In today’s tight Australian labour market, no SME can afford the cost of a bad hire. Between soaring inflation and a structural shift toward job hugging – where talent prioritises security over movement – small and medium business owners are operating in an environment where every recruitment decision is high stakes. Yet, data suggests some businesses are stumbling at the final hurdle. 

Employment Hero’s Employment Uncovered: Australian Work Insights survey found 1 in 4 people who started a new job in 2025 were disillusioned by onboarding, going so far as to describe the experience as ‘bad.’ The trend was even greater among part-time workers, who often make up the backbone of SME operations: 35 per cent reported a negative start to their new role. Onboarding is frequently regarded as an administrative task, but in reality, it poses a sizable business risk. A disjointed start can erode productivity and set the stage for early turnover in a market where replacing staff is both difficult and expensive.

Beware The Revolving Door Of Recruitment

The most immediate threat posed by a weak onboarding process is the ‘revolving door’ effect. Research has shown that a structured onboarding experience is an effective tool for improving employee retention, particularly when it involves separate welcome initiatives from HR, managers and coworkers. But an unpleasant onboarding process can lead to ‘buyer’s remorse,’ with one survey finding 22 per cent of workers had left a new role within 90 days. 

For an SME, losing a new hire within the first six months is a direct hit to the bottom line, as the business loses the recruitment costs and any training hours invested, and must continue to cover the role. High-quality onboarding acts as an insurance policy for an SME’s recruitment investment, ensuring that hard-fought talent actually stays to deliver value.

Successful Teams Need Clarity Around Roles

A common mistake made by time-poor SME owners is losing momentum once a new employee has been set up with logins and systems access. True onboarding must extend into role clarity and cultural integration. Without clear expectations and structured milestones, new hires often spend their first weeks in a state of unproductive waiting.

Insufficient role clarity is not just a cause of frustration for new staff, it’s recognised as a psychosocial hazard. If a process is rushed or lacks 30, 60 and 90-day benchmarks, the employee can be left to guess what success looks like. This lack of direction doesn’t just stall individual output; it can create friction with existing team members who have to pick up the slack. Effective integration means moving beyond the paperwork to provide ongoing role support, ensuring a new hire understands not just what they are doing, but why it matters to the business.

Everyone Must Roll Out The Welcome Mat

Onboarding often fails when it is treated as a solo HR activity rather than a collaborative business process. When businesses don’t have clear milestones, ownership or manager involvement built into onboarding, new starters can be left to figure things out on their own, causing engagement, confidence and productivity to drop.

The most successful SMEs avoid this by involving direct managers from day one. When an owner or manager is absent during the first week or fails to set clear performance benchmarks, the new hire can feel like an outsider. A Harvard Business Review analysis found starters were three-and-a-half times more likely to rate their onboarding experience highly if a manager was involved and one-and-half times more likely to feel they added value to a team.

Building a Competitive Advantage

In a 2026 business landscape defined by rising costs and limited talent, a superior onboarding process is a genuine competitive advantage. Businesses that get this right can thrive by building stable, engaged teams that can turn a positive first impression into long-term productivity.