There is the cost and then the true cost of onboarding a new employee.
This is the same for every organisation. But here’s what most people don’t consider: any onboarding cost can vary quite significantly depending on the size of the company, complexity of the role and the resources required to successfully build a solid foundation for success.
While we’re on cost, there’s a big elephant in the room. One that’s often overlooked–and that’s the true cost of employee onboarding.
This cost can be difficult to calculate accurately. Why? It involves tangible and intangible expenses–and these expenses are often overlooked.
Below are examples of tangible and intangible expenses.
Hidden costs: these can include a loss of productivity during the learning curve, or the time mentors spend with new hires, time that detracts from the value of their roles.
Role variation: different roles require different levels of training and integration, e.g., a highly technical role, such as an AI engineer or cybersecurity analyst, will require more in-depth onboarding to get up to speed.
Lack of tracking systems: some organisations don’t have robust systems in place to track all the resources allocated during the onboarding process, i.e., time, tools and training programs. This makes it challenging to accurately capture every cost.
Employee Attrition: An onboarding investment isn’t an automatic guarantee of long-term employee loyalty. Sure, it helps, but it’s not the only reason. If employees leave, recruitment and training costs are, ultimately, wasted. This contributes to the complexity of determining the ROI of the onboarding process.
Long-term vs. short-term costs: Some onboarding costs are upfront, e.g., training programs and software tools, but the benefits, such as improved employee retention or long-term productivity gains, are only seen later. This mismatch makes it hard to assess the true, long-term cost-effectiveness of the onboarding process.
Why The Cost of Onboarding Matters as Companies Grow
The true cost of onboarding is only really understood as companies scale and grow. Why? Small inefficiencies can easily be stacked, morphing into bigger problems. Below we’ve listed the reasons why. 👇
Costs multiply with volume: onboarding new employees is one thing. Hiring dozens or hundreds of employees means that every overlooked cost (manager time, slower escalation and admin work) gets repeated and becomes costly fast.
Productivity impacts become invisible: when scaling, speed matters. If onboarding is slow or confusing, new hires take longer to reach optimal productivity. This directly affects output, delivery timelines and, ultimately, revenue.
Manager capacity is strained: as headcount increases, decision-makers spend more time onboarding and less time on strategic work. Should the true cost of this be misunderstood, teams can be overlooked without realising why.
Early attrition becomes costly: growth often comes together with the risk of high turnover. When new hires leave in the first few months, the organisation absorbs the full onboarding cost without getting long-term value in return.
Budgeting and planning depend on accuracy: understanding the true onboarding cost helps organisations to forecast hiring budgets, set realistic growth targets and decide whether to invest in better onboarding systems or automation.
Difficulty maintaining culture and consistency: insufficient onboarding at scale results in uneven employee experience, misalignment and cultural drift–issues that are expensive and challenging to overcome later.
Onboarding as a System, Not an Event
Onboarding unfolds across multiple stages, typically involving multiple stakeholders and touchpoints over time. This means that it should be interpreted as a system, rather than a one-time event.
It begins with expectation setting, continues through to formal orientation and training and extends through to formal orientation and training, reaching ongoing support, performance enablement and feedback.
The onboarding system involves HR, managerial and peer input, tools, processes, and culture – all working together to help engage new employees, maximising their chances of becoming proficient and productive as quickly as possible.
Treating onboarding as a system allows organisations to identify dependencies, reduce friction, improve consistency, and scale effectively.
What Does Onboarding Cost Actually Include?
Onboarding cost includes all the direct and indirect costs of bringing a new employee to full productivity, including recruitment, HR administration, training, tools, and equipment, even managerial and peer time loss during the onboarding and early attrition risk. Let’s look at this in a little more detail below:
Direct vs Indirect Costs
Direct costs are onboarding expenses that are easy to identify and usually recorded as part of budgets.
These include recruitment fees, job advertising, HR administration, payroll setup, background checks, training programs, onboarding software, equipment (e.g., laptops and software licences), and any formal induction activities.
Indirect costs are less obvious and quantifiable. They’re often hidden and arise from the time and resource investment required to integrate new employees and bring them to full productivity. These costs often make up much of the total onboarding expense and have significant long-term impacts.
Key indirect costs include any loss of productivity, additional time invested by existing employees, managers and HR personnel to mentoring, training, supervising and assisting new hires, reduced efficiency and morale, errors and rework, disruptions from employee turnover and rehiring, loss of knowledge, and the negative impacts onboarding can have on organisational branding.
Visible vs Hidden Efforts
The visible effort of onboarding is self-explanatory. It’s the cost that you can see. Think software package subscriptions, equipment, like laptops, tablets or smartphones and the hours that teams, like HR and accountancy teams.
The hidden efforts of onboarding are a might more difficult to quantify. These include informal coaching, repeated time spent communicating with colleagues, shadowing, reworking, and the cognitive load placed on teams supporting new hires.
This hidden effort accumulates quietly across the organisation and is rarely measured. However, what should be noted is that it can exceed the visible costs.
Why Finance Teams Often Miss Parts of the True Cost
The full onboarding cost is often missed because indirect effort is distributed, non-transactional and embedded in the operational team.
Productivity loss, opportunity cost, and managerial time not linked to measurable activities are difficult to quantify and rarely captured by standard accounting practices.
Why is this important? It makes calculating the true cost of onboarding more difficult until scaling or high turnover exposes this.
The Real Cost of Onboarding a New Employee
As we’ve already outlined, there’s the cost of onboarding and then the real or true cost of onboarding. But what does this look like in practice? Let’s take a deep dive into how much it costs to get a new employee up to speed.
Direct Recruitment Costs
Filling a new position is a more in-depth process than you may first think. It typically involves candidate screening, background checks, interviews, administration setup, welcome material creation, agency fees, and disruption to typical workforce practices.
The average UK cost-per-hire is £3000 and takes around 30 days from hiring to full onboarding completion. This is time that, arguably, could be better spent completing essential functions, such as employment engagement.
Marketing and Advertising Costs
Attracting the right talent requires strategic advertising to influence candidates who’ll drive the organisation toward achieving its goals.
This starts with crafting educational and persuasive ads that grab candidates’ attention, making sure that these ads have as wide a reach as possible. This requires a multi-platform approach, often including social media.
Organisations must balance the effectiveness of recruiters. Paid advertising services versus free advertising (which typically only offer limited visibility and features) is also a clear consideration when maximising recruitment.
Compensation and Benefits
Quality candidates expect fair compensation. In 2025 in the UK, the average cost to employers for wages and benefits per hour (including gross pay plus non-wage costs, like National Insurance and pension contributions) is approximately £22 to £23.
However, let’s not forget that this cost is the aggregate total remuneration of employer-borne costs at an economic level. Benefits can include private health insurance, pension schemes and employee development programs, which can make up a significant portion of an employee’s salary.
Emotional Costs
The strain of recruitment costs, especially to organisations under resource restraints, may impact the emotional health of decision-makers.
In today’s challenging economy, any impact on people’s well-being and productivity must be factored in. This can impact the entire recruitment process.
Poor Hiring Decision Costs
Making a poor hiring decision can be very costly.
In some cases, the cost could amount to anywhere between one and three times the salary of the position you’re recruiting for. Cost can include lost wages, benefits and any additional costs from recruiting and training the employee.
We’ve put together a table below that illustrates the real, true costs of recruiting an employee. 👇
| Typical Cost | What’s Involved in the Cost | True Cost (What’s Often Missed |
| Admin & Coordination | HR setup, IT access, contracts, payroll, scheduling inductions, internal comms | Hard to calculate and rarely tracked; spread across HR, IT, finance, and ops, so it looks “small” in each place |
| Manager time spent | 1–2–1s, onboarding check-ins, answering questions, reviewing early work, performance corrections | Not costed because it’s “part of the job”; opportunity cost (what the manager didn’t do) is invisible |
| Team time and disruption | Shadowing sessions, buddy systems, peer support, and interruptions for questions | Spread across multiple people and teams, each interruption feels minor but adds up quickly |
| Learning and development | L&D courses, onboarding programs, external training, and internal trainers’ time | Often budgeted as training spend, not linked back to onboarding ROI or time-to-productivity |
| Lost productivity (new hires) | Ramp-up time, slower output, rework while learning systems and processes | Seen as unavoidable or “expected”, baseline productivity is assumed rather than measured |
| Mistakes and reworking | Errors from unclear processes, miscommunication, and lack of context | Treated as one-offs or learning moments rather than systemic onboarding failures |
| Compliance and risk exposure | Policy gaps, security errors, regulatory missteps, safety issues | Costs are probabilistic and indirect, only visible when something goes wrong |
| Cultural misalignment | Poor engagement, expectation confusion, values, or ways of working | Soft cost that’s hard to measure; impact shows up later as disengagement or attrition |
| Early attrition/rehiring | Replacement hiring, re-onboarding, lost knowledge, and morale impact | Often blamed on “bad hire” rather than inadequate onboarding; cost shows up months later |
| Delayed impact and lost opportunity | Slower delivery, missed deadlines, delayed revenue or other projects | Viewed as business-as-usual delays, not traced back to onboarding quality |
How Much Does Onboarding Actually Cost?
More than organisations can expect. It’s that simple.
Why? The biggest drivers of onboarding cost sit outside payroll or invoices.
In fact, when all are factored into account, organisations can expect to pay thousands before even considering the new hire’s salary. We’ve outlined the key considerations below.
Typical Manager Time Per Hire
Hiring managers and senior peers typically spend 20-40 hours on each new hire.
This includes recruitment in all its stages (from designing a job advertisement, reviewing applications, interviews and post-hire activities, such as training, reviews and internal support.) ⏱️
When valued at fully loaded hourly rates (wages plus add-on costs), the typical manager’s time per hire can amount to a significant monetary expense. Time that could be better spent on other workplace activities, e.g., operations.
Time to Productivity
Most new hires take three to six months to reach full productivity, depending on the role complexity.
During this period, organisations must account for a percentage of the cost per role, acknowledging that any output will be inconsistent and likely supervisory. The true cost is invisible–and delayed.
Productivity Dips
In the first few weeks, new hire productivity is a fraction of expected levels. This is to be expected. New hires are adapting to a new environment, building relationships with colleagues, absorbing and meeting their duties, and a host of other responsibilities while striving to perform to the best of their ability.
During this time, it’s estimated that new hire performance rests at between 30-50% of true productivity.
Then there’s the compound effect that onboarding has on the new hire and the performance of everyone around them. Simple things like new hires asking questions or being mentored by experienced people impact everyone around them.
Compliance Exposure (Risk-Based, Not Guaranteed)
New hires make more mistakes in all elements of their roles.
They don’t walk into a new professional environment and just know what to do. From navigating software platforms to meeting every new process touchpoint. It’s impossible.
This is no more apparent–and important–than when organisations consider their compliance exposure. Organisations that understand how to mitigate compliance risks successfully and embed this into new hires offset potential problems down the road.
Why Onboarding Costs Increase as Companies Grow
As companies grow, onboarding costs increase. This is accepted. But why? Well, costs don’t rise simply because more people are being hired.
They rise because the way onboarding is being delivered starts to change–quietly and unintentionally. What was once informal and flexible becomes fragmented, repetitive and increasingly inconsistent.
More hires equal more opportunities for variation. Different managers interpret onboarding differently. Hiring steps are skipped, reordered or reinvented.
This can result in uneven onboarding experiences, and the organisation absorbs the cost through longer times getting employees up and running. Rework can become commonplace, with preventable mistakes creeping in. Basically, more hires lead to more inconsistency.
Then there’s the issue that onboarding knowledge tends to live in people’s heads, rather than in systems. This can feel efficient. Seasoned managers and HR teams know how to address this in person and digitally.
However, as the organisation grows, that tacit knowledge can become a liability. This is exposed when an employee who has specific knowledge is absent. Delays, errors and dependency on a shrinking group of people can cause significant issues.
Training is another hidden multiplier.
Without standardised processes and explanations, walkthroughs and documents may have to be repeated.
Every new hire consumes peer and managerial time, often covering the same ground that was previously outlined. As the volume increases, this manual repetition compounds into a high operational cost.
All this leads to managers who feel obliged to fill in a gap or shortfall, eating into time that could be better spent on more pressing issues, rather than filling in when there’s an onboarding shortfall. This can include one-off sessions with new hires or something as simple as creating custom onboarding documents. This decentralised approach makes it difficult to measure, improve or scale onboarding.
When all’s said and done, the problem isn’t effort, it’s consistency.
As headcount increases, effort doesn’t translate into efficiency. In fact, onboarding becomes more expensive. Why? Organisations can end up paying double for their effort. 🤔
When Onboarding Stops Scaling
Like pretty much everything else integral to success, an organisation that doesn’t scale stagnates–and stagnation is the step before growth grinds to a halt. This is true of onboarding.
Think of it this way, if your new hires feel underwhelmed by the onboarding experience, their first introduction into the company, it sets the tone for their experience with the organisation. A negative experience can cause challenges down the road
Let’s not forget that onboarding is only as effective as its focus on providing new hires with everything they need to build a solid foundation–and that it meets the evolving needs of the organisation. Processes that rely on tribal knowledge, shared folders and superhuman managers who seem to wear many hats become disrupted.
The result? Duplicated tasks. Incomplete work. Conflict between colleagues. Basically, the opposite of productivity. New hires feel this.
The warning signs are often gradual and difficult to notice. They can be exacerbated when hiring multiple people per month or at once, making simple processes more complicated than they need to be.
Highly regulated or audited environments have small margins for error while having many moving parts operating simultaneously.
Remember, onboarding is more than just HR; it’s a whole compliance ecosystem, triggering legal, security, IT, finance, and policy obligations. Each step (from background checks to access provisioning, policy acknowledgements to training certifications) must be completed in the right order. This means that decision-makers and managers will spend more time on admin.
Fast hires, quick role changes, remote starts or senior hires often require exceptions to standard onboarding scaling. In compliance-rich environments, every exception needs to have strong documentation and approval. Organisations without structured workflows, which handle onboarding informally, can multiply risk.
There’s also the problem that many organisations lack a single view of onboarding progress because they’re structurally fragmented, with different departments handling individual onboarding, leveraging different IT systems, and ownership is unclear. Without a single, unifying team accountable for the entire experience. This results in a lack of unification.
All these pain points have clear drawbacks which can be felt throughout the entire organisation. However, the cost of not addressing them can be high, with knock-on effects reverberating organisation-wide.
How Growing Teams Reduce Onboarding Costs
As we all know, as teams scale, grow and evolve, so too organisational costs. This is true across all areas, including onboarding.
Depending on the nature and complexity of the role, highly specialised training, mentoring, one-on-one support, and a whole lot of trial and error are needed to figure out what really works.
Processes become documented, tools standardised, and training materials evolve from ad-hoc explanations to repeatable systems. Managers spend less time reinventing the wheel and more time evolving and iterating. This means getting new hires up to speed more quickly is integral. Do this, and you’ll dramatically reduce the true onboarding cost. 🙌
Let’s review how growing teams can reduce onboarding costs through five key metrics.
Reduced Manager Time
The Problem: managers can spend hours repeating the same explanations to junior or early-stage new hires, ensuring that they fully understand what’s required of them. Over time, this time can be stacked, pulling decision-makers away from high-impact work.
The Solution: as teams grow, onboarding knowledge becomes centralised and repeatable, reducing the need for constant manager involvement.
Demo: managers that shifting from hands-on training to check-ins will slash onboarding time per hire, lowering the hidden cost of leadership action.
Faster Time-to-Productivity
The Problem: New hires, especially those in smaller teams, face challenges to reach peak productivity. One of the reasons for this is that learning depends on who’s available to help and the degree of knowledge they have to impart.
The Solution: growing teams standardise onboarding paths. This means that every new hire can access what they need when they need it.
Demo: employees reach full potential faster, shortening the time between hire date and real business impact.
Consistent Onboarding Experience
The Problem: ad-hoc onboarding leads to an uneven experience. Some employees are privileged to receive robust training; others miss the critical context needed to fully understand the process.
The Solution: organisations should scale their workforce consistently, transforming initial knowledge into shared, documented onboarding journeys.
Demo: each new hire starts on level footing, reducing errors and rework, while systematically plugging performance gaps. This drives long-term growth.
Clear Compliance Visibility
The Problem: manual onboarding makes it difficult to track who has completed any L&D, is aware of policies and procedures and ensures that training and certifications are completed and awarded, thereby reducing compliance risks.
The Solution: teams should invest in a structured onboarding system, one that’s transparent and can be adapted to teams. Individual and team progress should be visible and auditable.
Demo: as compliance becomes transparent, it’s easier to verify. This reduces legal exposure and avoids costly follow-ups or remediation.
Less Manual Admin
The Problem: Early onboarding often involves spreadsheets, emails, and one-off tasks that multiply with each new hire.
Solution: As teams scale, repeated onboarding can be standardised or automated.
Demo: admin effort per hire drops sharply, allowing HR and People teams to support growth without increasing overload.
L&D Tools like Thirst can be a great help in helping teams reduce onboarding costs by centralising learning, automating tracking and giving managers visibility, without drastically increasing administrative costs.
From materials content creation and upload to onboarding and compliance, even expert-built content, like AI and digital marketing, Thirst has more than 4000 courses to optimise your L&D.
Below are a couple of examples of how growing teams can reduce onboarding costs.👇
Role-based Onboarding Paths Reduce Repeated Training
Organisations with growing teams benefit from creating role-specific, tailored learning paths for new hires.
This allows them to receive the training most relevant to the role they’ll perform. This stops organisations from repeating the same generic training sessions, ensuring maximum L&D retention, and reducing potential future re-training costs.
Automated Tracking Removes Manual Follow-Ups
Automated onboarding tools track progress and send reminders. This streamlines operations, negating the need for HR to send consistent reminders, chasing L&D completion rates. Ultimately, this ensures that the administrative workload is such that onboarding stays on schedule with minimal manual effort.
Centralised Content Prevents Rework and Duplication
Storing onboarding materials in a centralised location allows teams to avoid recreating documents and training for each new hire.
Content can be tailored to specific roles and iterated to meet the evolving needs of the organisation.
Reducing Cost Without Adding More Work
When organisations use the phrase ‘cost reduction’, they often assume that work’s about to start piling up, something that will jolt the system, especially if they’re already stretched to capacity.
The biggest cost savings come from removing friction. NOT asking people who are already stretched to do more–and this can be broken down into categories.
Fear of Adding Tools or Complexity
A common misconception is that new platforms, AI or digital tools, not processes or systems to learn and leverage.
Layering tools on an existing process that’s already broken only adds to the complexity and cognitive load people are already under. As complexity grows, the fear of not being able to keep up can lead to mistakes. Efficiency drops.
The right systems do the opposite, replacing scattered workflows and manual workarounds with a single, simpler way of working. This is the best way of reducing cognitive load and optimising productivity.
The Importance of Flexibility
Growing teams evolve quickly. Rigid systems quickly become a liability. Inflexible, unadaptable onboarding systems or processes are unable to adapt to current and future workflows, forcing workarounds, and this can be costly.
Flexible systems make it easier for teams to adapt and evolve, pivoting instead of starting from scratch. This adaptability keeps processes efficient over time, preventing constant, repeated reinvestment in new tools or L&D.
Focus on Systems that Remove Manual Effort
Real cost reduction comes from eliminating repetitive, manual tasks that quietly eat up valuable time. Actions like chasing updates, duplicating content and coordinating onboarding all have hidden costs.
Systems that automate tracking, standardise workflows and centralise information streamline output, allowing people to concentrate on more important tasks. This equips teams to better manage their time. 😀
Final Thoughts
Onboarding costs are rarely felt all at once—they stack quietly as teams grow. Small inefficiencies compound, manual work multiplies, and what once felt manageable becomes expensive. This becomes even more noticeable when organisations start scaling operations.
The most effective way to reduce onboarding costs isn’t through shortcuts, but through systems that scale with the team. Clear structure removes friction, prevents duplication, and lowers the effort required for every new hire over time.
What does this mean in practice?
- Onboarding costs grow cumulatively, not linearly
- Small process gaps become expensive as headcount increases
- Structured, repeatable systems reduce cost with each hire
When onboarding is designed to scale, the cost per new employee goes down–even as the organisation grows.
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Take a quick guided tour today and see how Thirst could support your organisation.
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