Artificial Intelligence in Salary Negotiations
Salary negotiations are essential for many employees as they are emotionally charged and psychologically difficult, but they may soon be supported by artificial intelligence.
Since 2021, Pactum AI, a large global procurement negotiation company, has been using an artificial intelligence chatbot to negotiate the salary of its employees.
Ironclad, a startup backed by Sequoia and Accel, is preparing to launch an AI agent that specializes in analyzing business contracts.
People use public chatbots to practice negotiations and brainstorm about rewards.
Workplace disruptions in the coronavirus era have changed many employees’ expectations for work-life balance and forced some employees to focus on both benefits and gross pay.
And repeatedly asking for a raise or benefits from someone you may be dealing with for years to come is difficult.
People who don’t normally negotiate salary, or those who want better options beyond salary, such as extra vacation time or another vacation, are benefiting from AI-powered chatbots.
Its Pactum AI salary negotiation bot was inspired by the independent negotiation platform that companies like Walmart use to negotiate with suppliers.
The Impact of AI in Salary Negotiations
“The feedback from our 80 employees has been positive and it has taught us the importance of benefit and salary negotiation by giving employees plenty of options to choose from,” said Martin Rand, CEO of Pactum AI.
Pactum’s AI salary negotiation bot reduces managerial bias and delivers better deals to both parties, but needs to be constantly calibrated.
Rand envisions a future in which benefits are constantly adjusted thanks to bots with unlimited negotiation time, when employee priorities change, when companies need to cut costs, or when they have the resources to provide additional compensation.
Negotiation is inherently human interaction and requires human intelligence, as artificial intelligence helps in this area if it complements rather than replaces human input.
According to AI proponents, the technology expands the scope of workplace negotiations to reflect the different priorities of employees in different life stages and with different family responsibilities, but AI can also harm employees in compensation negotiations.
Potential Challenges and Concerns
Employees who are not given full context or who misdirect the chatbot can be at a disadvantage with information.
Automating contracts for low-cost products is easy, but using a chatbot for highly skilled or uniquely talented employees risks alienating these desirable new hires.
A poorly trained chatbot can also compromise personal privacy and trade secrets. Pactum AI is currently having difficulty launching its salary negotiation bot on a large scale, and the company plans to continue focusing on automating procurement negotiations.