Just started a company and thinking of onboarding your employees? Even though time efficiency may be your main concern, onboarding employees is an important process for the success of any company.
Being an early-stage company, it is important for you to identify the needed outcomes of your onboarding plan to work towards each one and measure its impact successfully. But before we can talk about the importance of onboarding, let us understand what onboarding is all about.
What is Onboarding?
Onboarding is the process of adding new employees to a company. And for you to understand the importance of good onboarding, you should know that there is a huge difference between orientation and onboarding. Orientation is an event that usually lasts for a day. But the onboarding process takes place for months and sometimes even years after an employee has been hired in the company.
The best companies are the ones that start the onboarding process before day one. With this, new hires can easily get acquainted with the company before they are expected to do any work. Employers can remove the admin tasks out of the way and help the employees be comfortable in the office. In the end, the new hires would be nurtured into seasoned and highly-productive employees.
Importance of planning a new employee onboarding process
As mentioned before, the importance of new hire onboarding is two-fold. First, its effect on your employees on an individual level and its influence on your overall organization. Below are some points that let us know the importance of why you should have a good employee onboarding process:
- Improved Performance: One of the biggest benefits is the improved performance of the employees that in turn offers higher productivity. Companies that have an onboarding process have about a 50% greater new hire productivity as compared to those companies that do not have an onboarding process at all.
- Increased Retention: This is something that every business wants as a benefit and an onboarding process offers this. With a proper onboarding process in place, it reduces the time consumed, costly fallouts of high turnovers and keeps the employees around for a long time. Employees need to trust their employers to stick around in the company and the onboarding process helps in building trust.
- Boosted Employee Engagement: Employee engagement is the main thing of every company. It shows how motivated your employees are and how much they will contribute to the success of the company. This, in turn, helps in everything from customer success, productivity, and employee retention. So, employee engagement can be boosted by hosting a great onboarding process.
- Cost Savings of Onboarding: Hiring a new employee is a costly process. But with a proper onboarding process, you will be able to hire employees with a lower turnover rate which helps save a lot of money that would be used again if the employee decides to leave due to inadequate training.
- Shorter Learning Curve: Hiring a new hire usually takes time for them to reach their full potential and productivity. But with the proper onboarding process in place, it would cut down on time.
- Increased Likelihood of Reaching Goals: The onboarding process also helps in aligning the employee’s goals with that of the company’s. And with this, the company’s goals can be met and the business can grow. Onboarding processes should be able to dictate the clear directions of a goal and nurture the new hires so that they can meet the goal.
Tips for onboarding a new employee
A lot of early-stage companies usually overlook many fundamental legal rights and issues that surround the onboarding or service providers. To help to make things easier for you, here are some considerations that you need to look into to avoid any pitfalls that might come your way. In short, you will have to prepare many agreements and give the employees clear instructions. Here are some things that you have to consider:
- Offer Letters for Employees: Every employee in the company, including the executives and founders, has to sign an employment agreement with the company.
- Agreements for Service Providers: Every service provider also has to enter into written agreements before they do business with the company. Having this done before the work begins can help in avoiding disputes about intellectual property, service terms or equity ownership questions.
- Confidentiality & Inventions Assignment Agreements for Employees: Other than the offer-letter, employees also have to sign a confidential invention and information assignment agreement. The form would hold the laws and regulations of that state against any fraud towards the company’s confidential information. Every state has a different law, so you will need to take the help of your lawyer.
- Independent Contractor Agreements for Consultants: Every consultant and contractor has to sign an independent contractor agreement with the company. This is much more complex and different agreement as compared to the ones mentioned above. It has to include the invention assignment provisions and confidential information rules in it. The agreement would be different for different kinds of contractors based on the service they will offer.
- Employment Policies:Adding employment procedures and policies are usually an afterthought for startups. But, there are specific policies that are needed by federal and state law. They are needed to set the right tone and to help minimize liabilities down the road. Hence, it is important to prepare an Employee Handbook or Manual in the early days to keep things on track. You can then update the rules in later stages of the company.
- A Note About Service Agreements:A few of the most confusing and technical areas of workforce management are in compliance with the state and federal laws. These help in regulating the classification of the service providers as the interns, independent contractors, or employees. Since contractors can be misclassified as employees and their tax can be withheld causing issues, the service agreement would help avoid such things to a huge extent.
- Employee Compensation: Small companies normally increase legal complications by not offering cash compensation to their early executives or founders. This can cause huge damage to your company because of state and the federal wage laws. And there are many ways you can avoid the violations of the hour and wage laws without paying the executives a market rate. This is done by offering them shares of the company as employee compensation (explained in the next point). It is important to incorporate the measures before hiring the executive to work for free in the company.
- Equity Awards: As mentioned above, being an early-stage company can mean that you do not have enough funds to offer highly competitive salaries. But not paying employees or executives can be an issue. That is where equity incentive plans can help. But with these offerings, you will also have to prepare some agreements to ensure that the plan is clear. Also, you need to know how to go about the plans. To help you with this, you can take help from the many knowledge-based articles here!
Using the tips mentioned above, you will be able to get your new employees on board easily. To know more about the various equity options you have to offer, the tax consequences and the offboarding of an employee, check out the other knowledge-based articles here!