Only Modest Pay Bumps for AI Skills

For workers dedicating untold hours to developing AI skills, the rewards seemed juicy: Surely firms would pay a lot more for those with the right skills. Meanwhile, for workers who skipped all of their opportunities for learning, significant pay cuts seemed to be imminent. 

It’s not turning out that way for either group—yet. Survey after survey shows that CEOs rank hiring or developing talent with AI skills as a top strategic priority. But new Korn Ferry data finds that the big premium some people anticipated for those skills hasn’t yet arrived. Indeed, while some tech firms may be shelling out huge rewards for AI talent, a February survey of more than 4,000 companies in 133 countries found that firms overall are offering an average of just 10% above market rate (5% at the low end, 15% on the high end) for AI roles. Meanwhile, workers whose scope has been reduced by AI are seeing a pay cut of only about 5% to 10%.

Firms are struggling to design compensation packages because they haven’t determined how much AI will impact new roles, says Tom McMullen, a senior client partner in the North America Total Rewards practice at Korn Ferry. To be sure, according to the survey, 64% of compensation professionals say they are unsure what level of premium to offer at this point. “Firms know they have to pay more, but they don’t know how much,” says McMullen. “In many cases they are offering the minimum they can get away with.” 

Despite pouring millions into the technology and being fully aware of its coming benefits, firms are still in the early stages of redesigning compensation and rewards strategies for AI talent, says McMullen. The challenge is that external benchmarks, like peer salary bands and role classification, are limited. According to the survey, nearly 50% of compensation professionals expect to rely on the judgment of managers to shape salary premiums for AI-impacted roles. The irony, however, is that in another recent survey, 67% of employees—believing AI to be fairer and more transparent than humans are—said they trust AI more than managers in making pay decisions. 

To be sure, in certain functions where disruption is more substantial, firms are paying a higher premium for AI-skilled talent. Obviously, AI is transforming tech and digital roles first and fastest, which has led to higher compensation for engineering, data-science, machine-learning, and governance roles. Operations roles have seen the second-largest premiums; sales, finance, and human-resources roles, among others, are seeing the lowest. But McMullen notes that the premiums remain “too low to be effective” in attracting the talent firms want and need.  

The good news, at least for workers who are struggling to learn AI (or avoiding it altogether), is that firms aren’t reducing salaries when the technology takes over many of a given role’s responsibilities—at least not yet. To be sure, some companies have taken the harsher step of laying off thousands of AI-affected workers. But other firms are focusing on redesigning roles, reskilling, and moving workers into higher-value work instead, says Todd McGovern, global leader of the Total Rewards practice at Korn Ferry. 

Interestingly, skimping on AI skills doesn’t appear to be an issue in the uppermost ranks of the corporate world. Korn Ferry data indicates that AI-ready leaders are commanding more of a premium than peers without AI skills. Nearly 40% of compensation professionals expect that recruiting and retaining these leaders will require higher base salaries, signing bonuses, and equity incentives. McGovern says more boards are looking to tie leaders’ incentives, including stock options, to AI transformation efforts. “Firms are willing to pay AI-ready leaders more, because they are the ones responsible for driving transformation and scaling adoption,” says McGovern.  

Learn more about Korn Ferry’s Total Rewards capabilities.

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