HRMN DQ 4

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New Employee Onboarding–

Psychological Contracts and Ethical Perspectives

Abstract

Purpose – This paper clarifies the importance of Human Resource Professionals (HRPs) improving the onboarding and assimilation of new employees and explains why this important task is so essential as part of the psychological contract between employers and those new organization members.

Design/methodology/approach – This paper is a conceptual paper that identifies a problem based upon findings in the management literature, explains the nature of psychological contracts and ethical duties, and identifies action steps for improving the new employee onboarding process.

Findings – The paper identifies a ten.-step model for improving employee onboarding and explains why HRPs and those who oversee them need to reexamine their assimilation of new organization members.

Originality/value – This paper contributes to the management literature by addressing a major problem that is poorly managed in many organizations. The mismanagement of this important onboarding process undermines organization effectiveness, decreases trust, and violates the psychological contract held by new employees about the organization’s duties owed to them.

Key Words: Employee Onboarding, Employee Assimilation, New Employee Orientation, Psychological Contract, Duties of Human Resource Professionals.

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New Employee Onboarding–

Psychological Contracts and Ethical Perspectives

Assimilating new employees into an organization is an important task of Human

Resource Professionals (HRPs) and an essential element of their responsibilities as technical

experts in their discipline (Huselid, et al., 2009, pp 196-199). Ineffective onboarding destroys

benefits achieved by hiring talented employees and increases the likelihood that the hard work

spent in recruiting and selecting those employees will be wasted (Smart, 2012). Because many

organizations view their onboarding process as an expense rather than an investment, they

adopt a short-sighted approach to the process. The predictable result from this false economy

is that the transition into the organization for new employees will be painful--leading to

potential underperformance, minimizing the organization’s capability to fully utilize the skills

and abilities of these new employees.

The purposes of this paper are 1) to identify why improving this important Human

Resource Management (HRM) function greatly benefits those new employees and the

organization itself, 2) to clarify the ethical obligations implicit in new employee onboarding, and

3) to provide top managers and HRPs with a model for improving the new employee

onboarding process that meets the ethical expectations and psychological contracts of

incoming employees. The paper begins with a brief explanation of the onboarding process and

the nature of the psychological contract that exist between an organization and its employees.

Building upon a model introduced by the University of Michigan ethics scholar, Larue Hosmer, it

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then presents twelve ethical perspectives that identify how employees perceive the nature of

their onboarding process. The paper then introduces a ten-step model for conducting a top

quality onboarding process, identifying how each of those steps honors the ethical expectations

of the psychological contracts of new employees. The paper concludes with the contributions

of this paper.

The Onboarding Process

Onboarding is the process of introducing a new employee into his or her new job;

acquainting that employee with the organization’s goals, values, rules and policies, and

processes; and socializing the employee into an organizational culture (Watkins, 2016).

Wanous and Reichers (2000) explained that the new employee orientation process occurs while

employees are under a tremendous amount of stress. The typical new employee onboarding

process provides employees with a volume of information that is overwhelming, impractical,

and impossible for new employees to incorporate within a short period of time. In compiling

research about the state of the art of employee onboarding, Srimannarayana (2016) noted that

some organizations included too many complex tasks and information for employees to

realistically digest while other organizations offered too few items that fail to adequately

prepare employees.

Bauer (2010) has explained that an effective onboarding process included four critical

building blocks to improve performance, inoculate against turnover, and increase job

satisfaction:

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• Compliance: This building block is the lowest level of onboarding and includes reviewing or teaching employees about basic legal and policy-related rules and regulations associated with working in the new organization.

• Clarification: This key function ensures that employees understand their new jobs and all its related expectations. Frequently, this function is poorly handled and lacks specificity.

• Culture: Providing employees with a sense of formal and informal organizational norms is often overlooked because members of the organization assume that the organization’s values, assumptions, and norms are easily understood.

• Connection: This key activity refers to creating vital interpersonal relationships and explaining information networks essential for employees to perform successfully.

Unfortunately, Acevedo and Yancey (2010, 349) concluded that most organizations do a

mediocre job of assimilating new employees and, few organizations utilize its full scope or

potential.

Bauer (2010) explained that effective onboarding has short-term and long-term benefits

for both the new employee and the organization, noting that employees effectively assimilated

into an organization have greater job satisfaction and organizational commitment, higher

retention rates, lower time to productivity, and have greater success in achieving customer

satisfaction with their work. In contrast, poor onboarding leads to lower employee satisfaction,

higher turnover, increased costs, lower productivity, and decreased customer satisfaction.

Holton (2001, 73) noted in his study of factors associated with onboarding that “(t)he most

important tactic (for effective onboarding) was allowing new employees to fully utilize their

skills and abilities.” Unfortunately, most organizations focus on establishing managerial control

systems rather than on building commitment and empowering employees (cf. Pfeffer, 1998).

Onboarding and the Psychological Contract

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The employment relationship is inherently an interpersonal relationship with profound

ethical implications associated with HRM (Hosmer, 1987). That relationship is based upon social

exchange theory in which the employer pays money to the employee in exchange for his or her

services (Cropanzano & Mitchell, 2005). The expectations in this relationship frame the

psychological contract that exists between the two parties – a contract that is typically

unwritten and that rarely perfectly coincides but reflects the reciprocal obligations of the

parties (Rousseau, 1995; Robinson & Rousseau, 1994). Consistent with expectancy theory, new

employees are also concerned about 1) how they will benefit as an organization member, and

2) whether it is feasible for them to obtain promised outcomes (Shea-Van Fossen &

Vredenburgh, 2014). The implied psychological contract between employers and employees

has evolved over the past several decades (Pfeffer, 1998), but a growing body of evidence

confirms that employers who create relationships with employees based upon high trust create

organizational cultures in which employees exhibit increased extra-role behavior, are more

creative and innovative, and more profitable than employees in comparable organizations (cf.

Beer, 2009).

Well qualified employees who add the greatest value, or create the most organizational

wealth, for their employers expect to be treated with dignity and respect; given the

opportunity to advance in their organizations; be treated as valued “owners and partners” in

improving the organization; and valued as “Yous,” or as unique individuals, rather than as “Its,”

or fungible commodities with no individual identity (Buber, 1996; Covey, 2004; Block, 2013).

Although some employees are highly committed and inherently dedicated to giving extra-mile

performance, even in the face of poor treatment and ineffective leadership (Organ, et al.,

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2005), research evidence documents that employers who treat employees with high trust, who

demonstrate a personalized approach to employees as valued partners reap the rewards of

better quality, improved employee performance, and increased employee satisfaction (Pfeffer,

1998; Paine, 2003; Smith, et al., 2016).

Louis (1980) examined the problem of employee dissatisfaction with the new employee

entry process more than thirty-five years ago, yet new employees continue to be surprised by

the inadequacies of many organizations’ onboarding systems (Lawson, 2015, Ch. 5). Although

the expectations of incoming employees about the perceived duties owed to them in the

onboarding process may vary, employees feel betrayed when those duties are breached – with

an inevitable decrease in organization commitment (Morrison & Robinson, 1997). A realistic

job preview reduces surprises, clarifies supervisor expectations, provides an opportunity for

employees to ask questions about desired outcomes, and clarifies the psychological contract

(Tekleab et al, 2013).

Hosmer (1995) explained that trust and ethical expectations are closely related and

derived from well-accepted philosophical foundations. Table 1 presents twelve ethical

perspectives, a brief summary of each perspective, and a summary of how new employees

perceive onboarding duties owed to them.

==== Insert Table 1 about Here ===

Each ethical perspective confirms that it is in the best interests of an employer and their

employees for the onboarding process to occur effectively and with high quality (cf. Hosmer,

1995). New employees typically perceive that they are an excellent onboarding process as part

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of the psychological contract owed to them (DeVos, et al., 2005; Klein & Weaver, 2000). The

evidence also confirms that effective onboarding serves all stakeholders, benefiting

organization both long-term and short-term (Bauer, 2010).

A Ten-Step Model for Quality Onboarding

HRPs who incorporate highly effective onboarding programs honor the psychological

contract expectations of their new employees and fulfill their strategic role as ethical stewards

(Huselid, et al., 2009;). The following is a ten-step model for quality onboarding, including steps

prior to the actual arrival of a new employee.

1. Establish the Relationship Online Immediately after Hiring. Typically, the decision to

hire an employee occurs well before the employee actually begins work. Initiating an

online relationship enables an organization to create an immediate personalized

relationship with a new employee--a well-recognized element of effective leadership

(Kouzes & Posner, 2012, Ch. 1) and an opportunity for an employee to learn a great deal

about the organization.

2. Appoint a Trained Mentor-Coach for Each New Employee – The evidence indicates the

quality of mentoring for new employees can make a significant contribution to

employee socialization and learning (Ragins, et al., 2000). Mentoring can be highly

effective at helping employees to improve employee work attitudes, engagement, and

extra-role behavior (Van Dyne & Pierce, 2004).

3. Focus the Onboarding on Relationships and Networks – Assisting new employees to

create relationships with key organization personnel can shorten the socialization and

assimilation process. Sharing information with key organization personnel about the

employee’s qualifications and assisting the employee to become familiar with the

organization’s values communicates to the incoming employee that (s)he is an

important contributor to the organization’s success (Brown, 2007; Rousseau, 1990). The

relationship with the supervisor and the natural work group are both essential elements

in this transition (Parker, et al., 2013).

4. Prepare a Well-Developed and Complete New Employee Orientation Booklet –

Integrating the many diverse pieces of information that new employees needs in

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relocating; acquainting the employee with the community and organization culture;

identifying the organization’s values, mission, and history; explaining employee benefits

and policies; completing required paper work and documentation; and identifying key

job tasks in contributing to the organization’s ability to create value enables a new

employee to obtain this critical information and is consistent with employee

psychological contract expectations (Sutton & Griffin, 2004). Providing that information

in one location also facilitates an employee’s ability to share that information with a

significant other.

5. Prepare Physical Location, Office, and Staffing Support Prior to Onboarding – A

properly equipped office and appropriate staffing support enable an employee to get

off to the best possible start. Initiating those actions prior to a new employee’s arrival

demonstrates that the organization has carefully thought through the new employee’s

assimilation (cf. Marks, 2007).

6. Assist in Transitional Logistics – Recognizing that a new hire may have had to relocate,

sell or buy a home, arrange for schooling for children, and/or make other stressful

transitions of significant proportion, reaching out to new employees to assist them in

those time consuming tasks communicates that an employer is aware of the need for

work-family balance and is committed to the employee’s welfare (Dewe, et al., 2010).

7. Clarify and Affirm Priorities and Expectations – Immediately upon the new employee’s

arrival to the organization, the employee’s supervisor should meet with the new

employee to clarify job responsibilities, key outcomes, and the employee role with the

entire work group; identify key resources and the role of the supervisor; and listen

carefully to the employee’s personal goals and job-related concerns. Creating a high

trust relationship with the new employee is facilitated by such a meeting in addition to

building employee commitment (Leana & Van Buren, 1999).

8. Engage, Empower, and Appreciate the Employee – Employees actively engaged as

owners and partners in an organization are more likely to contribute creative ideas, add

organizational value, and improve organization productivity (Adkins, 2016; Smith, et al.,

2016; Beer, 2009; Saks, 2006;). Building employee self-efficacy and confidence reduces

employee stress, facilitates assimilation into the organization, and enhances employee

performance (Peterson, et al., 2011).

9. Involve Upline in Onboarding Training and Orientation – Actively involving Top

Management Team members and supervisors in the new employee orientation

process–particularly in explaining organizational values and cultural factors–

communicates to employees that organizational leaders are committed to those values

and that they are prepared to perform according to the values that they espouse

(Schein, 2010; Kouzes & Posner, 2012).

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10. Create an Ongoing Coaching Process – As part of the new employee orientation, both

the mentor and supervisor should identify the resources available to assist the

employee to become a highly productive contributor and the checkpoints that will be

used to help the new employee to be assimilated into the organization to achieve time-

targeted performance results (Bachkirova, et al., 2011).

Each of these ten steps communicates to the new employee that (s)he is a priority of the

organization. This ten-step process communicates, “We value you and want you to succeed. We care

about your success, and we have carefully thought through our responsibility to bringing you on board

successfully so that you can have a great experience in our company.” In the words of DePree (2004,

Ch. 1), this approach to the onboarding process and to helping the employee to succeed honors the

“covenantal” obligation of leaders to be “a servant and a debtor” committed to each employee’s well-

being and success. That psychological contract expectation of being valued as a person is the desired

hope of new employees as they transition into organizations. Although all ten of these recommended

steps might not always be practical in every situation, this model provides a guideline which has

applicability for many organizations in a variety of disciplines.

Caldwell and colleagues (2015) have provided a Virtuous Continuum of ethical conduct for

leaders and organizations for evaluating performance outcomes and ethical duties. That continuum,

indicated as Diagram 1, suggests that the responsibility of organizations and leaders is to optimize value

creation and organizational wealth by pursuing the best intetests of all stakeholders.

==== Insert Diagram One about here ====

Similarly, Cameron (2011) has explained that virtuous leadership is also “responsible leadership” and the

obligation of leaders to those whom they serve. A growing body of evidence confirms that honoring this

virtuous responsibility creates organizational wealth, greater commitment, improved customer service,

and better quality (Cameron & Spreitzer, 2012; Beer, 2009; Pfeffer, 1998).

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Contributions of the Paper

Like many practical HRM issues, onboarding of employees is a profoundly ethical process with

implications for the psychological contract between the employer and employee (Hosmer, 1987). This

paper makes five significant contributions.

1) It identifies the nature of onboarding new employees as an ethical and practical opportunity

to improve the relationship between new employees and their organizations. The

responsibilities of HRPs and immediate supervisors in assimilating new employees honors

“covenantal” obligations that benefit organizations and the individuals working for them

2) It identifies the ethical nature of onboarding in comparison with twelve highly regarded

ethical perspectives and as a key element of psychological contracts. By elaborating on the

ethical nature of the onboarding process, this paper integrates those ethical perspectives with

the expectations of employees directly impacts their trust, commitment, and willingness to

engage in value-creating behaviors.

3) It confirms the value of a Virtuous Continuum approach to examining the current practices of

onboarding for HRPs. Honoring duties owed to stakeholders and optimizing value creation are

responsibilities of HRPs and supervisors and the Virtuous Continuum is a useful criterion for

evaluating an organization’s onboarding process (Caldwell, et al., 2014).

4) It identifies a ten-step model for onboarding with each step identifying how each onboarding

activity strengthens the ability of an organization to honor ethical and psychological contract

expectations of employees. The specifics of this proposed model comply with best practices for

onboarding in HRM (Bauer, 2010) while meshing with ethically-related assumptions about the

psychological contract (Rousseau, 1990).

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5) It provides an opportunity for practitioners and scholars to increase their dialogue in

promoting the discussion of ethics in practice. The link between academicians and practitioners

is often weak and scholars are frequently criticized for being impractical (Van Buren &

Greenwood, 2013; Caldwell, 2014). This paper bridges that gap and provides an opportunity for

scholars and HRPs to work together to improve the onboarding process.

Conclusion

Although organizations depend greatly upon the ability of their employees to add value and

improve organizational creativity (Christensen, 2011; Beer, 2009), they often overlook the importance of

helping employees to succeed (Pfeffer, 1998). Van Buren and Greenwood (2013, 716) have noted the

importance of “involvement of business ethics scholarship in debates about important ethical issues in

employment practices.” By addressing the ethical implications of onboarding and assimilation in the

psychological contract that exists between new employees and their organizations, this paper furthers

that purpose while providing specific suggestions for improving a key HRM process.

As HRPs improve the onboarding and assimilation process for new employees, they enhance

each employee’s reason for wanting to connect as invested partners in the success of the organization,

the work group, and the supervisor with whom they work (Yamkovenko & Hatala, 2015). By improving

onboarding and new employee assimilation, HRPs and organization leaders honor the psychological

contracts and ethical assumptions of employees’ and create an organizational culture that generates

greater long-term wealth while serving the needs of their work force (Caldwell, et al., 2011).

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Table 1: Twelve Ethical Perspectives and Their Ethical Implications for Onboarding

Ethical Perspective Basic Summary Organizational Impacts

Employee Perceptions and Ethical Implications

Self-Interest (Protagoras)

Society benefits when we pursue self-interest without encroaching on others’ rights.

Seeks to optimize long-term wealth creation.

Excellent onboarding and quality training enable new employees to quickly become contributors in creating organizational wealth or value (cf. Caldwell & Hansen, 2010)

Utilitarian Benefit (Bentham & Mills)

A law or act is “right” if it leads to more net social benefits than harms.

Recognizes the need to identify costs, benefits, and impacts of choices.

The Return on Investment of onboarding saves an organization money in the long-run and increases commitment (Pfeffer, 1998)

Personal Virtues (Plato & Aristotle)

Standards must be adopted to govern relationships and articulate virtuous behaviors.

Organizations must govern according to correct principles and virtues.

Creating an excellent onboarding process is congruent with the virtuous obligations that leaders owe to others (DePree, 2004)

Religious Injunction (St. Augustine)

Compassion and kindness must accompany honesty, truthfulness, and temperance.

Honoring relationships equates with interpersonal respect and kindness.

Treating employees as valued “Yous” rather than as “Its” honors the obligations of Religious Injunction (Buber, 1996).

Ethic of Government Regulation (Hobbes & Locke)

“Live by both the letter and the spirit of the law in honoring duties owed to others, but remember that the law by itself is a minimal moral standard.”

Complying with the letter and spirt of the law builds trust and increases personal commitment.

Treating new hires as valued partners and with a concern for their best interests is not a legal obligation but complies with the spirit of the implied contract between the parties and is an important means of building trust (cf. Caldwell & Clapham, 2003).

Universal Rules (Kant)

Inspired rules govern action, resulting in the greater good for society.

Universal rules and values impact organizations and leaders.

Kantian rules mandate that individuals are treated as valued ends rather than as means to ends (Kant & Wood, 2001).

Individual Rights (Rousseau and Jefferson)

An articulated list of protected rights ensures individual freedom and protects individuals.

Organizations are obligated to honor duties owed to individual members.

Employees are likely to view organizations as owing them a complex series of “covenantal” duties and rights (Covey, 1992).

Economic Efficiency (Adam Smith)

Seek the maximum output of needed goods and the maximization of profits.

Acknowledges the importance of wealth creation and value.

Onboarding is win-win benefit that maximizes value creation (cf. Bauer, 2010).

Distributive Justice (Rawls)

Avoid taking any actions that harms the least of us in any way.

Organizations owe individuals fair treatment at all times.

Ineffective onboarding actually harms employees who are under great stress and impedes their ability to succeed (Acevedo & Yancey, 2010).

Contributing Liberty (Nozich)

Avoid actions that interfere with others’ self-fulfillment and development.

Acknowledges the obligation to assist employees to become excellent.

Poor onboarding conflicts with the Ethic of Contributing Liberty because it undermines the effectiveness of new employees (Bauer, 2010).

Ethic of Self- Actualization (Maslow)

Seek to fulfill one’s highest potential and to maximize one’s ability to contribute to creating a better world.

Recognizes that fulfilling one’s potential serves all stakeholders.

The Ethic of Self-Actualization is best served by empowering new employees and helping them to succeed (Smart, 2012).

Ethic of Care (Gilligan)

Emphasizes the importance of creating caring relationships and honoring responsibilities to those with whom relationships exist.

Focuses on the importance of each person and helping them to honor their responsibilities.

The Ethic of Care enables new employees to honor their responsibilities to others. It is also a duty owed to them which demonstrates that the organization cares about their welfare (cf. Cameron, 2011).

Hosmer, 1995

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Diagram 1: The Virtuous Continuum as an Ethical Framework for Leaders and Organizations

Caldwell, Hasan & Smith, 2015