For small businesses, every new hire is a crucial investment, and onboarding mistakes—a costly risk that simply cannot afford to be made. With lean budgets, fewer personnel, and limited time, small businesses feel the impact of poor hiring decisions far more than larger organizations.
Developing a deep understanding of organizational structure, culture, and goals is the first step towards creating an effective onboarding program. Unlike large corporations with standardized onboarding playbooks, small businesses require a tailored approach that aligns with their specific needs and constraints.
It can be quite daunting setting new hires up for success without an extensive HR infrastructure and a sizable financial cushion to absorb the strain and that’s why we’ve put together these five common mistakes peculiar to the employee onboarding process for small businesses.
Top Mistakes to Avoid in the SME Employee Onboarding
Here are some key pitfalls to watch out for.
- Lack of a Solid Onboarding Plan
Before implementing any onboarding program, small businesses must first achieve organizational self-awareness. This means recognizing what works for their specific business environment rather than blindly adopting best practices designed for larger organizations.
Another critical aspect of effective onboarding is identifying and eliminating barriers that prevent new hires from successfully integrating into their roles. Research has shown that newcomers face multiple challenges when trying to contribute to a project, and failing to address these barriers can lead to frustration and disengagement.
For instance, a case study done on the IT industry highlighted that new developers often struggle with their first contributions because of the complexity of the process, ultimately causing some to lose motivation or abandon their efforts altogether.
Unclear role definitions, inadequate training materials, and lack of structured guidance can hinder a new hire’s ability to contribute effectively. To overcome these challenges, small businesses should develop a clear and structured onboarding plan that includes preboarding initiatives, a structured knowledge base, gradual employee integration, and personalized guidance.
- Little Employee Engagement
While onboarding typically involves paperwork, company policies, and job training, it should also be a time to build connections, instill motivation, and create a sense of purpose for new hires. Without active engagement, employees may feel disconnected, struggle to integrate into the company culture, and lack long-term commitment.
According to a 2019 publication by the Society of Human Resource Management (SHRM), high levels of engagement have been found to promote talent retention, customer loyalty, and improved organizational performance.
Researchers have also developed a new approach to combating low engagement called ‘Personal Identity Socialization’, which focuses on empowering employees to bring their unique perspectives and strengths to their work from day one. This method shifts away from the traditional onboarding process, which primarily revolves around company values and expectations.
A field experiment with Wipro, a global IT company, demonstrated the impact of this new approach. The model provided multiple opportunities for employees to express themselves, making them feel seen, heard, and valued. Unlike the traditional method, which focused more on introducing hires to organizational culture and intricacies, this approach prioritized the uniqueness of each new hire.
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- Creating a Stressful Work Environment
A common but often overlooked mistake in the onboarding process for small businesses is unintentionally creating a stressful work environment for new hires. The transition into a new organization is inherently stressful, as newcomers face uncertainty regarding their roles, tasks, and social relationships.
If not properly managed, this stress can negatively impact a new employee’s perception of the organization, leading to disengagement, low morale, and even early turnover. According to a 2014 study , two types of stressors affect newcomers during the onboarding process:
- Hindrance Stressors – These stressors, such as role ambiguity and lack of direction, obstruct goal achievement and create unnecessary pressure, leading to frustration and decreased performance.
- Challenge Stressors – Unlike hindrance stressors, challenge stressors, such as time constraints or learning new skills, can have positive effects. These stressors push employees to develop and adapt, ultimately improving their confidence and resilience.
Challenge stressors should be carefully balanced to avoid unnecessary strain and to prevent a stressful work environment during onboarding.
Small businesses should also take a person-centric approach to easing workplace stress by; offering social support, providing clear role expectations, encouraging open communication, and balancing challenges with support.
- Less Emphasis on Enhancing Person-Job Fit
One common mistake small businesses make in their onboarding process is focusing too much on providing information rather than enhancing person-job (PJ) fit. Businesses ought to actively help employees find alignment between their personal strengths and job roles.
Traditional onboarding programs tend to overload new hires with company policies, procedures, and compliance-related details while failing to address the more critical aspect of helping employees integrate into their roles in a meaningful and personalized way.
Employees are expected to shed their past work habits and simply adapt to the company’s way of doing things. However, this method can be counterproductive, as it may ignore an employee’s unique capabilities and contributions.
Instead, encouraging employees to apply their strengths to their new role fosters a sense of belonging and commitment, making them more engaged and connected with their colleagues. This shift not only increases engagement but also improves long-term retention.
- Communicating to Inform as Opposed to Building Connection
Onboarding should not be reduced to a one-way information dump. Given the tight-knit nature of small business environments, fostering connection, engagement, and a strong sense of belonging for new hires should be a top priority.
“Just as communication at the beginning of a marriage can indicate if it will end in divorce, the foundation established early on with a new hire is crucial to productivity, engagement, and retention” (The HR Specialist, 2012). A transactional onboarding approach—where information is merely relayed to new hires without efforts to engage them—can lead to feelings of isolation, disengagement, and eventual turnover.
Research has found that one effective strategy for fostering workplace connections is storytelling; a communication technique that helps new employees relate to the company’s mission, values, and people on a deeper level. Instead of solely presenting facts about the company, leaders and team members can share real stories about workplace experiences, successes, and challenges to create a sense of shared purpose and belonging.
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