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Artificial Intelligence
Compensation
Quick hit: Striking a balance between AI and managerial discretion in compensation
May 29, 2024
By
Brandi Cowen
From automated benchmarking systems that provide real-time market information to predictive analytics for future salary trends and employee retention risks, artificial intelligence (AI) can go a long way in making data-driven compensation decisions in your organization.
As David Creelman, CEO of Creelman Research, noted in a recent Salary.com webinar, AI can also improve efficiency, scalability, objectivity, and consistency in compensation decisions. But even though we can offload a lot of the work to AI, humans continue to play a crucial role in compensation planning.
So, how do we balance AI with managerial discretion in compensation planning?
Creelman recommends the following:
Turn to AI when:
- High-volume, repetitive tasks such as initial salary benchmarking and compliance checks are required
- Fast analysis of data from multiple sources is needed
- Bias mitigation is crucial, and you must ensure objectivity in the initial stages of decision-making
Rely on human judgement when:
- Decisions involve significant changes to employee compensation, which may have an impact on employee morale
- Addressing a complex scenario that requires a deep understanding of your organizational culture or the nuances of individual performance
- Employee feedback or behaviour plays a crucial role in the decision you’re trying to make
Ready to let AI do some of the heavy lifting for you? Creelman suggests these next steps:
- Assess current capabilities: Evaluate existing tools and processes and identify where AI can boost efficiency vs. where human oversight is crucial.
- Implement AI tools where it makes sense: Choose tools that align with your organization’s needs and integrate with existing HR systems, then implement pilot projects where these tools can make an immediate impact.
- Train and educate staff: Develop training programs that focus on using the tools effectively and ethically. Be sure this training covers understanding outputs and decision-making enhancements too!
- Monitor and adjust: Set metrics to evaluate the performance of the tools you implement. Audit these tools regularly for accuracy, fairness and effectiveness.
- Enhance managerial skills: Train managers in your organization on soft skills and discretionary decision-making, then encourage them to use AI-generated information as a tool rather than a directive.
- Review and scale: After the pilot phase, review the results and refine your strategies. Scale the successful integrations across the organization while continuously fostering managerial discretion.
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