A 'Bonus' for AI Fluency

If you’re among those who passed up the chance to take your company’s course on AI-skills building, or decided to play in a softball league instead of attending a nighttime AI-training class, you may be in for some serious regret. No, it’s not about losing your job to AI—it’s about parlaying your expertise in a long-sought increase in pay.

Indeed, there is a new hiring spree in town. While the job market remains frustratingly tight in most cases, some firms are harking back to the days of the Great Resignation by making fantastic-sounding offers to people who have domain and AI skills together. Lawyers with AI skills, for example, now earn more than twice as much as their non-AI-skilled peers, according to data from Law Leaders, while elite candidates in the tech field have been the beneficiaries of a headline-grabbing hiring spree. There are even compensation premiums for people who understand AI adoption and automation across less glamorous specialties like logistics and manufacturing. “It’s a new ball game,” says compensation expert Tom McMullen, senior client partner at Korn Ferry. “Companies are really rethinking how they reward people based on these emerging skill sets.”

To be sure, skills-based compensation has been around for decades (remember when fluency with Microsoft Excel was worth listing on a résumé?), and companies have long paid premiums for the skills that are critical to their success—sometimes to their own detriment. “Corporations get very enamored with the newest hot capability,” says Ron Seifert, North America workforce reward and benefits leader at Korn Ferry. But AI expertise is receiving unique compensation attention, largely because Gen AI has emerged and captured virtually every industry in just two and a half years, and firms need people who can lead their corporate AI strategies. “The skills that were important five years ago just aren’t important right now,” says Shanda Mints, vice president for RPO analytics and implementation at Korn Ferry.  “Instead, it’s very niche skills that people have because they didn’t go down the beaten path.”

The question, of course, is how to compensate for these hard-to-find skills. Experts advise that rather than paying for the skills themselves, firms buy the outcomes associated with those skills over time, says Seifert. This requires the legwork of first identifying those outcomes, then thinking through whether they’re faster than or superior to than other options. For delivering an expected outcome within a set period of time, a potential funding structure might be to grant either equity that vests over multiple years (which also encourages retention) or a percentage of base pay at regular intervals. “Twenty to fifty percent of base pay wouldn’t be a crazy figure,” says Seifert.

The risk, of course, is that any compensation rooted in base pay means a permanent expense. To get around that, experts say, some firms dip a toe in by providing small, onetime bonuses for completion of trainings, which incentivizes the rank and file to upskill. “It raises awareness of the opportunity,” says Seifert.

Experts say firms can also look beyond compensation when trying to attract rare skills. “Money isn’t the only thing that makes the world go round,” says McMullen. Sought-after employees are attracted by other incentives too, like career paths that will give them meaningful and interesting ways to apply their expertise. Still, the allure of higher pay sure doesn’t hurt in today’s inflation-plagued economy, with firms quickly realizing that devising a new compensation strategy is mandatory. Companies who play ball, McMullen says, are “definitely going to win over those that give annual 3% compensation increases to everyone.”

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