Talking Tech: How AI Is Impacting Rewards, Skills and Compensation

While artificial intelligence (AI) adoption is accelerating, 40% of organizations are still uncertain about its impact on their specific roles, according to the latest global total rewards (TR) pulse survey by consulting firm Korn Ferry.

Conducted in February 2026 and released in March, the survey included responses from HR and total rewards (TR) professionals at 4,252 organizations across 133 countries, providing a global perspective on how employers are navigating AI-driven transformation in work and rewards.

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Tom McMullen, Korn Ferry

Workspan Daily (WD) interviewed Tom McMullen, Korn Ferry’s senior client partner and North America total rewards expertise group lead, about the survey’s key findings and to learn how AI is transforming work, skills and reward strategies.

WD: What are some key findings you can share from this latest survey? Were there any surprises or differences from the October 2025 TR survey?

McMullen: The new survey highlights that AI’s impact on work is accelerating, with 76% of organizations expecting greater transformation in the next two to three years, yet there remains significant uncertainty. Despite heavy media attention, most organizations estimate only 5% to 10% of roles are currently impacted, suggesting a more cautious, incremental reality versus hype.

Relative to compensation forecasts as compared to late 2025, there is a more optimistic outlook on incentive payouts, but also a slight pullback in salary increase budgets, which reflects a more conservative cost posture amid macroeconomic uncertainty.

WD: Based on this recent research, how is AI impacting roles?

McMullen: AI is primarily augmenting rather than replacing roles today, with moderate levels of disruption concentrated in technology and digital functions, where demand for AI engineering, data science and machine learning skills is surging. In contrast, commercial, operational and enabling roles are experiencing gradual task redesign, automation of routine work and increased reliance on data-driven decision-making.

Across functions, organizations are emphasizing upskilling and redeployment over elimination, signaling a shift toward hybrid human-AI roles. Importantly, future expectations point to significantly higher transformation levels, indicating that current impacts likely understate what is coming as AI adoption scales.

WD: How about the AI impact on compensation? 

McMullen: AI is introducing both upward and downward pressure on compensation, though the dominant effect is upward for scarce talent. Most organizations report premiums of 10% to 15% for AI-related roles, particularly in specialized technical areas, driven by supply-demand imbalances.

At the same time, where AI reduces job scope, pay reductions are limited (typically 5% to 10%), and often avoided altogether in favor of role redesign or redeployment. The bigger structural impact is that traditional compensation benchmarking is struggling to keep pace, leading to increased reliance on internal judgment, dynamic pricing and evolving job architectures to determine pay.

“Most organizations are still at an early to moderate maturity stage in applying AI within total rewards processes.”

WD: And, what about AI’s impact on other TR areas?

McMullen: AI is accelerating a broader shift in rewards philosophy from job-based to skills- and capability-based models. Organizations are increasingly incorporating AI-related outcomes into incentive plans, including for leadership roles, and are using a wider mix of compensation tools such as sign-on bonuses, retention incentives and project-based rewards to compete for talent.

At the same time, AI is beginning to influence how rewards are administered within organizations, with growing use in analytics, benchmarking and pay decision support, although most organizations are still at an early to moderate maturity stage in applying AI within total rewards processes.

WD: What did the latest survey show for total salary increases and bonuses in 2026?

McMullen: Salary increases for 2026 are stabilizing but slightly lower than late 2025 expectations, with most major markets clustering around 3% to 4% increases (e.g., about 3.0% in the U.S., about 3.1% in the United Kingdom, about 3.5% in Australia). Increases are being applied broadly, though more selectively than prior years, with 75% of organizations planning to provide increases to at least 80% of employees. Bonus outcomes are more optimistic, with 72% of organizations expecting payouts at or above target (up from 57% the prior year), reflecting relatively stable performance and a continued reliance on incentives as a key retention lever.

“Salary increases for 2026 are stabilizing but slightly lower than late 2025 expectations, with most major markets clustering around 3% to 4% increases.”

WD: What do the findings show about the business and revenue outlook of the survey participants?

McMullen: The business outlook is cautiously positive, with 63% of organizations expecting moderate to rapid growth and 93% anticipating revenue increases over the next year. More than half expect revenue growth of at least 6%, signaling continued expansion momentum. However, this optimism is tempered by substantial macroeconomic and geopolitical uncertainty, regulatory pressures, and labor market dynamics. Growth is being driven largely by investments in technology and AI, along with internal focus on operational efficiency, talent capability building and leadership effectiveness.

WD: Regarding AI’s impact on roles and compensation, what are some next steps organizations should consider?

McMullen: Organizations should begin transitioning toward a more skills-based workforce and pay models. This includes investing in skills taxonomy, dynamic job evaluation frameworks and stronger internal analytics to complement imperfect market data. At the same time, companies should prioritize reskilling and career mobility strategies to redeploy talent into higher-value work, while selectively applying premiums and incentives for critical AI skills and leadership roles. Organizations should modernize reward program management — building capabilities in AI-driven insights, data infrastructure and decision-making frameworks — to manage increasingly complex, fast-moving compensation environments.

Editor’s Note: Additional Content

For more information and resources related to this article, see the pages below, which offer quick access to all WorldatWork content on these topics:

• Employee Compensation
• Organizational Performance
• Total Rewards