Regular readers of my blog know that I talk a lot about the costs associated with getting transactional onboarding wrong. With the acculturation (training and socialization) side, it’s a little harder to pin down specific numbers. However, there is one eye-opening study from 2008 that puts the cost to U.S. and U.K. companies at $37 billion per year for failures in this area. The International Data Corporation (IDC) white paper presents compelling data about the price tag associated with mistakes new employees make. It focuses on errors caused by misunderstanding, misinterpretation, or misinformation. These fall into three categories:
- Job functions (what the employee’s job entails)
- Business processes (how things should be done and why)
- Company policies (forbidden behaviors)
A Price Too Great
When employers don’t communicate effectively in any of these areas during acculturation, this can lead to enormously costly errors. Businesses with a workforce of 100,000 employees lose an average of $62.4 million dollars per year to these mistakes. Unexpected downtime was the most damaging result of misunderstandings in the study. Losses to a company’s reputation, employee injury, and exposure of sensitive data can also result from lack of proper training. According to the IDC research, there was no industry exempt from significant losses from worker errors.
One of the most fascinating findings of the study was regarding the use of assessment programs to measure employee comprehension and knowledge. Many employers realize that this is a critical tool, but only 6% of respondents actually had an automated assessment program in place.
Waiting for new employees to absorb knowledge from their coworkers and identifying areas of weakness after mistakes occur is definitely not a best practice. The risks are simply too extreme. This is an area where a strong acculturation onboarding system that provides detailed data for analysis and continuous feedback for improvements can play a critical role in cost containment.