What Can You Do When Workers Use AI to Inform Their Pay Expectations?

Your employees — and the candidates you’re hoping to hire — are likely turning to artificial intelligence (AI) tools to ask what you should be paying them. And, oftentimes, the digital answers they receive fuel dissatisfaction.

“You’ve got significant proportions of employees who are relying on this data, and that’s immediately fostering a sense of distrust,” said Ruth Thomas, the chief compensation strategist at Payscale, a compensation software and data company. “That’s fueling the pay confidence gap that is growing and not shrinking, despite pay transparency.”

Access a bonus Workspan Daily Plus+ article on this subject:

• Workers Use AI for Pay Data. How You React and Respond Is Critical.

According to Payscale research, 7 out of 10 surveyed employers report that they’ve seen an increase in workers asking generative AI tools for salary information.

The result?

• 72% of polled employers said it’s becoming more common for employees to negotiate salaries based on information they’ve found online.
• 63% said employees come to them more often with salary requests that are based on inaccurate or unverified data.
• 38% said workers’ salary expectations are higher than they’ve ever been as a result of using AI tools.
• 35% shared employees are receiving conflicting pay information.

And, from the employee perspective:

• Only 32% of surveyed workers said AI assistants confirmed their salary was where it should be.
• 27% said the tools gave them higher salary expectations compared to results from other sources.
• 54% said they felt confused or conflicted about their pay as a result of their searches.

While 93% of employers surveyed by Payscale believe their workers trust their pay decisions, only 69% of responding workers said the same — a 24-point gap. And, more than 40% of workers indicated they’ve never had a transparent conversation about their salary and don’t know how pay decisions are made within their organization.

“We’re in a world where employees have strong expectations about open pay conversations, and when they’re being influenced by data that can be unreliable, it causes unnecessary friction in the workplace,” Thomas said. “Once you have mistrust around pay, your employees are much more likely to think about leaving your organization. You have to think about the true impact of this breakdown in understanding around pay.”

The Problem with Asking AI About Pay

Even for total rewards (TR) professionals, there’s no magic number when it comes to market guidelines for pay — and when employees or candidates use a general AI assistant that isn’t trained on factors unique to their organization, their equation is, more often than not, missing a number of variables. This can fuel pay misconceptions, Thomas said.

“Even if your employees ask AI to be a comp analyst, it may not be,” said Nancy Romanyshyn, the senior director of total rewards strategy and solutions at Syndio, a pay equity technology company. “It’s not trained on your company, your business strategy, goals, the practices you engage in, how you value jobs … the behaviors, skills and activities you find the most valuable for delivering business results. AI can’t deliver that up unless it’s trained for your company.”

Generally, salary recommendations from AI sources such as ChatGPT or Google Gemini — which employees often take at face value, Romanyshyn explained — pull from job advertisements and other publicly accessible data that may be outdated or inaccurate and rarely, if ever, is company-specific.

Those results wouldn’t take into account, for example, an organization that places greater weight on variable pay and incentives over base pay, or the elements rounding out a TR package such as generous health benefits or savings programs, said Gordon Frost, a global total rewards leader at consulting firm Mercer.

“Misinformation or misunderstanding about compensation components — such as base pay, bonuses, benefits and non-monetary rewards — can distort employees’ perception of their total rewards,” he said. “This disconnect can erode engagement and trust, making it harder for organizations to communicate the true value they offer and to attract and retain talent effectively.”

Closing the Trust Gap

So, how can you start regaining employees’ trust when it comes to their pay? The experts interviewed for this article offered the following tips:

• Ensure the market data informing your pay programs is solid, and be prepared to discuss your market data methodology with workers when they ask. This is an area that, Thomas said, still causes many employers to balk, even in this age of greater pay transparency.
• Regularly analyze your pay structures and salary ranges to ensure they’re fair, honest and aligned with external data, and be prepared to explain and defend them. “It comes down to making sure you’re paying the way you say you pay,” Romanyshyn said.
• Offer training for managers in fielding employees’ questions about pay.
• Use employee surveys and focus groups to gain a better understanding about your own workforce’s perceptions and concerns about their pay and benefits, and establish ongoing feedback mechanisms to allow for continuous improvement.

According to Frost, effectively tackling workers’ lack of trust about pay takes a collaborative effort between:

• TR;
• Organizational leadership and executives;
• Managers;
• Communications teams;
• Data and analytics teams;
• Legal and compliance departments; and,
• Employees.

“Recognize that pay confidence is a two-way street,” Thomas added. “You need to be prepared to have those two-way conversations because they are foundational in building trust more broadly in the organization. Don’t overlook that in terms of the opportunity for trust and engagement within your employee population.”

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
• Finance and Budgeting
• People Analytics