Artificial intelligence has gone from being a buzzword to a business necessity — nowhere more so than in the realm of employee pay. By 2025, companies in the US, Europe and the MENA region are relying on artificial intelligence-powered tools to interpret market data so that they can wipe out pay disparities and create salary structures that enable them to stay ahead of a fast moving labour market. As new regulations, open records laws, and talent gaps force HR teams to transform quickly, AI has become a necessity. It has become a tactical weapon.
New research from Korn Ferry’s 2024–2025 Global Compensation Insights Report shows that this acceleration is likely far more dramatic:
• 25% of companies now employ AI to determine salaries.
• 63 percent aim to incorporate AI-based compensation systems by the end of 2025.
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The shift marks a significant change in the way companies compare roles, negotiate offers and keep internal equity — all while fighting for talent amid difficult hiring conditions.
Real-Time Wage Information: The HR Revolution in 2025
For years, salary benchmarking was based on annual surveys that were outdated as soon as they landed in employer mailboxes. But AI reversed the whole model.
Newer compensation platforms — such as Payscale Peer, Payscale Verse, Mercer’s AI Workforce Hub and WTW Compensation Explorer — analyze tens of millions of real-time data points drawn from thousands of active employers so HR teams can instantly tap into labor market realities.
Why this matters today:
- Salary data updated daily is now available on payscale peer from more than 6,000 companies.
- Salary benchmarks include new categories such as AI safety specialists, machine learning operators, prompt engineers, robotics supervisors and cybersecurity analysts — jobs traditional surveys are unable to accurately compare.
- Firms claim to accept close to 90% of AI-based feedback on compensation due to greater transparency in the market and less resistance during negotiations.
AI isn’t merely a source for data — it is analyzing market volatility, forecasting salary trends and helping to detect pay anomalies before they turn into retention issues.
Automation Reimagining HR Workflows and Minimizing Mistakes
In the past, compensation analysis took weeks of manual data entry, survey submittals, spreadsheet modelling and back-and-forth communication between HR, finance and department managers.
AI has made a lot of that instant.
“The advent of AI for compensation Analytics is Now Using Artificial Intelligence and Machine Learning in HR .
- Compensation Surveys AutoSubmit Average Up to 70% of the manual effort required to complete compensation surveys automatically.
- Creating live market dashboards to augment static PDF reports.
- Spotting instances of Salary compression and inequity in Pay, especially post increased regulation for global pay transparency in 2024–2025.
- Generating data-supported pay justification reports, which managers would use when explaining salary decisions to their boss or staff.
Showcasing data, the companies that use AI for pay analysis are seeing reduced compensation disputes, faster time to hire and stronger internal alignment — all critical advantages in a talent market.
AI + Human Judgment: The Hybrid Every Company Needs
No matter how sophisticated the A.I. tools, coverage requires human supervision. Experts caution that AI alone cannot run compensation systems, at least not without serious ethical risk.
Why there is still a role for people in 2025:
Head off bias before it becomes systemic
AI can’t learn from the data it is not trained on. AI risks perpetuating such imbalances if the historical compensation was affected by gender or racial biases and is not adequately monitored.
Contemporary systems have built-in layers to detect this bias, but human discretion is still the final filter.
Adherence to new global AI and pay transparency legislations
With the introduction of the EU AI Act (2025) and extended transparency requirements in the US and Canada companies need to ensure that:
- Transparent explanations of AI-powered salary decisions
- Ethical and compliant data usage
- Privacy protection for employee information
- No AI-powered decisions allowed with no human vetting
Of course, context and culture and judgment still count.
AI can’t comprehend performance subtleties particular to one person, team culture or strategic exceptions.
That’s why vendors like PayScale, Mercer, and WTW all need “analysts” to:
- Review AI-generated recommendations
- Base salaries on an internal compensation plan
- Apply judgment to exceptional cases
The future of pay isn’t entirely automated — it’s augmented.
Theo Rinsema Theo serves as executive vice president of Global Head of ServiceNow Sales.
Those organizations embracing salary intelligence powered by AI in 2025 have a well-defined advantage.
Key advantages include:
- More pay transparency, attracting young talent from around the world
- Hire faster with less negotiation friction
- Better retention, at least with the help of more uniform internal pay practices
- More equitable pay, less discrimination and inequality
- Scaleable forms of compensation aligned with a fast-growth business model
In a mobile workforce, with remote hiring and machine-automated job creation defining the time we’re in, for companies that don’t update their compensation offerings, they risk being left behind.
The Future of Compensation Is Being Redefined by AI — But Humans Are So Far Leading the Way
Compensation strategy is ripe for disruption, and artificial intelligence is making it more precise, competitive, and fair than ever before. The winners of 2025 are the companies that treat artificial intelligence as a strategic partner, not a stand-in for human judgment.
The hybrid approach is now the gold standard: AI provides the data and intelligence, humans provide judgment and responsibility.
As employers place few limits on their use of AI salary tools at record pace, one thing is clear:
AI driven compensation is the future — and those companies that catch on early will win the war for talent.
