IBM artificial intelligence can predict with 95% accuracy which workers are about to quit their jobs

Key Points
  • IBM artificial intelligence can predict which employees will leave a job with 95 percent accuracy.
  • IBM CEO Ginni Rometty says methods used in the traditional human resources model are failing American workers and need assistance from machine learning.
  • AI, which has replaced 30 percent of IBM's HR staff, can help employees identify new skills training, education, job promotions and raises.
Ginni Rometty on the future of work
Ginni Rometty on the future of work

IBM receives more than 8,000 resumes a day, making it No. 1 on job-search site Glassdoor for Gen Z applicants, said IBM CEO Ginni Rometty at CNBC's @ Work Talent + HR Summit on Tuesday in New York City.

But that's not the only way the technology giant, which employs roughly 350,000 workers, knows who in the workforce is currently searching for a new position. IBM artificial intelligence technology is now 95 percent accurate in predicting workers who are planning to leave their jobs, said Rometty.

During Rometty's seven-year tenure as CEO, IBM has been improving its AI work devoted to the retention of its employees.

"The best time to get to an employee is before they go," she said.

IBM HR has a patent for its "predictive attrition program" which was developed with Watson to predict employee flight risk and prescribe actions for managers to engage employees. Rometty would not explain "the secret sauce" that allowed the AI to work so effectively in identifying workers about to jump (officially, IBM said the predictions are now in the 95 percent accuracy "range"). Rometty would only say that its success comes through analyzing many data points.

"It took time to convince company management it was accurate," Rometty said, but the AI has so far saved IBM nearly $300 million in retention costs, she claimed.

The AI retention tool is part of a suite of IBM products that are designed to upend the traditional approach to human resources management. Rometty described the classic human resources model as needing an overhaul, and said it is one of the professions where humans need AI to improve the work.

Rometty said that since IBM implemented technology more widely including cloud services and other modernization, the tech giant has reduced the size of its global human resources department by 30 percent. But she added that the remaining positions are higher pay and able to perform higher-value work.

"You have to put AI through everything you do," she said.

A clearer career path is needed for many

Among the tasks that HR departments and corporate managers have not always proved effective at, and where AI will play a bigger role in the future, is keeping employees on a clear career path and identifying their skills.

Rometty said being transparent with individual employees about their career path is an issue in which many companies still fail. And it is going to become more critical. "I expect AI will change 100 percent of jobs in the next five to 10 years," the IBM CEO said.

Being transparent with employees means being honest about the skills that are needed, especially when the workers don't possess them. IBM managers talk to employees about market skills that are scarce or abundant.

"If you have a skill that is not needed for the future and is abundant in the market and does not fit a strategy my company needs, you are not in a good square to stay inside of," Rometty said. "I really believe in being transparent about where skills are."

By better understanding data patterns and adjacent skills, IBM AI can zero in on an individual's strengths. In turn, this can enable a manager to direct an employee to future opportunities they may not have seen using traditional methods. "We found manager surveys were not accurate," Rometty said, referring to formal skills assessments. "Managers are subjective in ratings. We can infer and be more accurate from data."

IBM technology can view the tasks employees are completing, the educational courses they have taken and any rankings they have earned. Through these data points, the AI skills inference and HR managers can gain a greater understanding of an employee's skill set than they would by assessing the feedback from manager surveys.

IBM also abandoned another staple of classic HR: the annual performance review, a move Rometty said she resisted at first, but persistent HR leaders proved to her was necessary. The company assesses employees on their skills growth as part of their quarterly feedback check-ins with management.

You have to know the individual. Skills are your renewable asset, and you need to treat them like that.
Ginni Rometty

AI is getting better at providing career feedback to employees. IBM's MYCA (My Career Advisor) AI virtual assistant uses Watson to help employees identify where they need to increase their skills. Its companion, Blue Match technology, serves up job openings to employees based on their AI-inferred skills data (employees opt into the service). Rometty said some of the 27 percent of IBM workers who received a new job or promotion in 2018 were assisted by Blue Match.

"AI will change all jobs once it is in the workflow, and that is the most meaningful kind of AI. Yes, some jobs will be replaced, but that is a red herring," Rometty contends. "It is about getting people to work at the intersection of this."

She added: "This is all a game about skill and having people with the right skills, and everyone's job is changing."

Getting rid of the current HR system

Traditional human resource departments, where Rometty said companies typically "underinvest," has been divided between a self-service system, where employees are forced to be their own career managers, and a defensive system to deal with poor performers.

"We need to bring AI everywhere and get rid of the [existing] self-service system," Rometty said. IBM employees no longer need to decipher which programs will help them upskill; its AI suggests to each employee what they should be learning in order to get ahead in their career.

Poor performers, meanwhile, will not be a "problem" that is dealt with only by managers, HR, legal and finance, but by solutions groups — IBM is using "pop-up" solutions centers to assist managers in seeking better performance from their employees. She said many companies have relied on centers of excellence — specialized groups or collaborative entities created to focus on areas where there is a knowledge or skills gap within an organization or community. "We have to move away from centers of excellence to solutions centers."

IBM's bet is that the future of work is one in which a machine understands the individual better than the HR individual can alone. To be clear, the IBM CEO's comments were not framed as an attack on the HR profession. In fact, she began her remarks at the CNBC event by describing HR as a "labor of love" and adding she was "such a fan of this profession."

But the new era of AI-centered human resources will improve upon something many human-led HR teams can't handle as effectively as a machine that can crunch millions of data points and learn in new ways. Recognizing the true resource potential of individuals and serving as growth engines for companies.

"It is at the individual level. You have to know the individual. Skills are your renewable asset, and you need to treat them like that," Rometty said.

Correction: An earlier version of this story said the AI employee retention tool is only for internal use. IBM later clarified that it is being offered to external clients.