Korn Ferry's latest Global Total Rewards Pulse Survey, based on responses from 5,512 organizations worldwide, found that just 16% of companies are confident in their managers' ability to explain AI-related pay and job changes to employees. The gap matters because workforce expectations are shifting from higher pay toward career mobility and skills development - areas where managers now carry the burden of explanation.
The survey identified reward communication as a major opportunity for HR leaders. Only 43% of respondents said managers understand total rewards strategy well enough to communicate it effectively, and just 31% said managers can clearly explain pay decisions to their teams at all.
A widening capability gap
That communication gap can create tension as retention methods change. Korn Ferry found that workforce priorities are moving away from a traditional "pay me more" expectation 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.
AI for Human Resources adoption is widespread - 74% of organizations use AI to guide reward strategy amid economic uncertainty - but the survey found implementation is largely limited to basic administrative tasks. The harder work of explaining how AI affects pay and job design still falls to managers who, by the survey's measure, aren't ready.
Budget outlook and revenue expectations
Median salary increase budgets are projected at 3% across major markets, including the U.S., U.K., Germany, Japan, and Canada. Despite market pressures, 90% of organizations anticipate revenue growth.
Why this matters for executives and strategy
Executives setting reward strategy should treat manager communication as a core implementation risk, not a soft skill. A 3% salary budget leaves little room to buy loyalty with cash, which makes the "make me more marketable" shift a strategic necessity. If managers can't explain how AI affects pay and career paths, retention efforts will stall regardless of how well the strategy is designed.
Executive teams planning AI adoption should build communication capability alongside it. AI for Executives & Strategy work on job design and pay structures needs to extend to the managers who explain those changes to employees, or the capability gap Korn Ferry identified will widen as AI use grows.
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