In order to prevent employees from quitting or being laid off, companies have started using algorithms to determine which employees they should hire.
Statistics show that replacing a lost worker costs roughly six to nine months of the employee’s salary. Companies can save thousands of dollars in the short term by simply maintaining their current workers instead of replacing them.
Hence, companies have a strong desire for finding employees that can manage to stick around.
Now, companies are using algorithms to identify prospective employees that are likely to stay. These algorithms have shown that formulas can possibly identify better hires than actual humans.
Textio is one company that is offering such algorithm services. CEO of the company Kieren Snyder believes that if more effort is put into a company’s pre-hire, then it is more likely to have a better result. She says that most employers fail to make the association.
Textio has already started providing services for companies like Starbucks and Barclays. Many of these companies claim that they can find employees who will never want to leave and who will never need to be let go.
Employers who have used these services have said that they have experienced substantial reductions in employee turnover. Some employers have said that they successfully retain an additional 30% to 50% of employees after they started using such services.
The companies make use of different sources of information. They utilize public records, background information, resumes, credentials and interaction data from job applications. Some algorithms even look at minor things, such as how fast they type and how long it takes the job candidates to close a browser tab.
The algorithms manage to identify the candidates who would most likely perform the best on any given job. From there, hiring managers make their selection.
Some algorithms throw random questions at potential employees in order to see how they react. For instance, they might give a calculus question to someone without a mathematics background and see if they try to answer the question or if they just simply skip it.
These techniques may seem strange, but these companies say that the results are worth it. One company says that it has reduced the employee turnover rate by a bare minimum of 13% for every company it has done business with. Most companies experience around a 40% reduction.
Additionally, as algorithms function over time, they continue to improve. The formulas are able to examine the data associated with rates of hiring, firing and quitting. By doing this, they can figure out what works and what doesn’t, and create new formulas that are able to better predict which employees will stay.
Furthermore, the algorithms can adapt to different job environments. For instance, a healthcare facility might need different types of employees than a technology firm. The algorithms are able to adapt to this.
Some people have criticized the practice, saying that algorithms aren’t able to take old fashioned human interactions into consideration. Still, there’s not much to deny their proven effectiveness.
While the science isn’t perfect just yet, it is extremely promising. So if you want to land that next big job, you better be able to show that you’re a good fit in the formula.