When we talk about "micro level"...
We'll examine everything that happens within the company.
We'll look at how AI destroys the retention of team members / employees and clients.

Impact on team members / employees

Every human is naturally motivated to do things they deem purposeful.

But in terms of work, this doesn't always apply.

Some people do a job they hate because they have to earn a living.
Some are stuck in a job they've no passion for...
Because their paper qualifications led them to it.

In most cases...

They don't leave a job they hate because they're in debt.

Student loans... Housing loans... Car loans...Etc.

They're scared to move.

They need a safety net provided by a job.

You get the idea.

During normal days...
This group of employees is already feeling resentful.
Long working hours.
Little pay.

Pay raises are slow and barely keeping up with inflation.

Most of them only have a single income source.

Enter AI.

These employees suddenly realize their jobs aren't secure.

They realize the company they've served for years...

Is trying to replace them with AI to cut costs.

Their income source is at risk.

Distrust in the company grows further.

Their morale decreases.
Motivation to work drops even lower.

Their minds aren't on their jobs anymore.
Because they have to look for new jobs to make a living.
Or start a side hustle.
Some may leave the company before they get asked to leave.

The working environment doesn't feel safe anymore.

When this happens... Even those who love their jobs are affected.

Since Trust + Meaning = Retention

Trust in the company is gone among employees.
Employees also don't see the meaning in staying.

They know that not being retrenched now...
Doesn't mean they won't be retrenched later.

It's only a matter of... When.

Impact on the clients

When employees feel stressed, unsafe, anxious, and unmotivated...
They are in a negative emotional state.

Clients can feel the negativity during interactions.

The employee may display a poor service attitude...
Appear distracted and disinterested in solving the client's problems...

Slow to respond, etc.

Clients feel dissatisfied with the service.
Disappointment grows.
These are trust leaks.
Eventually... They may leave quietly as an unhappy client.

Client retention failure occurs.

Because there's no more trust.
There's no more meaning in staying with a business that gives a poor client experience.

Trust + Meaning = Retention
Both pillars are clearly absent in this case.

Impact on the company

When team morale drops, productivity and efficiency drop.

When employees resent and distrust their employer...
Nobody wants to do a good job.

How does the company expect the employees to put in their best...
When the company's goal is to remove and replace them?

No employee in the right frame of mind will stay loyal to a company that doesn't value them.
No employee will be happy to take care of the clients...
When the company doesn't take care of its own employees first.

So the company may experience increased employee absenteeism.

More people may be taking MCs and filing medical claims.

The company may receive more client complaints and support tickets...
Because there's a drop in service standards.

Client churn rates may increase.
Client retention rates may drop.
Employee retention rates also drop.

When the company uses AI to replace humans...
Some employees may start looking for jobs elsewhere and leave.

Let's pause for a while here.
Look at what I laid out so far.
It means that when the business is in the process of replacing employees with AI to save costs...
It potentially incurs more costs.

The costs come from losing clients unnecessarily...

Gaining a bad reputation due to client complaints and poor reviews...

Drop in productivity and efficiency from employee absenteeism and reduced motivation...
Increase in employee medical claims...

Drop in employee loyalty...

Poor business reputation compounds over the years.

Clients who leave today may be the reason new prospects don't buy in the future.

After AI adoption...

There are multiple problems that businesses have to deal with, too.
Things are not all smooth-sailing for companies that replaced humans with AI.
The big chunk of problems deserves a blog post on its own for discussion.

So I'll cover those in another future post

Conclusion

The role of businesses is to solve problems for people.

Businesses are supposed to get paid for the value they provide.

Jobs are available because businesses create them.

People can make a living and support their families because of jobs.

People pay businesses to purchase things as consumers.

Money flows from:
People -> Business -> People -> Business (The money-flow loop continues)

When businesses forget their main purpose and prioritize Profits > People...

They lay off their employees and replace them with AI.

So they can cut costs and increase profit margins.

They want to hog the money without distributing it to the people who work for them.
This disrupts the money-flow loop.

They've violated the very reason that businesses exist: To serve people.

And in doing so... They may potentially incur greater costs in the long term.

This is similar when you compare acquisition-focused businesses with retention-focused businesses.

Acquisition-focused businesses emphasize marketing and sales.
Because they prioritize Profits > People.
They neglect fulfillment and retention.
The poor client experience leads to low trust and a poor reputation...
That affects future sales.

Retention-focused businesses prioritize People > Profits.

They intentionally design retention into the business.
They care about fulfillment and the client experience to minimize trust leaks.

The good reputation and high trust will compound over the years.

Sales will become easier in the future.

There's no room for being selfish in business.

Profits > People is value extraction.
People > Profits is value creation. It's a service-oriented mindset.

People > Profits benefit both the clients and the business.

It's what builds durable and sustainable businesses.

People > Profits.

Always.

- Herek