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Beyond Day One

Electronic onboarding can cut costs and the time needed for new employees to master their jobs. But its real value may be even more strategic.

Tuesday, October 2, 2007
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The MGM Mirage Co.'s hotels and casinos on the Las Vegas Strip are hiring -- and hiring. "We don't have high turnover, but we have 50,000 employees on the [Vegas] Strip, and we have to hire 10,000 a year," says Richard Vosburgh, senior vice president of HR at Mirage Resorts, a division of gaming conglomerate MGM Mirage.

The workload of Vosburgh and his team is about to get even heavier: In 2009, Mirage Resorts will open Project CityCenter,a $7.4 billion development currently under construction in Las Vegas that will include hotels, shopping centers and condos and which will require the hiring of 12,000 new employees. 

Their job, however, is made easier by electronic onboarding, a process that's designed to reduce paperwork, reduce the time it takes for new employees to become productive and, ideally, help them feel like more than mere cogs in a vast machine.

At Mirage Resorts, the planned e-onboarding process means that after candidates accept an offer, they receive an e-mail with a link to a password-protected Web site welcoming them to the company. From there, I-9, W2 and other forms can be completed online. And in the days before reporting to work, new hires receive e-mail updates -- based on their job titles -- explaining where to park, whom to see about uniforms and where to drop off their dry cleaning.

In the meantime, information from the new hires' resumes is fed to a database for succession-planning purposes. And all the tasks associated with getting employees productive -- assigning a desk, requisitioning a computer, getting the proper security clearance, etc. -- happen before day one on the job.

"E-onboarding" is often touted as a way to save companies money: Rather than sending new hires forms and other documents via overnight mail, employers can have them complete the documents online, eliminating postage and paper costs and shortening the time needed for orientation on their first day. 

Beyond dollars and cents, however, e-onboarding can add value further down the road. According to the 2006 Onboarding Benchmark Report from Boston-based Aberdeen Group, managers reported that 90 percent of employees decide within their first six months on the job whether to stay at a company.

The report, which surveyed managers from 600 companies in a variety of industries, found that employees who are engaged on day one -- having already completed paperwork, requisitions and culturalization -- have a greater incentive to stay with their new employer. 

According to the study: "In today's environment, support for new hires is not only executed in the recruitment efforts but more importantly, in a well-defined, formalized onboarding process."

The Definition Dilemma

The Aberdeen Group report noted that although onboarding is gaining momentum, many organizations seem a bit fuzzy on what the process entails.

The report found that 76 percent of companies use or planned to use a formalized onboarding process -- up from just 40 percent a year earlier. Yet, "companies still do not grasp the fundamentals of onboarding," writes Aberdeen analyst Madeline Tarquinio, the report's author. "These companies face challenges defining the onboarding process and creating an onboarding map."

The confusion over how to define e-onboarding extends to the vendor community. Is it a stand-alone function, an extension of recruiting or a subset of automated HR? The answer depends on whom you ask.

Jim Haudan, CEO of Root Learning, a Sylvania, Ohio-based e-onboarding provider, says it's a part of performance management, not its own discipline, because it can be extended well into an employee's tenure with a company.

"Onboarding used to be a stand-alone, an exaggerated employee orientation," says Michael George, the "product evangelist" for Vurv, a Jacksonville, Fla.-based talent-management vendor whose product line includes an e-onboarding product called Aloha (which means "hello" and "goodbye" in Hawaiian, suggesting a fine line between onboarding and off-boarding, says George).

"At first, [e-onboarding] was automating the W-2, the I-9 forms and so on. Now it's integrated with recruitment and procurement; now, on day one, you're productive. Now, people say, 'Wow, they had stuff ready for me when I got here.' "

On the other hand, Tyler Holbrook, chief technology officer at Oklahoma City-based HRLogix (provider of MGM's e-onboarding solution), sees the process as a stand-alone function. "Onboarding is all of the tasks associated with bringing somebody in and starting them on the first day," he says. "Why not unify the whole procedure? Why not tie [it] all together?"

Others share Holbrook's views.

"We're one of a couple firms with an entire offering dedicated to the space," says Brian Platz, chief operating officer of Silk Road Technologies, a Winston-Salem, N.C.-based solution provider that offers an e-onboarding product called RedCarpet. E-onboarding, he says, is "a whole product category."

Says Platz: "If you look at the excitement curve of an employee about to be hired, they're on a real high. Then they get the job and there's a drop in interest." Calling Silk Road's process "talent branding," he says a new employee's experience should match up with the expectations they had as a candidate. "You get the company pitches during the interview process, but then you start and reality hits," he says. "[Comprehensive onboarding] is a way to bridge the gap."

Many companies don't handle things well during the period between a person's date of hire and when they actually start work, says Holbrook. "The more you can fill that gap, the better your relationship with the employee," he says.

The Aberdeen study, which rated companies on the basis of how well they integrated new employees, noted that 30 percent of "best-in-class" companies extend onboarding to the first six months of employment, while only 10 percent of "laggard" companies do so.

And 90 percent of best-in-class organizations incorporate "socialization" in their onboarding process, compared to just 75 percent of laggard organizations, according to the report, which defines socialization as "delivery of information about the culture and history of the company."

Tarquinio recommends laggard companies integrate onboarding with the hiring management process, adopt a long-term approach to onboarding and define the onboarding process -- what it includes and how it will achieve ever-greater consistency.

The study recommends that industry-average organizations develop a formalized onboarding process, measure first-year retention rates and time to performance, and eliminate paper-based processes in favor of Web-based ones.

Boosting Retention

Not everyone agrees that e-onboarding tools are necessary. Christa Degnan Manning, research director at Boston-based AMR Research, says most HR departments have other priorities and e-onboarding is seen merely as "nice to have."

"For 2007, when you look at priorities for IT investments, you see employee portals, self-service, HR management and talent acquisition," she says. While she notes that e-onboarding may be a feature of any of those tools, she adds: "Most HR departments could make a person productive if they simply have an offline procedure that people adhere to."

MGM's Vosburgh balks at that assessment. "That's old-school thinking," he says. "Whoever said that wasn't thinking about our scale."

Vosburgh isn't alone.

"You either go and hire 20 HR people and pay them 40K a pop, or you use e-onboarding and get that 20 down to five or six," says Humberto Trueba, vice president of HR for Pinnacle Entertainment, a Las Vegas-based global gaming company that uses HRLogix for e-onboarding up to 225 new employees per month. "If you can make it so that, when new people come in and they don't have to fight for a cell phone or a computer, you can get them productive earlier."

He estimates it would cost Pinnacle approximately $1 million to onboard 1,000 workers manually. But thanks to e-onboarding, the company enjoys a 10-fold savings, he says, adding that the savings come from more than eliminating overnight-shipping costs.

"Before, people would get hired and walk in and it would be lost productivity," he says. "The whole onboarding process was like, 'Thanks for being here; now just sit here until we tell you to do something.' But with [e-onboarding], we know this person will get in at 8 o'clock and orientation is at 9 o'clock, so let's get them a badge -- and since they can't have a computer until they have a badge, they'll get their computer while they're in orientation."

Some companies have documented a clear link between e-onboarding and retention.

Cyrus DeVere, vice president of field HR and learning for Rosemead, Calif.-based Panda Express, says the 1,000-store national restaurant chain uses Root Learning's e-onboarding tools from pre-hire through the first 90 days as part of an online curriculum that new hires complete in eight- to 10-minute spurts when business is slow.

"They can go through the modules -- there are quizzes and certifications, depending on your job classification," he says. Citing National Restaurant Association data, DeVere says industry turnover averages 150 percent to 200 percent nationally, and 85 percent to 100 percent at best-practices establishments. "We run at 97 percent," he says.

As for managers, DeVere calls 35 percent turnover "bleeding," and best-practices restaurants average 15 percent to 20 percent. "We're running at 17 percent" -- a figure he attributes in part to e-onboarding.

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To make sure Panda was getting its money's worth, DeVere recently commissioned a statistician from the University of Michigan to test a group of employees who participated in the modules against a control group who did not.

The results were dramatic: "Every metric was up," he says. "The test group [that used the modules] improved and the non-test group did not. Everything we measured, even same-store sales, increased." Because the only difference among stores was whether or not employees used the modules, DeVere credits them with improving retention by an average of 5 percent per store.

For years, HR leaders have based their success on metrics such as "time-to-fill." E-onboarding's proponents say it can help organizations set their sights higher.

"The mantra today isn't 'fastest time-to-hire' but 'fastest time-to- productivity,' " says Naomi Bloom, managing partner at Bloom & Wallace, an HR technology consulting firm in Fort Myers, Fla. At its core, she says, e-onboarding is enhancing time-to-productivity. "And not just when [employees are] new, but when they transfer as well," she adds.

Data captured during the e-onboarding process can be accessed each time an employee is transferred or promoted, says Bloom. Deepjot "D.J." Chhabra, president of Enwisen, an onboarding vendor based in Novato, Calif., agrees. He says his firm's next round of solutions will interface with training, succession management and global relocation. "We're extending the onboarding solution to other areas," he says.

Vurv is also expanding Aloha's capabilities. "We've added things [such as] what an employee's goals should be and how performance is measured" -- features designed to help managers promote and transfer by putting a talent database at their fingertips, says George.

"One of the opportunities e-onboarding provides is [the development of] a base of skills of your people," says Peter Mann, vice president of business development at Authoria, a talent-management vendor in Waltham, Mass. Authoria's onboarding product is designed to parse a candidate's resume and interview information and funnel it directly into a talent-management repository, he says. "Getting all the information you learn about a human being through interviews, tests and resume -- that is strategic onboarding."

The "Mother-Henning" Approach

HR leaders say it can be unpleasant when there's a disconnect between new hires' expectations and their actual experience at a new company. "Our employment brand was not consistent with our entertainment brand," says Gary Ellis, vice president of HR at Los Angeles-based entertainment giant 20th Century Fox. "The employee experience didn't always match what they thought was the brand. This was not the way to welcome someone to this exciting, cutting-edge environment."

After hearing enticing stories about Fox by recruiters, and knowing something about the Fox brand by watching its TV shows and movies, orientation was a low-tech, ho-hum affair instead of an exciting introduction to a state-of-the-art company.

Today, Fox uses new media "in a way that reflects our brand" during onboarding. In addition to delivering all the new-hire forms, the program includes clips of the company's TV shows and movies -- "a product reel for the new generation," says Ellis.

After checking out Fox's content, new employees now learn about free movie screenings, a hybrid car promotion and other things that make working there exciting and different. "This is primarily a marketing tool for the company," says Ellis.

Onboarding products can also provide new employees with answers to questions they may not feel comfortable asking. Enwisen's Chhabra says many new employees are reluctant to ask about benefits and total compensation during their first days on the job. "But being able to see it, show it to your family, it gets you fired up."

Rosette Cataldo, vice president of business development for KMS Software, a Los Angeles software developer that pioneered one of the first e-onboarding solutions in 1998, describes the process as "culturization on steroids." Today, KMS does most of its business by partnering with other e-onboarding providers whose products handle only the front end while KMS serves as the bridge to back-end systems.

Describing KMS as "an agnostic bridge between candidate and tracking system," Cataldo says, "We have the ability for the HR pro to post content that's password-protected, so incoming employees will see only what's relevant to them."

From strategic planning to strengthening a company's employment brand with new hires, e-onboarding can make potentially stressful orientations more pleasant. 

"We call it 'mother-henning,'" says MGM's Vosburgh, noting the practice is only used for mass-hiring events. "We hire [people] three months before they show up. They get an e-mail every couple of weeks. They learn about the company and we keep them warm. And we hear they like this."

Editor's Note: Some minor errors were corrected in the online version of the article following publication of this story.

Copyright 2014© LRP Publications