Companies are rapidly adapting total reward strategies for the AI era, but fewer than one third of managers can effectively articulate pay decisions to their teams. 

By Gillian Manning 

As organizations race to redesign their total rewards strategies amidst the rise of AI and economic uncertainty, managers are ill-equipped. According to Korn Ferry’s latest Global Total Rewards Pulse Survey, which analyzed data from 5,512 organizations worldwide, a stark capability gap has emerged with regards to compensation, AI adoption, and manager communication. 

Korn Ferry found that reward communication is a major opportunity for HR leaders, as just 16% of organizations feel confident in their managers’ ability to explain AI-related pay and job changes to employees—the largest capability gap revealed in the study. Just 43% of survey respondents agree that managers understand total rewards strategy well enough to communicate it effectively, and just 31% say managers can clearly explain pay decisions to their teams at all. 

This gap in communication can cause tension as employee retention methods shift. According to the study, workforce priorities are moving away from a traditional “pay me more” expectations toward a desire for “make me more marketable”—placing career mobility, continuous skills development, and internal capability building at the center of rewards rather than higher pay.  

Korn Ferry also found that: 

• 74% of organizations leverage AI to navigate reward strategy amid economic uncertainty, though implementation remains largely limited to basic administrative tasks; 

• 3% median salary increase budgets are projected across major markets—including the U.S., U.K., Germany, Japan, and Canada; and 

• 90% of organizations anticipate revenue growth despite current market pressures. 

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