AI to the Rescue: How Companies are Using it to Improve Talent Retention
Every year, a company experiences ~20% turnover in its workforce as a result of employees moving to a new organization or starting their venture.
The significance of this number comes into the picture when we look at the cost of replacing an employee. Replacing an employee can cost anywhere between 30-50% of their annual salary, which soars up to 150% for mid-level and 400% for high-level employees.
Employee turnover is a financial drain in any organization, irrespective of the industry. The worst part is its becoming more frequent in the recent times.
Today, talent retention is a battle when companies are filled with diverse talent coming from a variety of cultures, educational qualifications, and personalities.
To address this problem, organizations are bringing in AI as a partner in the game. Tools like AI can inform retention strategies and help employers predict who is most likely to leave, as well as what incentives might encourage them to stay.
Note that managing employee retention involves a series of strategic actions to keep employees motivated so they remain employed and stay productive for the organization’s benefit.
Let us look at how AI can power enterprises in increasing their talent retention rates:
Preventing Bad Hiring Decisions Through Objective Screening
One of the important reasons why AI is more effective than human beings in hiring decisions is because it is bias-free. It screens candidates and prevents the organization from a bad hire, all through an objective point of view.
It is important to note that close to Eighty percent of employee turnover is due to bad hiring decisions, and these decisions can cost over five times the annual salary of the bad hire.
When AI prevents a bad hire, sequentially, it prevents the possibility of employee turnover, thus increasing the retention of quality talent. AI has been used extensively in preventing bad hiring decisions in Fortune 500 enterprises through tools like Draup by understanding and solving the problem through quality data.
Delivering Opportunities for Growth
The moment employees realize they are nowhere near their goals, they tend to lose motivation, that later results in a turnover. Purpose-driven companies where employees were engaged reported an attrition rate 49% lower compared to their peers.
Modern-day organizations are using AI to assess employee engagement and the quality of work performance to match them with opportunities for growth. AI is being used to discover skillsets required, promotions/raise to allow, and career trajectories to map.
As long as employees sense growth, they stick to the organization, and thus, the retention rate stays safe.
Employee Experience Matters
Measuring employee engagement throughout the year and using the data to determine potential exits is a suitable way to minimize attrition. In companies with more than 40% turnover every year, those with higher engagement levels have 18% lower turnover.
By breaking down subtle cues and using AI to identify behavioral changes in employees, managers can take smart actions and work with employees to address their concerns. Today, more than 77% of companies are focused on employee experience as a way to increase retention.
AI helps organizations map out precisely how an employee will experience work throughout this career journey, and doing it well results in increased retention rates.
Traditional retention strategies that rely on employee performance reviews to measure engagement are losing relevance in the modern world. In a global survey of HR leaders, only two percent agree that their current method of performance management “delivers exceptional value.”
Instead of relying on a yearly review to communicate with employees and make predictions, managers are turning to AI that allows them to receive and understand feedback as it happens. This is helping managers stay close to the pulse of their teams and develop deep, meaningful connections with their team members.
One of the changes many companies have embraced is using AI to understand employees’ skill sets and determine what helps them succeed while also figuring out what keeps them motivated and engaged. This not only promises retention but also doubles the productivity since employees are working in a place they prefer to work at.
Draup, an AI-based talent intelligence platform, analyses and evaluates organizational talent to deliver essential insights to HR executives to help make the best management decisions possible. It excels in employee screening, workforce planning, mapping career paths, and increasing employee engagement with the help of data collected from over 4,500+ Job roles spread across 33 industries and 30,000 skills.