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ChatGPT might be a new stakeholder in your salary discussions, according to new research from compensation software company Payscale, which surveyed 1,000 employees and 500 leaders working in compensation.
Payscale found a growing gap between employer and employee salary expectations, and generative AI tools are contributing to the new norm.
Eighteen percent of employees are sourcing salary information from AI assistants like ChatGPT. Of those nearly one in five employees turning to a chatbot for insights, 27% say it’s “inflated their expectations” and 38% of employers agree that these tools yield higher salary demands, according to the report.
“I think the fundamental issue is that they’re [employers and employees] looking at the same object through two different lenses,” said Ron Seifert, senior client partner at Korn Ferry. “Employees get anecdotal information, and employers have real data, both internal practices and references as well as external market data.”
Employers are also armed with insights on how the company approaches pay with other people performing the same job, employee performance data and an employer view of an employee’s potential, and compensation survey data.
But employees may consult ChatGPT, social media, and websites like Glassdoor or others. Younger employees are also more open with their salary information than older colleagues, and word-of-mouth insights may also impact their impression of comp.
This dissonance has become a recipe for a growing confidence gap, the study found. While 93% of employers “believe their employees trust their pay decisions,” only 69% of employees say they trust their employer’s thinking.
What’s HR to do? “Acknowledge it and be sufficiently empathetic is probably the most important thing,” Seifert said. “You want to not be defensive and then share the perspective of how we reach our answers as employers on pay decision making, and then just present that in a fairly dispassionate way.”
Seifert told HR Brew it’s safe to assume employees are coming to a comp discussion armed with information, and some of that is probably misinformation. Be ready to receive bloated asks and prepared to explain the work that went into the company’s offer, he suggested.
“An employee discussion isn’t going to change an employer’s mind about their practices,” he said.
Seifert added that, in these conversations, it’s also useful to assess an employee’s motivation for the discussion: Is there another job offer, or is there a personal financial issue? These types of motivations can affect which action might make the most sense for the company and employee.
“Employees generally don’t leave for pay unless…[they] get an offer that’s so substantially above where they are, but if it’s 10 or 15%, it’s entertaining and charming up until the moment I need to make a decision about leaving,” he said, suggesting HR leaders or managers work with employees on identifying goals and a plan to achieve them.
