Journal of Management Development

New employee onboarding–psychological contracts and ethical perspectives

Cam Caldwell, Ray Peters,
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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.
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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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 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, 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 (Stanley, 2012). The predictable result from this
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false economy is that the transition into the organization for new employees is often painful--

leading to underperformance and hindering an organization’s ability to fully utilize the skills and

abilities of these new employees (Caldwell & Caldwell, 2016).

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

(1995), it 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

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 expectations of the psychological contracts of new employees. The paper concludes with a

summary of this paper and suggestions for additional research.

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

employees are under a tremendous amount of stress. Organizations typically struggle with the

onboarding process because their focus is on the organization and its outcomes, rather than on

the needs of incoming employees (Bauer, 2010; Snell, 2006).

The typical new employee onboarding process often provides employees with a volume

of information that is overwhelming, impractical, and impossible for new employees to

incorporate within a short period. (Bradt & Vonnegut, 2009). 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. Finding

the “right” balance is an important factor in successful onboarding.

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.
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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. In many cases, onboarding is ineffective because HRM is viewed as a relatively

unimportant strategic organizational resource (Caldwell, Truong, Linh, & Tuan, 2011) and costs

allocated for its programs and activities face scrutiny from budget setters and management

decision-makers (Caldwell & Caldwell, 2016). Determining the specific cost of employee

turnover will help in heightening the value contribution of HRM activities and highlight the

importance of successful onboarding programming.

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

both the new employee and the organization, explaining 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

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 important tactic 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

Extensive management research affirms the importance of organizations investing in the

importance of employee relationships (Goleman, Boyatzis, & McKee, 2013; McKee, Boyatzis, &
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Johnston, 2008) and the perceptions that employees develop as they are socialized within an

organization (Schein & Schein, 2016). 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 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 and high commitment create organizational cultures in which

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 employees exhibit increased extra-role behavior, are more creative and innovative, and more

profitable than employees in comparable organizations (cf. Beer, 2009; Caldwell & Floyd, 2014).

Well qualified employees who add the greatest value to their organizations expect to be

treated as valued “owners and partners”; given the opportunity to advance in their

organizations; 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). Value
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creation is a fundamental goal of every organization (Porter, 1985) as it transforms resources,

increases their value to customers, and creates incremental added value at each step in an

organization’s chain of production (Walters & Lancaster, 2000). The goal for every new

employee is to bring that employee’s performance to the point where (s)he begins to add value

or create wealth for the organization (cf. Caldwell & Hansen 2010) and the proper role of

onboarding is to make that transition as smooth, seamless, and rapid as possible (Lawson,

2015).

Although some employees are highly committed organizational citizens who are

inherently dedicated to giving extra-mile performance, even in the face of poor treatment and

ineffective leadership (Organ, et al., 2005), the research evidence documents that employers

who treat employees with high trust, who demonstrate a personalized approach to employees

as valued partners, and who pay close attention to their best interests reap the rewards of

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

1998; Paine, 2003; Beer, 2009; Smith, et al., 2016).

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

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

surprised by the inadequacies of many organizations’ onboarding systems (Lawson, 2015, Ch.

5). Although the expectations of each incoming employee about the perceived duties owed to

him or her in the onboarding process may vary, Morrison and Robinson (1997) noted that

employees feel betrayed when those duties are breached – with an inevitable decline in trust

and a predictable decrease in organization commitment (Zhao, Wayne, Glibkowski, & Bravo,
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2007). A realistic job preview that explains job relationships, performance expectations, work

policies, and the context of the work environment (Breaugh, 2009) reduces surprises and

provides an opportunity for employees to ask questions about the job and the company

(Tekleab et al, 2013).

In examining the nature of organizational trust and ethical perspectives, Hosmer (1995)

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

that ethical perspectives were diverse and typically derived from well accepted philosophical

foundations. Table 1 builds upon Hosmer’s (1995) research to present twelve ethical

perspectives, a summary of each perspective, and a summary of how new employees would be

likely to perceive onboarding duties owed to them.

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

Each of these ethical perspectives clarifies that it is in the best interests of an employer,

its customers, and their employees for the onboarding process to occur effectively and with

high quality (cf. Hosmer, 1995). A careful review of the right-hand column of the table clearly

7
 explains how each of the twelve different ethical perceptions applies to new employees’

perceptions about duties owed to them in the psychological contract between employees and

their organization. Table 1 provides a powerful connection between employee perceptions

about duties owed in the unspoken psychological contract between themselves and the

organization. HRPs and Top Management Team members should carefully review this table

and reflect on the implicit ethical perceptions that employees reasonably have as they begin a

job assignment with a new organization.

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Accordingly, it is logical to anticipate that new employees will perceive that they are

owed ethical duties associated with the twelve perspectives articulated in this table and

reasonably expect their employing organizations to provide them with an outstanding

onboarding process as part of the psychological contract owed to them (DeVos, et al., 2005;

Klein & Weaver, 2000). By honoring the ethical duties that employee perceives to be part of

the psychological contract owed to them, employers demonstrate that they are 1) committed

to employee success, 2) caring in their ability to understand employee needs, and 3) competent

in providing employees with an efficient and effective onboarding process. These three

ethically-related duties are inherently a part of the construct of trustworthiness which is so

critical in building high trust organizational cultures (Beer, 2009).

A Ten-Step Model for Quality Onboarding

HRPs who incorporate highly effective onboarding programs honor the perceived but

unwritten psychological contract expectations of their new employees (Snell, 2006) and fulfill

their strategic role as ethical stewards in achieving organizational mission (Huselid, et al., 2009;

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 Caldwell, et al., 2011). The following is a ten-step model for quality onboarding, including steps

prior to the actual arrival of a new employee in addition to assimilating the employee after

(s)he has arrived on site.

1. Establish the Relationship Online Immediately after Hiring. In many cases, the decision
to hire an employee occurs well before the employee begins employment. Initiating an
online relationship via Skype, e-mail, Go To Meeting, or other software 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.
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2. Appoint a Trained and Committed Mentor-Coach for Each New Employee – The
empirical evidence indicates the type and quality of mentoring for new employees can
make a significant contribution to new employee socialization and learning (Ragins, et
al., 2000). This mentoring can begin online before employee arrival and can be highly
effective at helping employees (Bierema & Hill, 2005). Effective mentoring by a caring
and well-trained mentor has been found 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 assimilation
process and is a win-win for all parties. Encouraging those individuals to contact and to
welcome the employee, sharing information with those key organization personnel
about the employee’s qualifications and needs, and assisting the employee to become
familiar with the organization personnel and the organization’s values communicates a
powerful message 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 all of the many and diverse pieces of information that every new employee
needs in relocating; becoming acquainted with the community and organization culture;
learning about the organization’s values, mission, and history; understanding employee
benefits and policies; completing required paper work and documentation; and

9
 identifying his or her key job tasks in contributing to the organization’s ability to create
value enables a new employee to be able to go to one clear and well-organized source
for obtaining this critical information and is consistent with employee psychological
contract expectations (Sutton & Griffin, 2004). Providing that information in one
location also facilitates the employee’s ability to share that information with a
significant other.

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

Acknowledging that new employees need an office computer or laptop, a properly
equipped office, and appropriate staffing support in order to get off to the best possible
start as a new employee should be matched by appropriate actions to take care of those
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important administrative details prior to a new employee’s arrival and demonstrates

that the organization has carefully thought through the new employee’s assimilation (cf.
Marks, 2007).

6. Assist in Transitional Logistics – Because a large percentage of the work force changes
jobs on a regular basis (Adkins, 2016), 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, clarify job responsibilities and key outcomes, explain the performance
measurement process, 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 and enhances
an organization’s social capital, in addition to building employee commitment (Leana &
Van Buren, 1999). Defining the employee role in context with the natural work group is
again very important.

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.,

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 2016; Beer, 2009; Saks, 2006;). Building employee self-efficacy and confidence can also
reduce employee stress, facilitate assimilation into the organization, and enhance
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 personally 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, the
employee’s mentor and supervisor should both 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 and 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 and is a highly respected “You” rather than a fungible “It” (Buber, 1996). 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 steps might not always be practical in every situation, this model provides a guideline which has

general applicability for many organizations in a variety of disciplines.

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 Caldwell and colleagues (2015) have provided a continuum of ethical conduct for leaders and

organizations which they suggest is a virtuous continuum for evaluating performance outcomes and

ethical duties. That continuum, indicated as Diagram 1, suggests that the ethical obligation and

responsibility of organizations and leaders is to pursue the best interests of all stakeholders and

optimizing long-term value creation.

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

Cameron (2011) has explained that virtuous leadership is also “responsible leadership” and the
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Positive Organizational Scholarship literature affirm that it is the obligation of leaders to raise the

standard of their conduct to a virtuous level in creating relationships with those whom they serve

(Cameron & Spreitzer, 2013; Cameron, 2013). As suggested in the virtuous continuum, a virtuous leader

seeks to do more than simply avoiding errors, honoring obligations, or performing at an acceptable

level; the virtuous leader seeks the optimization of value creation, pursues the best interests of

stakeholders, and honors the highest standards of ethical stewardship by optimizing organization

outcomes rather than accepting a less desirable set of results (Caldwell, Hayes, Karri, & Bernal, 2008).

The 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).

Summary 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 to the ethically-related HRM field.

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

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

The responsibilities of HRPs and immediate supervisors in retaining and assimilating new

employees honors “covenantal” obligations that benefit organizations and the individuals

working for them (cf. DePree, 2004; Pava, 2003).

2) It identifies the ethical nature of onboarding with twelve distinct and highly regarded ethical

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

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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 (Beer, 2009).

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

clearly 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 that 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).

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 &

13
 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.

Opportunities to research the impact of improving employee onboarding abound and can be assessed

by tracking such important related factors as employee turnover, employee satisfaction, the length of

time required for employees to begin contributing to value creation, and new employee attitudes about

HRPs and an organization’s Top Management Team. We encourage scholars and practitioners to

partner together to assess the current onboarding practices of organizations and to identify changes in
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employee behavior and attitudes after these ten steps are implemented (cf. Caldwell, 2014).

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 Employee Perceptions and Ethical

Impacts Implications
Self-Interest Society benefits when we Seeks to optimize long- Excellent onboarding and quality training enable
pursue self-interest without term wealth creation. new employees to quickly become contributors in
(Protagoras) encroaching on others’ rights. creating organizational wealth (cf. Caldwell &
Hansen, 2010)

Utilitarian Benefit A law or act is “right” if it leads Recognizes the need to The Return on Investment of onboarding saves an
to more net social benefits identify costs, benefits, organization money in the long-run and increases
(Bentham & Mills) than harms. and impacts of choices. commitment (Pfeffer, 1998)

Personal Virtues Standards must be adopted to Organizations must Creating an excellent onboarding process is
govern relationships and govern per correct congruent with the virtuous obligations that
(Plato & Aristotle) articulate virtuous behaviors. principles and virtues. leaders owe to others (DePree, 2004)
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Religious Injunction Compassion and kindness must Honoring relationships Treating employees as valued “Yous” rather than
accompany honesty, equates with as “Its” honors the obligations of Religious
(St. Augustine) truthfulness, and temperance. interpersonal respect Injunction (Buber, 1996).
and kindness.

Ethic of Government “Live by both the letter and the Complying with the Treating new hires as valued partners and with a
spirit of the law in honoring letter and spirt of the concern for their best interests is not a legal
Regulation (Hobbes duties owed to others, but law builds trust and obligation but complies with the spirit of the
& Locke) remember that the law by increases personal implied contract between the parties and is an
itself is a minimal moral commitment. important means of building trust (cf. Caldwell &
standard.” Clapham, 2003).

Universal Rules Inspired rules govern action, Universal rules and Kantian rules mandate that individuals are treated
resulting in the greater good values impact as valued ends rather than as means to ends (Kant
(Kant) for society. organizations and & Wood, 2001).
leaders.

Individual Rights An articulated list of protected Organizations are Employees are likely to view organizations as
rights ensures individual obligated to honor owing them a complex series of “covenantal”
(Rousseau and freedom and protects duties owed to duties and rights (Covey, 1992).
Jefferson) individuals. individual members.

Economic Efficiency Seek the maximum output of Acknowledges the Onboarding is win-win benefit that maximizes
needed goods and the importance of wealth value creation (cf. Bauer, 2010).
(Adam Smith) maximization of profits. creation and value.

Distributive Justice Avoid taking any actions that Organizations owe Ineffective onboarding harms employees who are
harms the least of us in any individuals fair under great stress and impedes their ability to
(Rawls) way. treatment always. succeed (Acevedo & Yancey, 2010).

Contributing Liberty Avoid actions that interfere Acknowledges the Poor onboarding conflicts with the Ethic of
with others’ self-fulfillment obligation to assist Contributing Liberty because it undermines the
(Nozich) and development. employees to become effectiveness of new employees (Bauer, 2010).
excellent.

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 Ethic of Self- Seek to fulfill one’s highest Recognizes that The Ethic of Self-Actualization is best served by
potential and to maximize fulfilling one’s empowering new employees and helping them to
Actualization one’s ability to contribute to potential serves all succeed (Smart, 2012).
(Maslow) creating a better world. stakeholders.

Ethic of Care Emphasizes the importance of Focuses on the The Ethic of Care enables new employees to honor
creating caring relationships importance of each their responsibilities to others. It is also a duty
(Gilligan) and honoring responsibilities person and helping owed to them which demonstrates that the
to those with whom them to honor their organization cares about their welfare (cf.
relationships exist. responsibilities. 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

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