Retention, or an organization’s ability to keep its employees. In these times of labor market tightness, it’s more of a hot topic than ever. But this is also the era of technological progress and AI. Sophie Jansen, David Myers, and Bas Eggelaar (SuccessDay) explain how to achieve higher retention rates within an organization with the help of AI.
“To help avoid low retention,” begins Bas Eggelaar, Founder and Managing Director of SuccessDay, “an organization must create a work atmosphere that meets the needs of its employees in the broadest sense. An atmosphere that ensures employees remain satisfied with their working conditions and development opportunities, but also with the work-life balance and the clients the organization serves.”
That sounds evident, but apparently, it’s not. “As much as 42% of employees who left their employer reported that their manager or organization could have done something to prevent them from resigning. This figure comes from recent research by Gallup on American workers, but the finding is quite telling. Companies often respond too reactively and rigidly to changing employee needs in order to perform optimally. We saw this during the COVID-19 pandemic, and we still see it today.”
“Of course, this varies from industry to industry,” continues Sophie Jansen, Senior HR Project Manager at SuccessDay. “But we generally see a strong focus on recruiting and onboarding people, not on retaining them.” “That’s true,” Bas adds. “Most companies only respond when retention is too low or when crucial employees are leaving.”
So how should you approach it?
“There are many retention strategies,” explains David Myers, Business Development Lead at SuccessDay. “In our organization, we place a strong emphasis on development opportunities for employees. We also offer them ultimate flexibility to manage their work independently. At the same time, we fully support them. For example, they have unlimited access to an external coach. Throughout the year, we also conduct continuous check-ins with our people to see how we can keep them happy and performing optimally.”
If an organization has the necessary data, it becomes possible to predict the risk of low retention with AI.
SuccessDay’s approach not only creates the right work atmosphere for high retention. If an organization has the necessary data, drawn from continuous performance reviews, for example, it becomes possible not only to see the risk of low retention today but also to predict it with AI. To some extent now, and certainly within five years. This is truly the trend in HRIT systems. So that organizations no longer just react to low staff retention but also anticipate it.
What exactly can AI predict?
“All major HCM tools (Human Capital Management, ed.) are actively experimenting with artificial intelligence,” says Sophie. “For instance, today there are already tools that can combine data from multiple engagement surveys and, based on that, predict retention trends. Broader HCM tools combine survey data with historical data on turnover and absenteeism within the department or with manually entered data in the context of performance management, for even more accurate predictions. In which direction are an employee’s performances evolving? How much absenteeism is a department facing? To what extent is there already a declining retention rate? And who should you pay more attention to in order to prevent them from leaving? AI predicts this much faster than a human can. It is up to the human to interpret these results correctly.”
“Such predictions enable the organization to take proactive action before staff retention deteriorates,” Bas continues. “Don’t get me wrong: the manager still plays the most crucial role in the fight for high retention. But AI helps the manager understand what is happening in their team with insights and advice.”
But AI can only make reliable retention predictions if the foundation is solid. What is needed for this?
“Having the right data, obtained through optimal performance and engagement management, which allows you to understand at any moment how an employee is functioning and developing,” says Bas. “Managers often handle their people management as an add-on, whereas it should be their main task: keeping their team motivated and lifting it to a higher level.”
Ideally, choose a comprehensive HCM package that covers your entire talent management framework
It starts with setting up the right HR processes. Having the right conversations at the right times during the different employee journeys within your organization. Bas: “At SuccessDay, we always start by mapping out those journeys. Then, during workshops with the organization, we explore how an employee should feel throughout those journeys and what is needed for that. This way, we develop one strategy to retain employees. We then implement processes to monitor employees at critical points during the journeys. Transparent, so that everyone can easily follow the processes, and uniform, so that standardized data can be collected in the right HCM software. Standardized so that AI can analyze it.”
“It’s best to choose a comprehensive HCM package that encompasses your entire talent management framework. One that supports all HR processes known to the organization for finding, developing, and retaining employees. By using a single HCM solution that supports recruitment, learning & development, succession, engagement, and retention, combined with compensation & benefits, you carry out a coherent HR policy and enable AI to combine and analyze all available data for optimal predictions,” Sophie explains.
Are many companies already working on this?
Bas: “Some larger corporates are certainly taking steps in this direction, but for companies with 1,000 to 10,000 employees, there is still a lot of work to be done.”
“Many HR departments call themselves business partners, but few truly are,” Sophie notes. “Understanding what drives the organization, what the business strategy entails, and aligning HR policies and technology accordingly is still too rare. Especially when it comes to retention. Again, the focus is often too much on attracting talent, sometimes the wrong talent, which then leaves relatively quickly, even though there are AI tools for talent matching, such as Eightfold’s Match Score. Building the house is often more appealing than maintaining it.”
Why is that?
“It’s like in love,” Bas replies. “As a young couple, you send each other four hundred messages a day; after twenty years, you often don’t. The same goes for employers and employees. HR can push for continuous conversations between managers and employees, not just three times a year, but both parties need to be motivated for that. Ultimately, it must come from the people themselves. Also from the employee, by the way. If they want a conversation, they should ask for it.”
HR professionals should more often map out the cost of low retention.
The threshold for investing in the necessary technology is even higher. “I’ve worked in large corporations myself, and when someone left, the first reaction was always: we need to hire someone new. No one wondered why the person left. No one knew exactly how much low retention cost. Well, that’s something HR professionals should map out more often. That argument resonates much more than ‘we need to proactively invest in skills’.”
“And close the loop,” Sophie adds. “If someone does leave, hold an exit interview with them and use the data from that conversation.”
How do companies get started?
“First, think carefully about why retention is low,” advises David. “Potentially, right from the start, involve an external partner who can reflect with you. We not only bring insights and benchmarks from other industries and companies, but we also know better than anyone what new and current technologies have to offer.”
And once the ‘why’ is clear, tackle the ‘how.’ “Then create a business case: what issues underlie low retention, what is the return if we solve this, and how do AI and technology help? The HR department is in the perfect position to experiment with AI applications since it only has internal clients. And today’s technology enables a lot to prevent low retention. But companies need to think end-to-end about the employee journey and get their data management in order.”
This interview was conducted by House of Excecutives.
