The cost of onboarding a new employee goes far beyond just training and includes a number of surprising elements that are often underestimated.

Table of contents
  1. The Investment in Human Capital
  2. A Better Look at Onboarding Costs
  3. Factors That Influence Onboarding Costs
  4. Anticipating the Unforeseen Onboarding Costs
  5. Technology’s Role in Reducing Onboarding Expenses
  6. Strategies to Minimize Onboarding Costs
  7. Conclusion
  8. FAQs

As you embark on what could be the next phase in growth for your company, understanding the nuances of onboarding costs is paramount.

Navigating the hiring process can be like steering through foggy waters; there are hidden expenses, including the oft-overlooked time and resources your HR team dedicates to effectively onboard new hires.

How much does it cost to onboard an employee, you might ask? It’s a figure that fluctuates, impacted by various factors such as industry, position level, and the meticulousness of your onboarding program.

Breaking down these costs can help sidestep unexpected financial pitfalls and pave the way for your new team members to seamlessly blend into your company culture.

Key Takeaways

  • The average cost of onboarding a new employee stands at $4,100 and goes far beyond just basic training expenses.
  • An effective onboarding process requires thoughtful planning and a dedicated HR team to minimize unnecessary costs.
  • Onboarding costs can be variable and are influenced by factors including industry specifications, job roles, and employee seniority levels.
  • Efficient and effective onboarding aids in retaining top talent and reducing overall employee turnover within your organization.

The Investment in Human Capital

Investing in human capital is not just another line item on your balance sheet; it’s a critical driver of your organization’s success.

Onboarding a new employee goes far beyond the initial hiring process—it’s the first chapter in what you hope will be a long and productive relationship.

As you prepare to welcome a new team member, understanding the scope of investment from their annual salary to training is key in fostering growth and ensuring retention.

Employee turnover doesn’t just disrupt the harmony of your workplace; it also has a tangible cost.

💡 Pro Tip:

Use our handy employee turnover calculator to estimate the financial impact on employee turnover on your company.

According to the Society for Human Resource Management (SHRM), replacing a salaried employee can cost, on average, 6 to 9 months’ salary—this figure can rise exponentially for highly specialized positions.

With this in mind, your onboarding process should aim to mitigate the average cost per hire by crafting an experience that supports new hires throughout their learning curve and beyond.

  • Annual Salary: The most obvious investment in your human capital but also the starting point for measuring the ROI of employee retention.
  • Training New Employees: A robust training program is essential for building competency and confidence in new team members.
  • Productivity Loss During Onboarding: As new hires climb the steep learning curve, a temporary dip in productivity is an investment in their—and your—future success.

A crucial aspect of human capital investment is mitigating the cost related to employee turnover.

For a typical business where the average salary is $50,000, fostering a stable working environment could be the difference between hemorrhaging upwards of $660,000 and saving or even growing that portion of your budget annually.

By mastering an effective onboarding strategy, you’re not only reducing the frequent need for hiring but also creating a solid foundation for every new team member to become a thriving, long-term asset to your company.

📚 This Might Interest You:

Read our in-depth review of the best onboarding software to get your employees off to a great start.

A Better Look at Onboarding Costs

When you’re onboard a new employee, deciphering the costs involved unveils a landscape of expenses that encompass more than the eye can see.

Hard Costs VS Soft Costs

The initial outlay that jumps out is training costs.

Organizations are said to shell out an average of $1,296 per employee on training. However, that’s just the tip of the iceberg.

Alongside this, companies account for administrative expenditures and grapple with lost productivity, a common scenario where a new hire operates at 25% efficiency during their first month.

Factor in workspace setup for varied work environments and the one-time welcome kits, and the numbers begin to add up, influencing the employee’s early experiences.

These expenditures, often less tangible and more elusive, are what we refer to as ‘soft costs.’

Soft costs can make up a staggering 60% of the total cost of onboarding a new team member.

Now, let’s flip the script and consider the other side of the coin: the hard costs associated with bringing a new employee on board.

Hard costs represent the direct financial investments made during the hiring process and include the more tangible and easily calculable expenses: job board fees, background checks, essential onboarding materials, and perhaps even health insurance considerations.

It’s crucial to not only account for these costs but also to prepare for their impact.

Factors That Influence Onboarding Costs

As you navigate the complexities of bringing on a new team member, understanding the variables that can affect the cost of onboarding a new employee is essential.

The magnitude of these costs often stems from the unique characteristics of your company and the nature of the onboarding processes.

Let’s look into the factors that can either drive up or mitigate these expenses.

Company Size and Structure

The size of your organization and the intricacies of its structure significantly influence onboarding costs.

Bigger companies may face more elaborate onboarding steps that can drive up costs.

In contrast, smaller businesses or startups with fewer levels of bureaucracy may navigate the onboarding journey more easily, leading to potentially lower expenses.

In-Person Versus Remote Onboarding

Whether you’re inducting a team member into a brick-and-mortar space or a digital workspace, the costs vary.

Remote onboarding might save on relocation but could require investment in technology, while in-person onboarding has its own set of tangible costs.

Creating a New Role vs Replacing an Employee

Introducing a novel position can be initially costlier in terms of setting up new systems and processes; however, this avoids the indirect costs of lost productivity associated with replacing a team member who holds critical operational knowledge.

New Employee Experience and Seniority Level

The seniority and prior experience of a new hire can either increase the cost of training new employees if they’re less experienced or decrease it if they require less direct oversight and can leverage their experience to acclimate more quickly.

The Number of People Involved in Onboarding

The more hands on deck—such as the HR team, IT personnel, and other team members—the more training, coordination, and resources are needed, which can swell onboarding costs.

Paperwork & Bureaucracy

The necessary evil of administrative tasks, though integral, can contribute a hefty sum to the cost of onboarding a new employee, especially for smaller organizations with leaner HR teams.

Onboarding Resources

The breadth of materials, from training packets to software access, drives up the cost of onboarding a new employee but is critical to ensure effective integration into the working environment.

The Time Needed for an Employee to Get Up to Speed

Ultimately, the speed at which a new hire reaches full productivity impacts the total cost of onboarding.

Senior roles may require less day-to-day training but need ample time to understand internal dynamics, all of which contribute to the average cost of onboarding.

Anticipating the Unforeseen Onboarding Costs

When you’re in the thick of the hiring stage, calculating the cost of onboarding a new employee can seem straightforward.

But it’s the unexpected and often hidden costs that often catch companies off guard.

Have you thought about the price of a new hire who takes longer to reach full productivity than you anticipated?

What about the additional training that could become necessary if the employee faces unforeseen challenges?

To ensure you’re covered, building a buffer into your onboarding budget is a wise move.

Here’s how you can brace for those surprise costs:

  • Assess the Risks: Before a new hire starts, identify areas where unexpected costs could arise.
  • Contingency Fund: Allocate a portion of your budget to handle unforeseen onboarding expenses. This could be a percentage of the estimated onboarding cost.
  • Monitor and Adjust: Keep an eye on the new employee’s progress. If they’re advancing slower than expected, you’ll have the means to support them without jeopardizing your budget.
  • Feedback Loop: Integrate feedback mechanisms to quickly identify and address areas where costs could spiral.

Remember, the goal is to be prepared, not just for what you know but also for what you don’t.

Technology’s Role in Reducing Onboarding Expenses

As you navigate the complexities of incorporating new members into your team, it’s worth considering how advancements in HR technology, such as those offered by Connecteam, can streamline your onboarding processes.

Connecteam’s all-in-one employee management app is designed to simplify and enhance every stage of the onboarding experience.

Embracing digital tools like Connecteam not only promotes an efficient workflow for your HR team but also ensures a more effective onboarding experience for your new hires.

A barista in an apron is looking at his Connecteam Training & Onboarding app on his phone.

Imagine reducing the manual burden while enhancing the new employees’ ability to hit the ground running with a platform that’s both intuitive and comprehensive.

Streamlining Onboarding With HR Tech and Connecteam

To truly capitalize on technology’s role, consider the following ways that HR software, especially a platform like Connecteam, can revolutionize your approach to onboarding:

  • Automated Welcome Messages: Connecteam’s smart team chat allows you to reinforce your company’s culture and provide essential information before day one through customizable, automated messages.
  • Digitized Onboarding Checklists: With Connecteam’s checklist app, you can easily keep track of necessary steps and documents, ensuring nothing falls through the cracks, and maintain organized workflows.
  • Electronic Document Storage: Speed up the paperwork process with Connecteam’s employee document feature, making document handling a breeze and reducing paper waste.
  • Virtual Training Modules: Help new hires learn at their own pace with Connecteam’s interactive and engaging employee training software.

By equipping your HR team with Connecteam’s effective onboarding tools, you not only mitigate the time spent on administrative tasks but also significantly cut the overall expenses associated with onboarding.

Best of all, Connecteam is incredibly affordable with paid plans starting at only $29 for up to 30 team members. Small businesses with fewer than 10 employees even get to use all of Connecteam 100% for free.

Strategies to Minimize Onboarding Costs

In the pursuit of an efficient hiring process, there’s a delicate balance to strike between incurring the necessary cost of onboarding a new employee and finding ways to streamline these expenses.

The HR team is key in implementing strategic onboarding processes designed to not only enhance employee experiences but also to ensure each step is as cost-effective as possible.

By adopting effective onboarding strategies, you can significantly reduce costs without compromising the quality of the onboarding experience.

Pre-boarding Procedures

Getting a head start on the onboarding process can greatly reduce the time and resources used once the new employee steps into the office.

Pre-boarding includes steps like electronically submitting documentation for signatures, initiating training modules, and preparing the workstation even before the official start date.

This proactive approach paves the way for a more structured and tranquil first day, alleviating the pressure on both the HR team and the new employee and ultimately reducing the costs associated with a lengthy onboarding period.

Reevaluating Onboarding Processes

Conducting regular reviews of your onboarding processes is crucial for continuous improvement.

Gather feedback from recent hires to understand their firsthand experiences and keep an eye on the latest industry trends that can introduce efficiencies.

Scrutinizing the outcomes of your existing onboarding methods can illuminate areas where time and resources may be optimized.

Remember, an effective onboarding process is not set in stone; it’s evolutionary, adapting to the changing needs of both the organization and its employees to be most effective while cost-conscious.


The journey from identifying an open role to fully integrating a new team member within your organization is accompanied by numerous considerations and, importantly, expenses. 

So, as you look towards onboarding the next member of your team, remember the larger picture: every dollar and every moment spent is an integral stitch in the tapestry of your collective success.

It’s an investment that promises rich dividends in the form of a stronger, more unified workforce.


What factors into the cost of onboarding a new employee?

The cost includes both direct expenses, such as the team member’s annual salary, training materials, and workspace setup, and indirect expenses, like lost productivity during the learning period and the time the HR team invests in the process.

How much does it typically cost to onboard a new employee?

While costs can vary widely, averages from the SHRM suggest that it is approximately $4,100 per new employee, taking into account various factors such as industry, job level, and geographic location.

What are some of the hard costs associated with employee onboarding?

Hard costs refer to tangible, direct expenses such as health insurance, job board fees, background checks, training costs, and onboarding materials required.

What are some of the soft costs involved in onboarding?

Soft costs include less tangible investments, like the time current employees spend training new hires, the impact on team morale, and overall lost productivity until the new employee is fully integrated and working at full capacity.

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