On average, 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 number may sound insignificant until we take into account the cost of replacing an employee. The cost of replacing an employee can be anywhere between 30-50% of their annual salary, which soars up to 150% for mid-level and 400% for high-level, specialized employees.
In any organization, irrespective of the industry, employee turnover is a financial drain and is becoming more frequent. It adversely impacts productivity, work culture, revenue, training programs, and long-term growth. With such costs associated and time consumed in replacing an employee, organizations are considering focusing on talent retention as a way forward.
If organizations can retain their existing talent while keeping them updated with the industry, they can drastically reduce turnover rates and push their retention rates forward.
But talent retention isn’t easy either, especially when companies are filled with diverse talent from different cultures, backgrounds, educational qualifications, and personalities.
To address this problem, organizations are bringing in AI as a partner in the game.
Artificial Intelligence, in recent times, has emerged as a backbone for organizational talent management, whether it’s for workforce planning, talent retention or recruiting, and more. With AI, organizations are pushing their boundaries with good talent management and retention, resulting in a positive ROI.
From a retention perspective, AI can effectively identify candidates for promotions and internal opportunities from existing talent by analyzing a candidate’s ability to perform a particular skill or role. The result could be better opportunities for existing talent to advance and the opportunity to reduce both turnover rates and cost to hire.
Managing employee retention involves strategic actions to keep employees motivated and focused so they elect to remain employed and fully productive for the organization’s benefit.
Here are some of the ways how AI is helping enterprises increase talent retention rates:
Objective screening to prevent bad hiring decisions :
One of the crucial reasons why AI is better than humans in hiring is because it is bias-free. It objectively screens candidates and prevents the organization from a bad hire. Eighty percent of employee turnover is due to bad hiring decisions, and these decisions can cost more than five times the annual salary of the bad hire.
When AI prevents a bad hire, it also prevents a possibility of employee turnover, thus increasing the retention rate of quality talent.
Mapping out the employee experience journey:
Measuring employee engagement throughout the year and using this to determine potential exits in relation to engagement is a smart way to minimize attrition. In companies with more than 40% turnover every year, those with higher engagement levels have 18% lower turnover.
By examining subtle cues and relying on AI to identify changes in employee behavior, managers can act on it and work one-on-one with employees to address their concerns.
When an employee feels valued and has had an opportunity to discuss certain concerns, the chances of them leaving become nil. Today, more than 77% of the companies are focusing on employee experience to increase retention.
AI helps organizations precisely map out how an employee will experience work throughout this career journey, and doing it well results in increased retention rates.
Identifying opportunities for growth:
One common motivation for employees is achieving goals and having access to challenging work in a long-term setting. When employees feel they aren’t doing their best or are nowhere near their goals, they tend to lose motivation, resulting in a turnover. Companies with a purposeful mission where employees felt engaged had an attrition rate 49% lower than those who did not.
Today, organizations use AI to assess employee engagement and the quality of work performance and then match it with further opportunities for growth. It is being used to discover who needs new skills, who needs a promotion or a raise, and who needs an entire career path mapped out.
As long as employees feel they are growing and moving forward in their career, they stick to the organization, and thus, the retention rate stays safe.
Listening to employees
Traditional retention strategies that only use employee performance reviews to measure engagement are broken. In a recent global survey of HR leaders, only two percent said 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.
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.
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.