire progress. It’s best to set remote hires in their own separate category.
The way you calculate the time-to-productivity KPI is as follows: Average time-to-productivity = total number of days until the new employees reached the expected productivity level / total number of new hires in the same period.
Note that “expected productivity” refers to when new hires perform to the desired level with little-to-no oversight. To stay on top of this metric, you should hold monthly check-ins with managers regarding new employee progress.
#2: Engagement rates for new employees
Employee engagement rates are a strong indicator of the company’s long-term success. This metric speaks to the workforce’s overall commitment and drive to perform.
If you have low employee engagement, your productivity will suffer, work quality will go down, and you’ll likely have more customer complaints and rising churn. There’s a direct link between this KPI and your company’s bottom line.
The employee’s experience during the first week of the onboarding process often dictates how well a new hire engages with your business and company culture in the long run. First impressions really do count for a lot.
There are a couple of ways to measure employee engagement. Depending on what you look at, you can use an employee Net Promoter Score (eNPS) or absenteeism.
The eNPS involves asking your new team members a series of questions about their opinion of the company. You can format an eNPS in several ways, such as rating statements about the company on a scale of one to 10 or allowing them to submit an anonymous survey.
eNPS = percentage of promoters – percentage of detractors
Note that “promoters” refers to those who score as a 9+ out of 10 for promoting the business, whereas “detractors” score below 7. Marks of 7 or 8 are considered “passive.”
Another way of gauging new employee engagement is through their absenteeism rate.
New employee absenteeism rate = (total number of missed workdays in a specific period / total number of days worked during the same period) x 100
#3: Employee retention rates
Employee retention is the opposite of employee turnover. Instead of focusing on how many new hires quit, you look at those who stay. According to the Society for Human Resource Management (SHRM), roughly half of hourly workers leave their jobs in the first four months. Similarly, about half of all senior outside hires leave within 18 months. Anyone who decides to remain with your company past those time frames is likely to be in it for the long haul.
Making a good first impression during the onboarding process has a positive effect on the new employee experience and helps increase retention. Knowing what today’s workforce finds engaging solidifies it further. A major factor in retention is ensuring that promises made to new team members during the hiring and onboarding process are kept.
New hire retention rate = (total number of new hires who stay with the company for at least 18 months / total number of new hires in the same period) x 100
This metric can also help identify turnover trends that you can address. If, for instance, too many new hires quit after around three months, there might be an issue with your onboarding. Alternatively, if too many start leaving at, say, the 270-day mark, it could be an engagement or disillusionment problem versus onboarding.
#4: New hire job satisfaction
Not only does job satisfaction improve retention it also helps in employee performance. An employee’s job satisfaction level speaks to how pleased they are with their benefits, compensation, company culture, day-to-day tasks, or schedule, among other factors.
Gauging new team members’ job satisfaction involves routine check-ins with both new hires and their managers. Regular onboarding satisfaction surveys also bring to determine how pleased new employees are in their new roles.
Typical new-hire satisfaction survey questions include:
- How would you rate your onboarding experience?
- Do you have easy access to all the resources you need to do your job effectively?
- What was the biggest challenge during your first week?
- What would you improve about your onboarding process?
- How does your new job compare to your ideal workplace?
It’s advisable to conduct these surveys once every few months to keep track of new hires’ sentiments throughout their first year. Any pain points that emerge will highlight gaps in your onboarding process so you can improve them. Say, for example, a new hire is unhappy with their promotion or compensation opportunities. You can use this insight to better define during the initial onboarding stage how pay increases and career advancements work in your organization. Alternatively, you can work on better explaining how the benefits package fits into the overall compensation.
There isn’t an exact formula for employee job satisfaction as there are many factors that could contribute to it, such as employee surveys, eNPS, absenteeism, and turnover rate. With this KPI measurement, it’s best to look at it from as many angles as possible to build an accurate representation.
#5: Voluntary and involuntary new hire turnover rates
To calculate new employee turnover rates, you can use the following formula:
New hire turnover rate = (total number of new employees who’ve quit in a given time frame / total number of new employees in the same period) x 100
You can apply it both to voluntary and involuntary turnover. If you experience a sudden rise in voluntary turnover, it usually means there’s a problem with your employee satisfaction, morale, or engagement. Tracking these KPIs helps keep voluntary turnover at a minimum.
Involuntary turnover, on the other hand, typically highlights an issue in recruitment. Candidates may be unqualified for the specific job role or don’t fit with your company culture.
#6: Training completion rate
An effective corporate training program is not only essential for engagement and time-to-productivity but also helps with the new hire’s professional development.
High training completion rates indicate employee dedication and interest in achieving their goals. A low training completion rate, however, could highlight too many employee responsibilities too soon. They may not have enough time to focus on training. Alternatively, managers may not see the need for a new hire training program, or the program itself is not effective in addressing new employee needs.
You calculate this KPI as follows:
New hire training completion rate = (total number of new hires who completed training in a time frame / total number of new hires in the same period) x 100
Employee learning and development are key to improving retention rates. A whopping 87% of millennials consider “professional or career growth and development opportunities” as important to them in a job—an impressive number, especially compared to the 69% of non-millennials who say the same.
It’s best to add training requirements to the onboarding checklist so that new hires are aware of their upskilling opportunities.
#7: Recruiting ROI
Retention rates, time-to-productivity, job satisfaction, employee experience, morale, and corporate training completion rates, are all good metrics to determine recruiting return on investment (ROI).
The main difference between them in terms of ROI is about which business goal or outcome you’re looking to achieve.
There are a couple more KPIs to note that can help you determine recruiting and onboarding ROI. These are:
(a) Offer acceptance rate = (total number of offers accepted by applicants / total number of offers made) x 100
(b) Revenue per employee ratio = net sales in a given time frame / average number of employees in the same period
These give further insight into how well the recruitment process is performing and how productive new recruits are in relation to previous measurements.
#8: Overall company morale
Company morale is infectious.
If your senior staff is in high spirits, chances are that your new hires will be too. But if they’re constantly greeted by passive looks or frowning faces, it’ll only be a matter of time before new hire excitement turns to apathy.
There is no specific formula to accurately gauge employee morale. There are, however, attitude surveys that can highlight the overall employee mood. You could also gather regular open-ended feedback to see how employees are feeling. You can also use:
- Employee counseling to allow staff members to air out their true feelings in a safe environment. Counselors can report results to management (without naming names) to implement changes.
- Grievance reporting for employees to express concerns. Addressing these concerns often increases satisfaction.
- Suggestion boxes for a more informal way of collecting employee feedback. Employees can also leave anonymous feedback.
- Exit interviews for any departing employee, which allows them to express their reasons for leaving without fear of judgment.
You should also keep an eye out for any behavioral red flags that might indicate a drop in morale. These can include things like coming in late, taking longer breaks, not socializing or taking part in company events, dips in productivity or work quality, etc.
According to a University of Warwick study, happy employees are 12% more productive. To create a happier and healthier workplace culture, find ways to promote collaboration, foster learning, and address any toxic workplace characteristics.
#9: Manager performance
Last but not least, you should also look at how managers impact new hire turnover rates. A Gallup study revealed that half of the adults surveyed left a job at some point in their career to “get away from their manager to improve their overall life.” If one particular manager experiences a high turnover rate among their subordinates, it could be a strong indicator that the manager is the reason.
One way to address this issue is to look at managers with the lowest turnover rates and determine what they’re doing right. How are they keeping their staffers happy and content? You can invite your worst-performing managers to use those same techniques and/or incorporate them as best practices in your corporate training strategy.
Although not exhaustive, this list of employee onboarding KPIs is what you should keep your eye on for the most effective onboarding program.
Now, let’s take a quick look at how technology can help optimize your onboarding program.
Optimize your onboarding experience with the right LMS
Nobody wants to spend time, money, and energy on a new hire only for them to quit within the year. A learning management system (LMS) can optimize your onboarding and maximize your retention efforts.
Docebo LMS is a SaaS solution that puts professional development front and center. You can create personalized learning plans for individual learners and track their progress in real-time. Based on these onboarding KPIs, you can also measure the success rate of your corporate training program and determine which learning content garners the best results.
To learn more about how an LMS can help your onboarding program, schedule a demo with Docebo today.