What’s the most dire problem facing the tech industry right now? It’s a complicated question, but if you had to pick one particularly thorny challenge, you could hardly do better than focusing on retention.

According to the most recent data from the Bureau of Labor Statistics, tech faces a whopping high turnover rate of nearly 60 percent. You may think that this alarmingly high number has to do with the industry being dynamic or with a large number of smaller startups all vying for talent, but turnover plagues the biggest players, too: the average tenure of an employee at Google is 1.1 years; Uber, with 1.8 years, is only slightly better; and, with an average tenure of 2.1 years, Dropbox is near the top of the list.

The High Cost of Turnovers

According to the Work Institute, each single employee turnover costs the employer something in the neighborhood of 33 percent of that employee’s salary. Another recent study by SHRM paints an even bleaker picture, showing that the cost of replacing an employee may be as high as nine months of that employee’s salary.

And then, of course, there’s the time it takes to find a replacement. According to new benchmarking data from the Society for Human Resource Management (SHRM), the average cost per hire was nearly $4,700. If you’re hiring for a job that pays $60,000, you may spend $180,000 or more to fill that role.

The turnover, timing, and training of new hires are costly realities facing all businesses today. In areas that are in high demand, like software development, this is not simply a cost problem but a competitive one. The ability to compete depends on the ability to deliver new software features.

Taking the Initiative

At BairesDev, a near-shoring unicorn, we’ve achieved a turnover rate of 45 percent lower than the industry average, and we did it by harnessing the power of cutting-edge machine learning.

Here’s how we did it: After deciding to address this problem head-on, we began by assessing the dominant market approach to the problem. Most tech companies take a decidedly reactive approach, only initiating mitigation actions to avoid resignation when attrition risk is identified. Put simply, the tech industry has processes to identify early warning signs of an employee’s potential burnout and then take small steps to postpone the inevitable outcome.

From the outset, we wanted to test a different theory, one focused on proactively empowering employees. And, being a tech company, we approached the problem by building a cutting-edge machine learning algorithm, a proprietary tool designed to identify attrition risk among its tech talent. This tool considers various factors such as salary increases, growth opportunities, motivation levels, location, expertise, etc. It provides invaluable insights that enable employers to ensure their high-performing developers remain committed and deeply engaged with their work and the organization.

When we were done, we returned to the start and tweaked the algorithm. And then we tweaked it again, and again, and again. Paired with the continuous learning of the algorithm, within two months, it will have achieved around 4,000 iterations. Our goal was audacious: a 100 percent retention rate. By June 2023, the tool had gotten us very close, helping us hit a staggering 90 percent retention rate for the professionals identified as high turnover risks.

Moving Beyond AI

While having a predictive tool helps figure out how to proactively identify employees at risk of leaving the company, the work of empowering employees begins where AI ends. Naturally, factors like compensation and schedule are essential. Experience shows that our People Experience Team is pivotal in facilitating conversations that cultivate a working environment conducive to employee retention.

How? Four surprising and rather unorthodox components of engagement:

1. Talk. A Lot: Look, we get it: People are busy, and no one loves spending an hour–or even fifteen minutes–talking about anything that isn’t directly connected to the immediate task. However, in-depth interviews revealed that employees appreciate proactive talent management that goes beyond the surface and delves into deeper aspects such as job satisfaction, career expectations, etc. Even more telling, employees reported feeling thankful if their supervisors took an interest in their personal lives, asking them questions about their families, hobbies, and other subjects that had little to do with work. This approach not only fosters open communication between project managers and their teams, encouraging them to pursue meaningful interactions that build trust and mutual understanding but also gives employees a feeling that they’re valued not simply as transactional functionaries but as holistic human beings who are part of a larger and caring community.
2. No Labels: This brings us to the second insight: Beware of labels. Managers tend to put employees in boxes, labeling them according to their skill sets or responsibilities. This might make your org chart cleaner, but it runs the danger of making employees feel as if they’re restricted to exclusively predefined roles and not able to grow and develop. Want to make employees feel that the sky’s the limit? Allow them to explore by themselves and tap into their full potential. How? This leads us to our next finding.
3. Make Things Difficult: Managers often make the mistake of thinking that employees prefer work environments that are easy and uneventful. The opposite is true: Especially in a field like IT, where employees can often grow fatigued given the repetitive nature of programming. It is crucial to push people out of their comfort zone and present them with real and meaningful challenges. By introducing new assignments and stimulating tasks, even–or especially–difficult ones,  employees are more likely to find a renewed sense of enthusiasm and purpose at work.
4. Send ‘Em Back to School: It is no surprise that the tech industry adapts and changes faster than any other. Encouraging employees to stay up-to-date on the latest developments in tech is critical for improving their skill set and individual career development. Still, it can also play a key role in the overall success of any organization. Additionally, providing opportunities for further education, certifications, and skill development empowers employees to remain at the forefront of their field.

A Paradigm Shift in Talent Retention

The above isn’t just a host of folksy advice on how to be nice to your employees. Rather, these insights represent a paradigm shift in how tech companies address talent retention. To date, the tech industry has systematically approached the problem of retention, focusing on merely mitigating attrition to reduce the costs associated with replacing team members. Data-driven approaches show that proactively creating an engaging environment that promotes continuous learning contributes to dramatically reducing turnover and builds dynamic work environments that empower employees to think creatively, experiment with new ideas, and, as a result, often contribute to considerable growth for their organizations. But don’t just take our word for it: In 2023, our methodology delivered an impressive 52 percent reduction in turnover ratio compared to the first half of 2022.

Conclusion: Forget Retention and Focus on Continuous Growth

While it’s easy to ignore the human element in an industry dedicated to lines of code and servers, studies repeatedly show that even the most attractive companies out there cannot retain talent for more than a handful of years and that the costs of employee turnover are significant and disruptive to the organization’s mission.

As our experiment shows, machine learning tools can work wonders toward identifying those employees most at risk of quitting and helping employers mitigate the situation proactively. But the proactive approach begins, rather than ends, there. HR officials must create a robust and rewarding work environment that moves beyond retention and fosters a continuous growth culture.

Featured Image Credit: Alexy Almond; Pexels; Thank you!