Altus Dynamics Blog

What Human Service Organizations Don't Know About Their Employee Onboarding Spending

Posted by Stefanie Gause on Aug 3, 2016 8:15:27 AM

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Many organizations in the developmental services/community living field have been experiencing a funding freeze for over a decade now. With increasing demands on services, competition from for-profit service providers, and the sky-rocketing costs of real estate, food, fuel, and wages, these organizations need to find ways of doing more with less without compromising the quality of their services.  

HS_Onboarding_blog_questions.jpgIn this economic climate, budgeting has become a frightening task. We’ve seen agencies struggle to find the funds to manage their programs, juggle administrative costs, and maintain control over their finances from month to month.

Most agencies also have a relatively high rate of employee churn with over 30% of their front-line workforce turning over each year. With these kinds of rates, it becomes crucial to not only take steps to reduce the churn, but to ensure that new employees are ramped up as quickly and efficiently as possible to reduce the impact of this turnover on your clients. Typically, the costs associated with onboarding fall into 3 categories: administrative costs (i.e. time spent on paperwork); training costs; and overtime costs (not enough staff = unfilled shifts = overtime costs).

What most agencies don’t realize is that they’re inadvertently overspending significant amounts of money in employee onboarding.

What’s more, it’s not an insignificant amount of money at risk – our consultants regularly find tens of thousands of dollars on the table. If Human Service organizations can control their spending in this key area, they can free up funds that can offset the challenge of a tight budget and increasing overhead costs.

Administrative Costs

Let’s take the example of Community Living A-Z (CLAZ). CLAZ has 300 employees and a 30% annual turnover rate. That means CLAZ goes through the onboarding process for approximately 90 employees a year.

Their onboarding process looks something like this:

arrows_chart.jpg CLAZ manages everything manually on paper, including:

  • Employee onboarding forms and checklists
  • Managing certifications and training (registration, and tracking completion/compliance)
  • Setting up employee record, payroll data, IT access

Administrative Costs of Onboarding:

HR Staff Admin Time per New Employee (Minutes)  60 minutes
Number of New Staff Annually  90 new staff
HR Staff Hourly Wage ($)  20 per hour
Total Annual HR Admin Cost  135,000.00

 

Training and Overtime Costs

The average CLAZ employee usually takes 4 weeks from time of offer to their first day on the job as a fully trained employee who is able to pick up shifts. During that 4-week period new employees complete about 20 hours of paid training.

CLAZ often finds itself understaffed –by the time it’s in the process of onboarding a new staff person, managers are usually struggling to fill all of the open shifts in the schedule. Full time staff end up working overtime in order to ensure that the necessary location-specific training is completed while also filling the vacant shifts.

Overtime Costs of Onboarding:

Number of Weeks to Completion of Onboarding  4
Avg. Number of Unfilled Hours Weekly (Per Onboardong)  10
Overtime Cost per Hour ($)  10
Number of New Staff Annually  90
Total Annual Overtime Costs ($):  36,000

Not including the cost of paying new employees to complete mandatory training, CLAZ is already spending over $150,000 annually on the onboarding process. While turnover is unfortunately one of the realities of the sector – as is mandatory training – the administrative and overtime costs associated with them don’t have to be. Luckily, technology can help you cut your costs in half by automating the majority of time consuming manual administrative processes associated with onboarding, bringing the average amount of time spent per employee under 30 minutes and getting new staff on board more quickly.

An integrated ERP system can help accomplish this by:

Eliminating the need for re-keying data between systems or from paper documents. With the option of integrated Applicant Tracking, applicants enter their own information which is then used to populate the employee record. Additional information is entered in once, then auto-populates across the system.

No more employee onboarding checklist. Period. A good ERP solution will automate the process with workflow approval processes and reminders, ensuring that everyone has completed their tasks without the need for HR to follow up. Most steps are done automatically, such as the assignment of a new employee email, registration for mandatory training, payroll setup, and more. Say goodbye to your paper checklist forever.

Get employees on the job in record time. Auto-registering new hires for the next available training session ensures that they complete their pre-requisites as soon as possible. By providing online, web-based training options, you can speed up the process even further while reducing the cost of delivering the training.

Intelligent shift suggestions reduce overtime costs. Shadow shifts (training shifts), especially while short-staffed to begin with, often mean that front-line staff accrue overtime hours. With integrated shift scheduling, you can ensure that you don’t put any staff into an overtime position unnecessarily without spending hours looking for relief coverage or worrying about availability and overlapping shifts.  


Want to discover how your organization can stop overspending on employee onboarding and start putting those funds towards delivering more services to your clients? Register for our free Employee Management Assessment where we'll provide you with a custom report of how efficiently you're running your organization.

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This Post Was Written By Stefanie Gause
Stefanie has always had a passion for the non-profit and public sectors with several years of experience in the education, assisted living, and social services industries.
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