Opinions expressed by entrepreneurial contributors are their own.
New AI products are constantly hitting the market with promises to revolutionize some aspect of your business and save you time and ultimately money. It’s an exciting time full of promise, but it’s important to look past the hype and take a hard look at whether the benefits justify the costs.
Take workforce data analytics. Employee dissatisfaction and disengagement, especially among younger workers, has been a hot topic since the pandemic. This is a critical issue, but many business owners are unaware of just how costly employee turnover is. According to a McKinsey study, a mid-sized S&P 500 company can lose between $228 million and $355 million a year in lost productivity due to layoffs and layoffs.
Related: The AI Tool Your Competitors Don’t Want You to Know
Even when companies admit they have a problem, they often create interventions to solve the problem with little more than guesswork. Artificial intelligence enables businesses to analyze their workforce challenges more cost-effectively than hiring an expensive consulting firm. AI data analytics tools can now predict the exact cost of employee turnover, identify causes and offer data-driven solutions to prevent it.
Just because the technology is available doesn’t mean your company will automatically benefit. You should evaluate decisions about whether to implement AI solutions using the same rigorous cost-benefit analysis you use in all other aspects of your business.
Below are six questions to ask yourself before making the commitment:
- How many employees do I have?? AI workforce analytics typically only start to pay off when your company has more than 50 employees. This is because it takes resources to collect and structure the data, and more analytics are complex enough to justify the cost.
- What information do I already collect? For predictive workforce AI analytics to work, your company must already be collecting a lot of data, preferably using workforce management software. Useful information includes employee schedule adherence and variability, employee utilization, feedback review sentiment, employee skill sets, overtime, and overtime pay.
- What is my free cash flow budget to apply to R&D? Even if you collect a lot of data, you still need a robust pipeline to structure the data, and that means high upfront costs. Simple descriptive AI tools won’t require as much investment, but they won’t provide the same predictive insights. Make sure you know exactly what your AI tool has to offer and what you need to spend to make those insights pay off for you in the long run.
- What external data does my AI tool break? A powerful predictive AI tool will combine your internal company data with external data that affects employee satisfaction – down to traffic patterns on an employee’s commute. Ask questions at the beginning. What data does my AI tool bring to the table that I can’t access on my own?
- Are my current workforce retention strategies working? If you’ve already tried to address employee retention, do you have data to support the effectiveness of the interventions? Or are you flying blind? A good workforce data analytics firm can use root cause analysis to determine if you’re spending money on solutions that don’t get to the root of the problem.
- What is my ROI?? You need to calculate the cost of layoffs in your company, the savings from implementing changes to help you retain top talent, and the cost of implementing AI data analytics. How does it compare to the costs of a consulting firm? A good workforce data analytics company can help you determine if it’s worth the investment, and an honest one will tell you when it’s not.
Related: What is Artificial Intelligence (AI)? Here Are Its Benefits, Uses And More
AI workforce analytics tools have incredible potential. They can identify which employees are planning to leave your company they even know. New tools give small and medium-sized businesses access to information and insights previously unavailable. Still, it’s wise to exercise caution and make sure the investment will benefit your business in the long run.