Imagine Negotiating Your Salary With AI

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Aug 14, 2019

Job hunting isn’t what it used to be. Technology has transformed the process from painstakingly walking door-to-door handing out printed resumes to applying for positions with a simple click of the button. It’s only a matter of time before technology revamps the uncomfortable task of salary negotiation.

A study published in 2018 by Robert Half found that only 39 percent of workers attempted to negotiate a higher salary with their last job offer. Why do candidates feel they need to accept the first salary offer? It’s a painful discussion for both sides.

Hiring managers are challenged to offer a new hire a competitive salary based on what they believe is fair. But “fair” is subjective. New hires are eyeing the top part of the salary range. Hiring managers might look to save a few bucks and get a quality employee for less money. One side sees a low-ball offer and the other sees a naive employee.

While both sides might feel they’re being reasonable with their pay range, the process isn’t objective. A great negotiator can earn more money, while others, who could be earning more based on their qualifications, settle for the initial offer. Imagine how technology could satisfy both parties’ needs and lead to a happy outcome. 

Technology Is Almost There

We’re almost to a point in HR where this will be the reality.

There is an app, Energy Ogre, that ensures you are getting the best possible rates on electricity. With machine learning, the app negotiates on the customer’s behalf and automatically switches the electric company and program to the best rate to save on the bill.

Online shopping is similar. Retailers change pricing based on market trends and use sentiment to gauge a buyer’s interest. A friend of mine negotiated her property taxes completely online, without making a call to the tax agency.

Recently, Facebook AI Research and Carnegie Mellon University built AI and machine learning that defeated poker pros in a game of Texas Hold ’em. The “computer” is able to analyze all the information, what hands the humans might play, and potential outcomes without showing their poker face.

Within a few years, technology will be a significant part of salary negotiations. Candidates already have the ability to enter their qualifications through consumer sites and estimate a salary range based on their geography. 

A Tech-negotiated Salary Is Better for Businesses

Artificial intelligence levels the playing field. Instead of being a range based on job titles, salaries can be automated based on data analyses of things like location and experience. Enter machine learning. Real-time analysis makes our jobs as humans much easier.

Currently, we’re negotiating based on public information and what organizations can afford to pay someone. Instead of basing the salary offer on a gut feeling or instinct into how much a person deserves for the work they would do, AI assists in making a recommendation based completely on facts. 

A 2017 Pew Research Center survey showed 1 in 4 employed women said they have earned less than a man who was doing the same job. AI removes the in-person judgment from offering a lower salary because of the candidate’s age, gender, or race. If we can eliminate bias from our technology, we can see this level the playing field for diversity and even minimize the gender pay gap.

Candidates Benefit by Negotiating With AI

Working with AI encourages people to be more cognizant of what their value is. It takes the guesswork out of salary expectations. Some candidates are able to fight for what they think they’re worth. Others are trying to get a job and feel that asking for just a little bit more might anger the hiring manager and have them “go a different direction.”

Applicants wouldn’t price themselves out of a job but could have their salary broken down based on their exact qualifications. Instead of an ambiguous number, the estimate would be based on a value assessment. This wouldn’t be technology in favor of the business. AI works in the candidate’s favor to help them justify their value. 

Candidates aren’t losing when they negotiate with AI. They’re having better conversations about pay based on education, geography, work experience, and industry experience, without the emotion felt on both sides. Technology allows us to have a conversation we couldn’t and wouldn’t have previously.

The Drawback

As with most things, there’s a risk to both sides. 

Although automation is more of an analysis of what is going on to provide for smarter business and individual choices, both will need to adapt. This is another skill people will need to develop, just like any technology addition to the business world. But it makes up for everyone’s discomfort in negotiating salaries.

However, everything can’t be left to technology. In self-driving vehicles, there’s an override option to prevent a direct impact. AI-negotiated salaries don’t eliminate the need for humans and discussions. We still need to have human interaction to tweak the algorithm. We should still have human conversations about salary.

New technologies can be scary, but AI involvement in salaries is nothing for businesses or candidates to fear. This type of negotiation benefits everyone and bases a salary on fact. This isn’t just a discussion for new hires, but current employees as well. Wouldn’t it be great to be able to have a fact-based conversation about a raise?

The key to success is going to be adaptability. People need to start educating themselves on the processes so they’re not left behind.

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