Salary negotiations are essential for many employees, as they are emotionally charged and psychologically complex, but they may soon get a boost from artificial intelligence.
Since 2021, Pactum AI, a major global procurement negotiation company, has been using an AI chatbot to negotiate the salaries of its employees.
Ironclad, a startup backed by Sequoia and Accel, is preparing to launch an AI agent that specializes in analyzing business contracts.
Individuals use publicly available chatbots to practice negotiations and brainstorm compensation. Salary negotiations are often unsatisfying, nerve-wracking, and time-consuming for employers. As a result, anything that might improve the process is worth a try.
Workplace disruptions in the age of coronavirus have changed many employees’ expectations about work-life balance, and led some employees to focus as much on benefits as on 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 time off or other time off, benefit from AI chatbots.
Its salary negotiation bot, Pactum AI, was inspired by its independent negotiation platform, which companies such as Walmart use to negotiate with vendors.
“Feedback from our 80 employees is positive, and this has taught us the importance of negotiating benefits as well as salary, giving employees multiple offers to choose from,” said Martin Rand, CEO of Pactum AI.
Pactum’s AI salary negotiation bot reduces manager biases and provides a better offer to both sides, but it must be constantly calibrated.
Rand foresees a future of continuously adjusted benefits thanks to bots with unlimited negotiation time when employee priorities change, when companies need to cut costs, or when they have resources to provide additional compensation.
Negotiation is human interaction by nature and requires human intelligence, as artificial intelligence helps in this field as long as it is a complement and not a substitute for human input.
According to AI proponents, the technology expands the scope of negotiation in the workplace to reflect the different priorities of employees at different stages of life and with different family responsibilities, but AI may also harm employees in compensation negotiations.
Employees who are not given full context or who provide poor directions to the chatbot may find themselves at an information disadvantage.
Automating contracts for low-value products is simple, but relying on a chatbot for highly skilled or uniquely talented employees risks alienating those desirable new hires.
An ill-trained chatbot may also jeopardize individual privacy and trade secrets. Pactum AI is now seeing difficulties getting its salary negotiation bot to work at scale, and the company plans to continue focusing on automating purchase negotiations.
