How much does it cost to onboard a new employee?

Onboarding is more than just a formality; it’s one of the most important investments you can make in your new hires. When done right, it can increase employee retention by 25%.

But how much does it really cost? Why does the price vary so much? And how can you reduce onboarding costs without sacrificing quality?

In this guide, we’ll break down what drives onboarding prices up or down, what’s typically included, and how to make smarter onboarding decisions for your business.

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What does onboarding include?

Onboarding is a comprehensive process designed to integrate new employees into the company culture, ensure they understand their role, and get them up to speed quickly. The process typically involves several key stages that contribute to the overall cost:

• Administrative tasks: This includes filling out forms, setting up accounts, enrolling in benefits, and ensuring the new hire has access to all necessary tools and systems.
• Training and orientation: This might involve formal sessions, online training programs, or one-on-one coaching. Training can represent a significant portion of onboarding costs, especially for complex roles.
  
• Team integration and cultural introduction: This often includes introducing them to key team members, familiarising them with company culture, and providing the resources they need to thrive in their new environment.

Six factors that can drive up the cost of onboarding

Several factors can contribute to the overall cost of onboarding a new employee. Avoiding mistakes during this process can also help with the cost. Understanding these factors can help businesses identify areas for improvement and reduce unnecessary expenses.

1. Time spent by managers and HR: Onboarding is rarely handled by just one person. Managers, HR, and sometimes even IT or finance teams are involved. The labour costs can range from a single hire of $200 to $700. From the begining of the hiring process, candidate screening, background checks, setting up systems to guiding new hires through processes, the investment can really add up.
2. Technology and tools: Although it is waning, we still live in the subscription era. Using onboarding platforms, e-signature tools, or AI-driven systems can save time and reduce errors, but as we know, these tools aren’t free. The cost can range from $20 to more than $100 a month, not considering custom setup fees (up to $2000) and possible system integrations.
3. Role complexity: The more senior or technical the role, the more support is required and the higher is the cost per hire. Highly skilled positions often involve job shadowing and in-depth onboarding sessions, all of which increase time and cost. For complex roles, onboarding costs can increase by $500 to $1,500, mainly due to longer ramp-up times and the need for customised resources.
4. International employee onboarding: Hiring costs across borders comes with extra steps that can add $1000$ to $3000$+ to the cost per employee. Work permits, tax compliance, payroll setup, and cultural training are all included in the cost. The variation depends solely on the country, legal requirements, and whether relocation is involved.
5. Training programs: Comprehensive training, whether it’s virtual, in-person, or blended, represents one of the largest onboarding expenses. The investment per employee training costs usually starts from $500. Effective programmes need content, facilitators, and delivery platforms, all of which require time and budget to develop and implement.
   
6. One-on-one training: Personalised onboarding offers new hires a tailored experience and often faster integration. But it’s also resource-heavy, requiring more hours from experienced team members, mentors, or managers to deliver that one-on-one attention. This can also enhance average cost of the whole process by an additional $200+ per employee.

What brings the cost down?

Reducing the average cost of onboarding a new employee doesn’t have to mean cutting corners. There are several ways to streamline the process, ensuring it remains effective while saving both time and money.

• Leveraging technology by automating administrative tasks, such as document signing and setting up employee accounts. This frees up HR team resources for more valuable tasks and reduce on recruiting costs.
  
• Using a standardised onboarding platform. By providing employees with resources they can access on their own, such as training materials or a company handbook, you reduce the need for extensive one-on-one training.
• Pairing new hires with experienced employees can help them settle in faster and feel supported. It’s an efficient way to integrate them into the team without having to invest as much time in formal training.  Mentorship and buddy systems can go a long way.
  

Why do some onboarding programmes cost so much more?

The most expensive onboarding services typically include:

• Tailored training plans and materials
• Ongoing check-ins and personalised support
• Country-specific compliance setup
• Cultural onboarding and team integration activities
• Visa or relocation costs

These may be essential in high-stakes, senior-level, or global roles.

Why are some onboarding services so cheap?

Cheaper onboarding services may:

• Focus only on basic admin tasks
• Lack of tailored training or culture fit integration
• Offer minimal or no follow-up support
  
• Use outdated or manual processes
• Skip legal or compliance checks in some regions

This might work for temporary or low-skill level roles, but it could lead to higher turnover or compliance risks.

The average cost of onboarding a new employee

According to Bianca Passos, Senior Service Consultant of Employer of Record at Airswift:

Onboarding costs can range from $1,000 to $2,500 per new hire, depending on the number of employees, the specific qualifications required, and the complexity of the role.

Typically, an onboarding structure includes:

• A one-time onboarding fee for administrative setup and coordination (usually the biggest part of the cost, ranging from $1000 to $2000+)
• A monthly management fee for ongoing support (a payment that can go from $800 to $1500)
• Optional add-ons like visa/work permit services, depending on the employee’s location

For roles with specialised skills or fewer employees, the cost may increase due to more extensive training and customised integration plans. On the other hand, larger teams can often reduce the cost per person. Companies in sectors like tech or healthcare, which require more complex training, tend to incur higher onboarding expenses.

Understanding these variables is essential for businesses looking to optimise their onboarding process. This will ensure a balance between cost efficiency and a high-quality experience for new hires, which will improve overall employee engagement and production.

Get the best onboarding for your business with Airswift

From administrative tasks and training to long-term employee engagement, every aspect of onboarding contributes to both immediate and future success.

As companies continue to focus on creating effective, cost-efficient onboarding programs, they can look forward to stronger employee relationships and a more successful, engaged workforce. Get in touch with us today to start getting the best onboarding your new hires.