How to Calculate Onboarding Metrics for Companies

Onboarding , or the process of integrating new employees into an organization, is an important part when it comes to bringing new hires up to speed with their new company. However, what many companies fail to notice is that it also plays a huge part in their employee retention rates. After all, research has shown that 69%  of employees who received a well-tailored onboarding experience are more likely to stay longer compared to those who did not.

Thus, learning more about onboarding metrics can teach companies how to streamline their onboarding process and ensure that employees can learn more about their company. This can lead to onboarding success – which can then lead to happier employees in the long run.

Continue reading to learn more about onboarding metrics, what it can do for companies, and most importantly – how to make one and the metrics that should be considered before making one.

What are onboarding metrics? 

Onboarding metrics are statistics that HR professionals look for to ensure onboarding success. This provides them with insights on their new hires’ overall experiences along with helping them assess how they can contribute to the company’s success.

Onboarding metric also allows companies to find gaps within their onboarding process. This can then help them improve the overall process, in turn alleviating the 25% of new employees that are likely to leave before they’re done onboarding.

An important part of the overall recruitment process, job descriptions play a huge part in onboarding success as it allows companies to let employees know of their role within the organization. Thus, it’s important to properly highlight it to ensure that employees can get a smooth transition into their new role.

Why should companies measure onboarding success? 

Companies should measure their onboarding success to ensure that new employees are more engaged. More engaged employees mean reduced absenteeism, which can then make for more productive employees.

Additionally, the right onboarding metrics can also help companies gauge how much they can help their new employees with their current struggle with their new workload. This can alleviate their stress in the long run as well.

Keep in mind that employee onboarding is completely different from customer onboarding metrics. Customer onboarding analytics mainly deals with guiding new users through their initial experience with products, onboarding metrics deals with teaching employees the ropes of their new company.

What metrics should be considered during onboarding? 

Listed below are meaningful onboarding metrics that companies should consider in their onboarding checklist to ensure that it will be a resounding success.

• KPIs

  Introducing onboarding KPIs (key performance indicator) can help companies gauge onboarding effectiveness. Though there are plenty of KPIs to consider, most companies can measure onboarding success by using the metrics below:

  • Time-to-productivity

  • Engagement rate

  • ROI (Return on investment)

  • Employee satisfaction

  • Training completion rate

  Remember that to reach the needed KPIs and to measure onboarding success, companies should properly clarify their job descriptions ahead of time. This lets future employees know their specific role even before they start onboarding, along with helping them reach their KPIs even after a week or two of starting their new role.

• New hire satisfaction

  New hire satisfaction refers to how well a company prepares new hires for their respective roles. To measure this, companies can conduct onboarding surveys that can help them highlight the onboarding effectiveness along with its strengths and weaknesses. Ask questions like:

  • Was your role explained well?

  • Did you receive every log-in information and resources to properly start your role?

  • How would you rate your onboarding experience on a scale of 1–5?

  • What improvements are needed to improve the orientation program. if any?

  • Did the onboarding program properly cover the company’s mission, vision, and goals for the future?

• Retention

  As the research above shows, employees are more likely to leave if they’re not trained right. Thus, calculating for employee retention rate 3 months after new hires have been introduced to a company can help companies determine if their onboarding program is effective.

• Time to value

  Time to value, or time to productivity metrics refers to the time an employee provides a return on investment (ROI) to their company. Ideally, it should be as short as possible, but it’s important to consider that different employees have different learning styles – and thus, it’s ideal to keep the time to value rate slightly longer to give everyone a fair chance.

• Engagement rate

  Engaged employees are happy employees – and happy employees are more productive employees in the long run. A good onboarding strategy produces a naturally high engagement rate.

How can companies calculate onboarding metrics? 

Companies can follow the steps below to calculate onboarding effectiveness.

1. Step 1: Define the metric

   The first step is to define which onboarding metrics to track is a priority and which is okay to be considered for a later time. It can be any of the metrics mentioned above, or other metrics that companies may need fit to measure onboarding success.

   Remember that the onboarding metric varies from one job description to another, and it’s important to consider the nuances that come with it as well — thus, only calculate for the important onboarding metrics first before taking care of others that might need attention.

2. Step 2: Collect the necessary data

   The next step to measure onboarding success is to collect every onboarding material necessary. It can range from the number of employees that finished their onboarding program, the number of employees terminated before reaching 6 months, the total number of days that new hires have performed at an ideal level — essentially anything that can help companies determine their value.

3. Step 3: Apply the formula

   Lastly, companies should then apply the formula to find out their overall employee ratio. Remember that although most of them share the same formula with certain variations depending on its needs, using the wrong formula can still get varying results that may or may not be an accurate metric for a company’s onboarding success.

Onboarding metrics: calculation examples

To put these steps into practice, let us assume that a multinational SaaS company has welcomed 100 new programmers into the organization wants to know their onboarding metrics. Although the 100 have finished the onboarding with flying colors, 23 employees have left the company after 3 months, and there is a total of 100 absences marked from the months of June to August.

Let us also assume that we’re calculating for the overall onboarding completion rate, new employee turnover rate, and new hire absenteeism rate.

Onboarding completion rate

Firstly, to calculate the onboarding completion rate, let us use the formula below:

Onboarding completion rate = # of new hires that finished every training program in the current cycle / # new hires in the current cycle.

Thus, the onboarding completion rate for a SaaS company with 100 new hires that finished their training program would look something like the figure below:

100 (# of new hires that finished every training program) / 100 (# new hire in the current cycle) = 1

Ideally, high training completion rates hover around 2 to 3. Thus, a number of 1, or a situation where every new employee has finished the overall onboarding process, is a stellar number that most companies should look for.

New hire retention rate

Next, let us calculate the new hire retention rate. To calculate how many new hires stayed after the onboarding phase, companies can use the formula below:

New hire retention rate: (# of employees that stayed after 3 months / # of employees during the new cycle) x 100

Unlike the other formulas discussed within the article, the turnover rate has some caveats included in it that make it different from the rest. Voluntary and involuntary turnover are included within this, as well as employees that went AWOL (absent without leave) within the first 3 months.

New hire turnover rate

The new hire turnover rate for involuntary and voluntary turnover for this specific SaaS company would look similar to the figure below:

77 (# of employees that stayed after 3 months) / 100 (# of employees during the new cycle) x 100) = 77%.

Although the number is below the ideal average of 90%, 77% is still good for most medium – large scale companies since these kinds of companies usually have a more rigorous training method compared to other companies and many employees stayed even after the rigorous process.

New hire absenteeism rate

Lastly, to calculate the new hire absenteeism rate, companies can use this formula:

New hire absenteeism rate = (# of workdays missed by new hires in 3 months / total # of days worked by new hires in the same period) x 100

Thus, the new hire absenteeism rate for the months of June to August where there are 100 total absences would look like this:

100 (# of workdays missed by new hires in 3 months) / 620 (total # of days worked by new hires in the same period) x 100 = 16% 

It's important to note that analytics tools can be used to further streamline this process further and make sure that companies can smoothly acquire their onboarding metrics on top of helping them with their business goals.

Creating an effective onboarding process is not easy - numerous factors, like employee experience, voluntary and involuntary turnover, customer satisfaction, and employee engagement are only few things that should be considered in evaluating the whole onboarding process. Remember that at the end of the day, onboarding metrics are just numbers.

It’s most important to note that onboarding effectiveness means that people with new jobs fit well within the company culture. Onboarding efforts merely help promote better employee job satisfaction and to teach them the ropes and provide them with the help that they need in their professional lives. It's still the company's job to provide them with positive onboarding experience that matches their job description.