In today’s competitive labor market — where the global talent shortage is the worst it has been in 10 years — winning and retaining top talent is key for companies to achieve their loftiest goals, from expanding to new markets and actualizing digital transformation to exceeding revenue predictions and more.
Recruiting successfully in this landscape requires companies to recognize that millennials, who now make up the largest generational segment of the American workforce, expect more from employers, including pay equity and sufficient recognition for their achievements in the form of bonuses, raises, or non-cash prizes.
When it comes to setting key organizational priorities, items like big-name client wins, product launches, and high-profile partnerships must be secondary to the happiness of your people. Engaged, high-performing talent is a prerequisite to achieving any other business aim.
The problem is, HR leaders and managers typically rely on guesswork to assess employee happiness. Lacking data-driven insights, such surface-level prognoses are often inaccurate, resulting in high attrition rates and higher turnover costs — about $15,000 per employee in the US.
The good news is that AI tools and predictive analytics are available to help HR leaders and managers identify the peaks and pitfalls of performance on individual, team, and corporate-wide scales, and reward employees accordingly.
Here are three ways predictive analytics can help organizations get to the heart of what matters to their employees so that businesses can get the results they want by delivering the benefits employees crave:
1. Zero in on Individual Performance to Personalize Rewards
AI and predictive analytics give business leaders the ability to benchmark compensation, identify flight-risk employees, and determine compensation boosts by deriving data that they would previously have had to ascertain through gut instinct.
Ten years ago, when an employee submitted notice because they had found a new job, a manager’s gut instinct may have been to make a counteroffer. Today, by using AI and predictive analytics, employers can identify flight risks based on factors like slipping performance or increased absenteeism and take actionable steps to address problems before they lead to turnover
2. Eliminate Unconscious Bias From the Compensation Equation
With more states passing fair and transparent pay protections, equal pay is no longer just a trend — it’s the law. Businesses have an obligation to actualize pay equity throughout their organizations. AI helps HR leaders and managers achieve pay equity by measuring and predicting employee performance based on a variety of rules including education, experience,and certifications — but not gender.
The advantages to closing the gender pay gap cannot be overstated. According to Deloitte, “78 percent of millennials who say their top teams are diverse report their organizations perform strongly in generating profits — 13 points higher than among those in which the leadership teams are not thought to reflect the wider society in which they operate.”
Furthermore, 75 percent of workers ages 18 to 34 expect employers to take a stand on issues related to equal rights, climate change, immigration, and constitutional rights. These workers will notice if your company fails to address pay equity — and they’ll choose to work elsewhere as a result.
3. Earn Trust With Transparency
In addition to the gender pay gap, the gap between CEO and worker compensation is becoming a particularly contentious topic, with workers pressuring more organizations to reveal salaries across all corporate levels. Given that the CEO-to-worker pay ratios of Fortune 500 companies range from 2:1 at the low end to nearly 5000:1 at the high end, it’s easy to see why so many professionals are concerned.
The benefits of leveraging AI and predictive analytics to release corporate-wide salary reports are immense. Companies that publish external salary and cost-of-living benchmarks to their employees give HR leaders and managers the resources they need to make effective salary adjustments each year. With visibility into how organizational goals and team objectives impact compensation throughout the company, these reports enable employees to see they are paid fairly for their work, thus leading to higher performance and lower turnover.
Compensation is no longer the taboo topic it was even 20 years ago. Employees today, especially millennials, are demanding greater pay transparency from their employers and fair recognition of their work. Businesses that deliver compensation data through AI and predictive analytics empower employees to play more active roles in controlling their salaries and determining their overall success within a company, leading to long-term business advantages like retention, loyalty, and motivation.
Tanya Jansen is cofounder of beqom.