Why replacing junior staff with AI will backfire

Healthy organizations grow their own talent, and it’s not possible to recruit for all positions from outside, according to Chris Eldridge, CEO of UKI and North America for technology recruitment firm Robert Walters.

“If you remove too many entry-level roles, you can starve the internal talent pipeline,” Eldridge said.

“Entry-level and entry-level roles are fertile ground for future leadership. I believe that if you move beyond that entry-level tier, you will encounter a talent bottleneck at some point in the business which invariably results in an increase in hiring costs.”

If a company does not have enough young talent, it will be forced to hire from abroad in the future and will create a “talent death cycle” that will lead to increased costs, salary inflation, and dependence on the external talent market.

“I represent a talent consulting firm, however, we advise every organization to have several ways to access talent in the market, and one of them is to create your own,” Eldridge said.

“Talent retention is also very important through the development of training and opportunities that you can give people…but you are missing out on a huge aspect of growth if you close off the pipeline to bring junior or entry-level talent into the organization,” he added.

Companies that don’t nurture young talent will eventually lose touch with consumers and mainstream culture, according to Stephanie of the Oxford Internet Institute.

“A company is part of the community, and if it doesn’t adequately reflect the community, it’s very hard for me to imagine a business model or product that doesn’t need that generational bridging…and young people bringing new ideas that bring a new perspective,” Stephanie told CNBC Make It.

Stephanie said companies that fail to adapt and hire younger employees will become “like an elderly care company.” “It’s like a company with people who are going to retire soon because…they may not have the edge and verve you need to bring a new product to market.”

“Tacit knowledge” is an important component of maintaining the health of an organization, according to Stephanie. It refers to the implicit and unspoken information about company culture that colleagues share.

“There are a lot of things that make a company successful that can’t be written down anywhere,” he said. “They come out of the network of people, those people who sometimes sit in the cafeteria and say, ‘I’ve been with the company for 25 years, I can explain to you what’s going on, why X is having a problem with Y.’

“This is the kind of corporate wisdom of tacit knowledge that serves as a lubricant for a company’s economic well-being,” he said.

Eldridge added to Robert Walters that young people are a sponge and “absorb the best of the business” including the kind of tacit knowledge that can only be transmitted through people.

“They are the culture bearers of the future as well, so if you don’t bring this group there, what does it mean for the future in terms of culture?”

“I think companies rely on this upward pressure, where you bring in a bunch of people who are inexperienced, and they’re hungry, and they want to learn. And they demand a lot of the organization, which tests them sometimes and keeps the company on its toes. If you don’t have that, it can potentially end up hurting the culture and performance of the organization,” Eldridge added.