The 5 Best Employee Onboarding ROI Calculators of 2024

Welcome to a subject that's increasingly on the minds of HR leaders, CFOs, and CEOs alike—Employee Onboarding and its Return on Investment (ROI). You may wonder why we should allocate resources to onboarding and employee training when countless other areas demand attention. Lets explore the comprehensive guide to employee onboarding ROI calculators.

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Why Calculate Employee Onboarding ROI?

Optimizing every aspect of organizational performance is crucial. One often overlooked area is employee onboarding. Far from a mere formality, effective onboarding is a strategic investment that accelerates the productivity of new hires and promotes a culture of engagement and retention.

The need to justify expenditures is present in every department, and Human Resources is no exception. Employee onboarding usually involves costs like training materials, administrative overhead, and the time commitment of existing employees.

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In a budget-conscious environment, clearly understanding your return on investment (ROI) is imperative.

Calculating ROI for employee onboarding is not just a tactical HR function; it’s a strategic necessity for the entire organization. The ROI numbers help you:

1. Justify Budget: Show senior leadership the monetary gains from proper onboarding.
‍2. Optimize Resources: Identify which aspects of your onboarding program provide the most value.
‍3. Increase Retention: High-quality onboarding experiences make employees feel valued and significantly reduce turnover, another cost saving.
‍4. Improve Employee Engagement: Engaged employees are more productive, innovative, and contribute positively to workplace culture.

Data Needed to Calculate Onboarding ROI

To effectively calculate the ROI of your onboarding process, you will need to gather several key pieces of information.

Employee Data

• Number of New Hires: Helps in scaling the process and understanding the scope of onboarding required.
• Average Salary of New Hires: Provides an understanding of investment levels, often used in attrition and productivity calculations.
• Duration of the Onboarding Process: Indicates the time investment and helps cost person-hours.

Onboarding Costs

• Training Material Costs: Manuals, online courses, or other training material.
• Instructor/Facilitator Costs: Costs associated with external trainers or in-house facilitators.
• Software and Hardware Costs: Investments in Learning Management Systems, computers, or other necessary technology.
• Administrative Expenses: Costs related to HR personnel involved, paperwork, etc.
• Overheads: Miscellaneous costs such as electricity, internet, and physical space.

Time Investment

• Time by HR Professionals: Hours spent preparing and executing the onboarding plan.
• Manager’s Time: Hours spent by supervisors or line managers in overseeing the new hires.
• Employee’s Time: Hours spent by the new hires in training sessions, seminars, or any other onboarding activity.

The Output

Once you’ve gathered all the necessary input data, you can use it to assess various output metrics that will help you calculate your onboarding ROI.

Direct Savings and Gains

• Reduced Attrition Rates: Higher employee retention cuts down the costs of hiring.
• Decreased Time to Productivity: Faster adaptation to job roles increases profitability.

Indirect Gains

• Employee Satisfaction: Highly correlates with customer satisfaction.
• Team Cohesion: Enhanced teamwork boosts project effectiveness.
• Improved Employer Brand: Makes future hiring easier and less expensive.

How to Measure Employee Onboarding ROI?

The precise expense an organization incurs for onboarding software access fees is influenced by the annual number of hires and the quantity and intricacy of forms utilized during onboarding. However, the following examples provide a representative estimate of what a typical organization, mirroring our sample profiles, would be charged.

Projected Savings from Onboarding Software:

This results in an ROI of approximately 174% (($3,125 / $1,800) x 100). It indicates that the onboarding software offers savings for Companies and simplifies the process for both the new employees and existing staff. It liberates labor hours and allows them to be redirected to more value-added activities such as mentoring, training programs, KPI evaluation, employee recognition, feedback sessions for new hires, and more.

Noteworthy Employee Onboarding ROI Calculators

There are several tools available to simplify the complex task of calculating onboarding ROI.

Why it Stands Out: HRcloud is praised for its fully integrated system that brings together payroll, benefits, and other HR functionalities. Their ROI calculator offers a 360-degree view of onboarding costs and benefits, making it a comprehensive tool for HR professionals.

Why it Stands Out: Qualee focuses on modernizing the employee experience, offering an ROI calculator that helps HR leaders quantify the impact of a robust, engaging onboarding program. This calculator is mobile-friendly and they provide an invaluable user experience with the sliding features.

Why it Stands Out: ELMO’s ROI calculator is robust, factoring in compliance costs and potential risks, which are often overlooked in other calculators. This provides a more holistic view of ROI.

Why it Stands Out: HROnboard provides a unique 'Employee Lifetime Value' calculation in their ROI calculator. This feature makes it easier to project long-term gains from effective onboarding, a rare but invaluable feature.

Why it Stands Out: BambooHR is known for its comprehensive HR software solutions. Their ROI calculator is designed to align seamlessly with their other offerings. The firms can calculate ROI with minimum data of their employees and salary benefits.

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Conclusion

The options above offer a good starting point for your search. They range from simple, straightforward calculators to more comprehensive, holistic solutions. The key is to find the one that aligns with your organization's specific needs and objectives.

By utilizing an effective ROI calculator, you are taking a data-driven approach to what is often considered a soft business function employee onboarding. This will help you make a strong case for investment in employee training, which is crucial for your organization's growth and long-term success.

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