More Productive With AI, More Pay?
Some AI-boosted employees want higher comp for the added value they provide. Can firms afford that?
The employees were growing frustrated: After two years of integrating AI into their work, they were billing dozens more customers per month—and, in turn, earning more income for the firm than ever before. Why, they asked, didn’t their paychecks reflect their newfound value?
This is precisely the question that firms will face from their staffs. Staffers who bring in direct revenue, such as lawyers and consultants and marketers, are increasingly aware that their smart use of AI is growing revenues for their organizations; a recent survey of doctors by healthcare platform Doximity found that 44% believed that they should be the primary financial beneficiaries of their own improved clinical productivity. “This will be a very hot topic a year from now,” says compensation expert Tom McMullen, senior client partner at Korn Ferry. “The question is who captures the value that AI creates?”
Firms have not yet needed to answer this question for the very good reason that economists and corporations are still parsing out the value that AI does and doesn’t provide. “I’m still hearing more clients unsure of how to get a return on investment,” says Renee Whalen, North America market leader for Korn Ferry’s Professional Search business. Parallels to past technological advances, like steam engines and computers, are commonly tossed around, and for employees, those precedents don’t bode well: Historically, companies have not paid employees more when tools emerge that make them more efficient, such as word processors and computers. Given their huge financial investments in AI, most firms have, up to now, assumed that the benefits of the technology would be theirs to reap. Yet employees asking questions is also a norm, such as during the pandemic, when many inquired about who would pay for the printers and daytime utilities. “Whenever there is a transition, the question arises of who should share the benefits,” says Jenna Young, head of client creative at Korn Ferry.
To be sure, companies are not keen to increase compensation just because employees are using widely available tools. Rather, what companies do historically pay for is an employee’s immediately relevant expertise, as in the case of an executives who might be fluent in finance, business intelligence, and AI. “Expert implementation and enablement of AI in companies will probably be a ‘hot skill’ for a while,” says Bryan Ackermann, head of AI strategy and transformation at Korn Ferry, and, he notes, will likely come with high compensation. But that’s very different from rank-and-file employees asking for a pay boost because they’re more productive. “They can’t just demand a pay increase,” says Danielle Smith, senior client partner in the Financial Officers practice at Korn Ferry.
But the age of AI era is unlike most previous technological advances in that a sizable minority of employees are able to quantify their increased economic value. “It’s a legitimate argument,” says McMullen. While employees who work in the belly of the best may be less aware of productivity gains, those in roles with clearly measured revenues are beginning to ask questions. Experts say that this trend will likely spread. “If firms keep up ratcheting up performance targets, there will be a point at which employees start expecting more pay,” says Joshua Dahle, a principal in the Workforce Rewards practice at Korn Ferry, who reports that while nearly all his clients want to know how their competitors are rewarding AI productivity, hardly any have moved on it.
Experts say that any compensation increases will likely be the product of market pressure. In practice, that might look like a doctor with 30% more patients jumping ship to another healthcare organization that is willing to pay her 30% more. Experts advise executives to begin internally discussing and articulating their own AI-reward policies. “Companies will eventually have to give logical explanations,” says Dahle.
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