105: 2025 HR predictions

[00:00:00] Join us on a journey where we unravel the latest trends, tackle your burning questions and explore innovative strategies that are shaping the future of compensation, all with a coffee in hand.

[00:00:14] Hello everybody and welcome to this episode of Comp and Coffee. This is our final episode of the year as we pivot into the festive season.

[00:00:24] But I know if you're working in HR or compensation, you're probably pretty busy at this time of the year.

[00:00:29] You're either knee deep in your year-end process or busy preparing to launch that in the new year.

[00:00:36] So we're here for you. We feel your pain. For my many years of being a practitioner, I know how hard this time of year is.

[00:00:44] So we hope today's podcast is maybe a little bit of light relief for you during this time when you're busy locked away,

[00:00:51] kind of getting the organization ready to get through their year-end process.

[00:00:55] So we're following up to our last episode, which was where we discussed our end-of-year report.

[00:01:02] So that was published this month. And that's our look into the jobs market, taking a look at what's going on.

[00:01:08] And then we give some great lists of like the top moving jobs this year, the top list of jobs by wage growth.

[00:01:14] So that was episode 104. If you missed that, you want to go back and listen to that.

[00:01:18] But when we published that report, we also published a predictions guide.

[00:01:23] It's HR predictions time by some of our thought leaders here at Payscale.

[00:01:27] And so closing out the year, we thought it was time to get our crystal balls out and maybe just chat about some of the things that we think might be happening in 2025.

[00:01:38] And I'm delighted that I've got two of our industry thought leaders joining me to do that today.

[00:01:42] They've been with me on the podcast throughout the year.

[00:01:45] But welcome to Sarah Hillemeyer, who's our senior director of data science.

[00:01:49] And welcome to Lexi Clark, our chief people officer here at Payscale.

[00:01:53] Now, you've both been on before, but do you just want to give us a quick introduction to who you are and your role here for the audience in case they haven't met you before?

[00:02:01] Sarah, do you want to go first?

[00:02:02] Sure. Good to meet you and good to be back, Ruth.

[00:02:05] I'm Sarah. I lead our data and AI teams at Payscale.

[00:02:09] My training and history is in the AI and statistics areas.

[00:02:13] I've been working in that domain for 20 years or so.

[00:02:17] At Payscale, we generate the data sets that you use to help figure out your compensation.

[00:02:22] And we also work on some of the tooling to make the process of doing compensation management easier and more streamlined.

[00:02:31] Thanks, Sarah.

[00:02:32] Hi, Lexi.

[00:02:33] Hi, everybody.

[00:02:35] Excited to be with this crew today.

[00:02:37] Closing out the year and celebrating holidays.

[00:02:39] My name is Lexi Clark.

[00:02:40] I'm the chief people officer at Payscale.

[00:02:43] I have been at Payscale.

[00:02:44] I've crossed over the four year mark this year, which is wild and crazy.

[00:02:48] But very exciting.

[00:02:49] I have the pleasure of leading the people team here at Payscale, but also getting a chance to talk to all of our customers and folks in the industry as well around what's going on and what you're seeing and hearing.

[00:03:01] Previous to Payscale, most of my background was spent in early to mid-stage tech in the Seattle area.

[00:03:07] Thank you, Lexi.

[00:03:08] Well, thanks for coming back, both of you.

[00:03:10] Now, I know this is comp and coffee and I normally ask you whether you drink coffee or tea, but it is the festive season.

[00:03:16] So do you have a favorite festive beverage at this time of year?

[00:03:21] Lexi?

[00:03:22] I think, okay, I could stay on the theme and I could say coffee with eggnog, a little bit of eggnog.

[00:03:29] And then maybe a little bit of like, you know, there's the boozy, non-boozy version.

[00:03:33] And I think you've got to embrace bull during the holidays if that is up your alley.

[00:03:39] Interesting.

[00:03:39] I've got to, I've got to invite you over because my festive drink is eggnog, but I make it myself and I age it.

[00:03:46] So it's been aging for weeks, the eggs and the sugar and the booze you put together.

[00:03:51] And that sits for a while.

[00:03:53] And then next weekend or so I get to pack it open and add the cream and the nutmeg and all of that good stuff.

[00:04:00] And then I have the world's best eggnog.

[00:04:02] I would not, I love coffee.

[00:04:04] I would not put it in my coffee.

[00:04:06] It is so good by itself.

[00:04:08] This is not fair.

[00:04:09] Edna for sure.

[00:04:10] You were both located in Seattle.

[00:04:12] So the chance of that actually happening is quite high.

[00:04:14] Whereas I am in the UK.

[00:04:16] So you're going to have to send me a bucket, Sarah.

[00:04:18] I'll see what I can do.

[00:04:21] Okay.

[00:04:21] Thank you for that.

[00:04:22] Right.

[00:04:23] So before we start future gazing, let's not get rid of 24 quite yet.

[00:04:29] I'm interested to hear what you were surprised about, or if there was anything that surprised you in 2024,

[00:04:35] in terms of what went down in the world of work.

[00:04:38] Lexi, I know we've been talking about this a bit.

[00:04:40] Do you want to kick off first?

[00:04:42] Yes, I will.

[00:04:43] And Ruth and I talked about this a lot.

[00:04:45] And I think the headline is what surprised me was that there were no surprises.

[00:04:50] There was a lot of continuation from 23 to 24 as it relates to some of the impact that we saw in the market.

[00:04:58] But I think one of the things that was not surprising in 24, but will be interesting as we continue this conversation today,

[00:05:05] but also go to 25 is the continued debate around where you work.

[00:05:10] Are you working from home?

[00:05:11] Are you working a flexible schedule?

[00:05:14] Or maybe you're commuting in once in a while, or are you doing a full return to the office?

[00:05:18] And that I think definitely continued to be a debate this year.

[00:05:21] There's lots of compensation impact to that, both from an actual base compensation standpoint,

[00:05:26] but also how are you thinking about a total rewards package that, for example, supports someone commuting into an office again?

[00:05:32] And what does that look like?

[00:05:33] So, you know, I don't think that was surprising in 2024.

[00:05:38] But I do think that it continued to be a hot topic and I think will continue to be a hot topic as we see some folks starting to go back to the office full time as of January 1st

[00:05:48] and see the actual impact of what that looks like as we head into the new year.

[00:05:53] I think lots of, you know, labor changes, but continued in the market, I think, continued to be something that we watched year over year.

[00:06:01] But that would be, I think, the biggest piece that I would highlight.

[00:06:05] We'll talk about the employer-employee friction point, but I think like that return to office, don't return to office debate feels like it is at the crux of that conversation.

[00:06:16] Yeah, we didn't really see resolution on that, did we?

[00:06:18] So, okay, Sarah, what about you? Any big surprise this year?

[00:06:22] Yeah. So I've been working in data and AI for 20 years, long before it was this cool.

[00:06:27] And in 2223, I had the impression that the HR domain would be late, reluctant adopters of AI technology.

[00:06:37] What I'm seeing is much more enthusiasm and adoption of AI across different HR-related use cases than I expected.

[00:06:44] In particular, I didn't expect AI to gain as much traction in the applicant tracking, resume screening, interviewing, hiring space as it has.

[00:06:54] I thought we would see several years in which tools were helping make those processes more efficient.

[00:06:58] But right now we're seeing some organizations, especially those that need to hire at a really high volume, that are relying solely on AI to recruit, screen, interview and hire employees.

[00:07:10] And that was a surprise to me.

[00:07:12] So the adoption of AI and the pace of it by the HR profession has been a surprise.

[00:07:18] Yeah.

[00:07:18] Okay, great. Okay.

[00:07:20] Now, Lexi, you mentioned friction in the employer and the employee power dynamic.

[00:07:26] This was one of the things that you talked about and how this will evolve potentially in 2025 in our HR predictions guide.

[00:07:33] Do you want to tell us what you were thinking about that?

[00:07:36] Yes.

[00:07:36] I think so that employer and employee friction point has always been there, right?

[00:07:41] It's always been something that I think has existed historically.

[00:07:43] What I think is interesting is we've seen that friction and almost like, I don't want to call it tug of war, but a little bit of like tugging back and forth since COVID.

[00:07:52] And some of that I think was working remotely.

[00:07:55] Some of that I think was patriots parents.

[00:07:57] Some of that I think was the great resignation or reconsideration, like all of those different trends.

[00:08:02] Quite quitting all of those different pieces, I think, set into this conversation over the last couple of years.

[00:08:09] I think that this will continue.

[00:08:10] So, you know, some of what we were watching for as we go into 25 and some of what is a natural impact is the results of the election and what it would look like in the U.S. in terms of a change of administration.

[00:08:22] And while I think that, you know, we now know the results of the election and we know understand, at least in the short term, some of the conversations around the change in administration.

[00:08:31] I don't think that this will this friction point will go away.

[00:08:36] I think that all of the same asks from an employee standpoint, the debate has been, will we go back into an employer favorable stance?

[00:08:45] And I just think that cats out of the bag and it's not going back in.

[00:08:50] Like, I think that that that friction point between employers and employees will still exist.

[00:08:55] And I think what that means for employers is that, you know, there there's not an option, I think, to ignore that employee sentiment.

[00:09:02] One of the things that I think has been on the table in terms of new U.S. administration is that the potential for the market to start to turn around.

[00:09:10] And I think if the market starts to turn around, the job market opens up a little bit.

[00:09:14] You're going to see employees that maybe have been waiting to leave their current jobs.

[00:09:18] And that makes engagement sentiment, all of those different pieces even more critical.

[00:09:23] And so I think, you know, if I if I think about that, that friction point and what will help that, I think it means that you've got you have to continue to prioritize things like fair and transparent pay.

[00:09:33] You have to continue to prioritize things like flexibility.

[00:09:37] And, you know, we've had a really good discussion internally as well around career growth and continued growth and development.

[00:09:44] And I think, you know, a pro employer stance will only increase the tension even further.

[00:09:50] And I think, you know, if you're an HR leader or practitioner on this call that is listening, you know, your role is and what you'll need to do is to continue to balance advocating for workers with business priorities.

[00:10:01] And so thinking about that balance and how you're listening to the engagement and the feedback from your employees while also balancing your business priorities, I think that's going to be critical.

[00:10:12] Great. Yeah.

[00:10:12] And I think I covered this, too, in my predictions, kind of focusing on the element of fair pay.

[00:10:18] Will we see employee employers deprioritizing their focus on fair pay, particularly with some of the quiet quitting or the walk back that we've seen around D&I through 2024?

[00:10:31] And with the change of administration, you know, we just don't know what's going to happen there in terms of what employers might be asked to do.

[00:10:39] And I think, you know, as you said, the cat's out the bag.

[00:10:42] I think employers will get a shock if they try to deprioritize fair pay.

[00:10:49] I think the expectations of employees through things like pay transparency laws, cultural shifts and the basic availability of pay data,

[00:10:59] which is obviously what we do here at Payscale, has all heightened employees' expectations around pay.

[00:11:06] And I don't think that is going to go away.

[00:11:09] It was interesting.

[00:11:10] I was reading this week the recent Just Capital survey, which is their eighth annual American Views on the Business Survey.

[00:11:18] So in this study, they go to the general public and they ask them, you know, what is it that you expect out of your employer?

[00:11:25] And actually, fair pay came out at number one this year.

[00:11:29] So that is what people expect of their employers.

[00:11:33] And, you know, so the expectation to pay workers fairly and offer a living wage was really important to the people that took part in this survey.

[00:11:43] So, you know, it's the decision time next year, I think, as a business.

[00:11:47] You can decide to either continue your journey to fair pay or you can walk back from it.

[00:11:52] I think if you're an employer, you know, that wants to show that you value employees,

[00:11:57] that you're an employer that wants to retain the best talent in your organization and attract the right talent to your organization,

[00:12:03] you will find it hard to deprioritize that focus on fair pay.

[00:12:09] And especially if you're out there at the moment working on your year-end process,

[00:12:13] you know, make sure that you're applying a fair pay lens through that.

[00:12:17] You know, thinking about equity to market, internal equity and equity by protected category,

[00:12:21] or something that you can put into place as you're going through the year-end process.

[00:12:26] A simple thing you can do is to set up reports to monitor, you know, as you go through the year-end process,

[00:12:31] how those pay increases are being allocated by different employee segments and by a protected category.

[00:12:39] You know, it's something that's easy for you to set up and monitor as you go through the process.

[00:12:44] Okay, so employee-employer attention fair pay.

[00:12:47] Let's go back to talking about AI, Sarah.

[00:12:49] You said that was your surprise in terms of the pace of adoption.

[00:12:53] How do you see that continuing into 2025?

[00:12:58] Yeah, we're getting out of that hype cycle much faster than I expected.

[00:13:03] In 2025, I think AI is going to shift from the hype into a few practical, very strategic assets and tools

[00:13:11] with real use cases that can transform HR functions, including compensation.

[00:13:17] The Bureau of Labor Statistics and Goldman Sachs are both forecasting that labor force growths and GDP growths are going to slow over the next few years.

[00:13:27] Historical data and forecasts from Goldman indicate that labor productivity is accelerating.

[00:13:32] If you take those two things together, it shows that companies are generating more value with less labor,

[00:13:38] and I expect that trend to continue.

[00:13:41] AI can help drive that in two ways.

[00:13:43] One is by increasing the efficiency of workers' day-to-day tasks, whether they're HR professionals or the jobs of other workers.

[00:13:51] And the other is through AI-powered compensation planning tools.

[00:13:55] In 2025, I expect that HR professionals need to adopt these AI-powered tools that can provide actionable insights

[00:14:03] and automate processes to improve the efficiency of their work,

[00:14:07] but also support better decision-making related to market pricing, related to pay equity, related to being compliant,

[00:14:14] and related to communicating that with their employees.

[00:14:18] Those models that can help build compensation ranges, I expect to be heavily scrutinized for fairness and explainability.

[00:14:24] And then organizations that adopt those can save time, increase fairness, have an easier time with that pay equity check report at the end of the year,

[00:14:34] and drive toward the strategic use of the compensation budget that they have towards supporting their most important goals.

[00:14:43] And I know we've got lots of exciting things planned here at Payscale in terms of our roadmap that relate to AI.

[00:14:51] AI match suggestions, powered match suggestions has come out this winter.

[00:14:56] And then I think what we're looking forward to is, you know,

[00:15:00] thinking about how we can use AI to enhance the data that we provide to customers in 2025.

[00:15:06] Is there anything you want to, without letting the cat out of the bag too much,

[00:15:09] is there anything that you want to add on there, Sarah, in terms of what you're excited in terms of what we're doing?

[00:15:15] Sure. I'm very excited about and very proud of these new AI features.

[00:15:20] We have a great 2025 roadmap of additional AI-powered features and tools to help reduce the time and effort required to manage compensation.

[00:15:30] I wanted to point out that our North Star guiding principle in designing AI tools and features at Payscale

[00:15:36] is that we give the user enough information and explanation that they can meaningfully evaluate the accuracy

[00:15:44] of any of the AI-based recommendations that we make.

[00:15:49] We know that HR professionals using our software ultimately have to stand behind the compensation decisions

[00:15:55] that they make using our tools. And so our job is to make sure that the information you need to stand behind that decision

[00:16:01] is surfaced in a way that you can understand and evaluate as a real human with a real brain

[00:16:07] and a lot of expertise using these tools.

[00:16:11] And that addresses some of the concern that we hear around AI, like, you know,

[00:16:15] I don't want AI making my compensation decisions.

[00:16:18] What we're trying to do is put you in the position as the person making those decisions to have better insights,

[00:16:24] to be able to make, still make the best decision that you can.

[00:16:27] Right. Right. Yeah.

[00:16:29] Now, AI governance is probably something that we'll continue to hear talked about in 2025.

[00:16:36] Luli Cycle, our employment lawyer, can't join us today.

[00:16:40] She has covered some thoughts on AI regulation becoming a hot topic issue in 2025 in her section on HR predictions.

[00:16:52] She indicates that a federal movement around AI regulation is likely to take time and be contentious.

[00:16:58] But she does believe that legislation could start to be introduced more at the state level in terms of AI regulation.

[00:17:07] So it's going to be interesting to see how that evolves.

[00:17:10] Have you got any views on this, Sarah?

[00:17:13] Sure. I think that, you know, as these tools evolve and the regulation will lag a little bit where the tool development is,

[00:17:21] HR's role gets expanded here into guiding those AI ethics and fostering a culture

[00:17:28] that balances the automation's benefits with the human guided insight and the empathy that humans have for particular situations that maybe are getting caught wrong in the AI.

[00:17:41] So even with vendors like Payscale, who are designing AI features that give the user enough information to meaningfully evaluate the AI-based recommendation,

[00:17:52] HR professionals in 2025 and beyond will need to receive specific training on working effectively with these tools.

[00:18:00] I think that training should also cover things like ethical standards and concerns around bias in the underlying data and privacy of different data sources

[00:18:09] and how to maintain the balance of keeping data private, but also benefiting from AI.

[00:18:17] Ultimately, the goal is that HR professionals can spend less time doing rote calculations and annoying data processing

[00:18:25] and more time on complex tasks and relationship development.

[00:18:29] But I think we're at a point where we have to start developing new skills in HR pros so that they can really effectively interact with the AI tools

[00:18:39] ahead of this maybe slower process of government coming up with the right regulations to safeguard that.

[00:18:47] Yeah, it's definitely a need to continue to upskill like the whole breadth of what the impact of AI can have on your workplace,

[00:18:54] not only just how it can make your job easier, but, you know,

[00:18:57] how you need to think about it from a governance perspective as well.

[00:19:00] So that's interesting.

[00:19:02] Okay, something else we talk about in the HR predictions document is wage growth.

[00:19:07] Obviously, something that we focus a lot on here at PayScale because we're always monitoring wage trends.

[00:19:14] And our research, along with others, has been predicting that pay increases will potentially dip below the 4% mark,

[00:19:23] especially in sectors, but it may stay strong in some sectors where talent is more competitive.

[00:19:30] Lexi, is there anything that you're kind of observing as you're thinking about preparing for year end in terms of how pay budgets will shape up?

[00:19:38] Yeah.

[00:19:39] I mean, I think, you know, from a data perspective, we use our own salary budget survey as our first data point for thinking about compensation planning year over year.

[00:19:48] We also triangulate with anyone else who's talking about predictions as we get into what wage growth will look like.

[00:19:55] We look, obviously, cost of labor and cost of living to anticipate employee questions so that we can really make sure that not only do we have a good recommendation from a budget standpoint,

[00:20:05] but, you know, that we also have a point of view in talking about what those increases might look like and how they may meet, exceed or fall short of any of those questions around inflation.

[00:20:18] You know, I think for us, what that really looks like is we are seeing it hover somewhere in that 3% range.

[00:20:27] It's not, you know, hugely, hugely shifted year over year.

[00:20:33] And so, you know, we're anchoring to that internally.

[00:20:35] I think going back to what I referenced in terms of our total rewards package, one of the things that I think is interesting is there's a lot going on.

[00:20:42] There's the flexibility of where companies are working.

[00:20:47] There's absolutely an increase, I think, in health care costs within the U.S.

[00:20:54] I know for us internally this year, as we looked at 2025, we saw one of the largest renewal increases on the health care side that we've ever seen.

[00:21:02] I don't think that's going away.

[00:21:04] I think that that will continue to evolve, be a hot topic and potentially go up even further.

[00:21:11] We'll see what happens under new administration.

[00:21:13] But, you know, with rising health care costs and you're talking about total rewards, you've got to kind of balance out what that will look like in a way that is both favorable to your budgets, but also favorable to your employees.

[00:21:24] And for us, what that meant is taking a real rewards view this year as we look at what that looks like overall for us.

[00:21:32] So we are internally at Payscale, flexible employer.

[00:21:35] So we are remote first and we have no plans to change that.

[00:21:38] We did receive a big, you know, bump in terms of a renewal increase year over year.

[00:21:45] But it was important to us to still keep really good kind of strong core benefits for our employee base.

[00:21:50] We did make an investment in more paid leave that is both birthing and non birthing leave for our employees.

[00:21:56] That was really important to us as we think about the average.

[00:22:00] And I'm going to say average and median because my friend Sarah always reminds me to use median as well.

[00:22:05] But, you know, that that I think that was a big deal to us, because if we look at our average and median age across our employee population, we can make an assumption that paid leave will be really important.

[00:22:16] We made also an investment into 401k matching for our employees.

[00:22:20] So, you know, that means that we're going to have a pretty standard business as usual merit budget.

[00:22:26] But it means that we've made other investments in other places in terms of rewards package.

[00:22:30] That does not mean that that is a one size fits all approach for you.

[00:22:33] And so if you are listening and you should think about your total rewards package as a whole and where the levers are that you can pull, increase or balance things out or any of those things.

[00:22:44] And I would use your population both from a sentiment engagement standpoint, but also from your demographics to deeply understand what they might need.

[00:22:52] And so, you know, to use an example that I think is a hot topic right now in the headlines.

[00:22:57] If you are asking folks to come back into the office, you should think about your commuter benefits and you should think about your compensation and the cost that an employee may have that they wouldn't have had that they have to commute every day.

[00:23:07] And that's both cost from an actual dollar standpoint, but that's also cost from a productivity standpoint.

[00:23:14] Sarah and Ruth both know that like I thrive in my morning productivity working from home.

[00:23:19] I wouldn't have that same morning productivity if I went back into the office.

[00:23:22] And so I think for employees, employers that are switching their strategy, thinking about what monetarily is going to help and what your employees will value is really important.

[00:23:33] But that non-monetary productivity tradeoff is real as well.

[00:23:36] So I've rambled on a little bit, but I think total rewards as we think about, you know, compensation, budgeting and planning for next year has been really important to us because I think we've had to pull and tweak a couple different levers to make sure that we're fair and balanced across the board and that we're thinking about our employee population.

[00:23:54] Yeah, so I think what I'm hearing you're saying is that although it seemed to be like we were in a, from the employer's perspective, starting to maybe, you know, put a cap back on wage increases by seeing the numbers dip back below 4%.

[00:24:08] There's a whole load of other issues going on in terms of other employment costs that are going to make that decision process.

[00:24:14] For example, in the UK where I'm based, we've got new social security increases that were going to come in effective the 1st of April.

[00:24:21] It's about a 1.2% increase for employers, but, you know, there are some employers who are potentially going to dip into their merit budgets.

[00:24:27] I expect to, you know, to fund that.

[00:24:30] So there's a lot of challenging things that we're seeing.

[00:24:33] And also it's going to be dependent on what happens in the economy.

[00:24:36] You know, we kind of felt we've had a fairly steady year.

[00:24:39] The soft landing happened.

[00:24:41] But in the US, you had inflation go up this month by 2.7%.

[00:24:45] In the UK, we've had two months now of inflation going back up.

[00:24:49] So, again, that does tend to fuel employee expectations.

[00:24:52] I don't know, Sari, if you're looking at the data, are you seeing what sort of trends are you seeing in terms of wage movement in that data?

[00:25:02] Yeah, the market is behaving differently in different sectors.

[00:25:06] Pay is up 20% year over year for our customer service team leaders.

[00:25:11] But some technical jobs have seen pay dip slightly.

[00:25:14] So if you're only thinking about base salary, a peanut butter approach to market increases isn't going to work in this climate.

[00:25:22] As Lexi discussed, the base salary compared to market is not the only thing that matters to employees.

[00:25:28] I'm certainly very happy to work at a company that has Lexi at the helm and can think about the total rewards rather than just the market data.

[00:25:35] But as part of the market data piece, it's really important to get up-to-date market data.

[00:25:43] Payscale's flagship data offering peer is updated nightly.

[00:25:47] Coming soon, we'll have additional easy-to-use data offerings that offer that near real-time view of the market

[00:25:53] and help untangle that complexity of some sectors where wages are exploding and other sectors where they're flat or dropping a little bit.

[00:26:04] I expect that in the next year, the advancement in data availability and analytics will continue to reshape how organizations approach compensation decisions and compensation strategies.

[00:26:18] And as part of that, HR pros will keep modernizing their tech stacks to be able to take advantage of those AI-powered tools

[00:26:26] that can really help untangle all of that complexity and help pull together those total rewards pieces into packages that make sense

[00:26:37] and help you deliver on those most important strategic goals.

[00:26:41] Great. Thank you.

[00:26:42] And it's also the time of year now.

[00:26:43] We're here at Payscale.

[00:26:44] We're collecting data from you for our compensation best practice report.

[00:26:49] So we're outfielding at the moment.

[00:26:51] We'll include a link to the fielding in the episode resources.

[00:26:56] That report will come out in Q1.

[00:27:00] And that's our kind of next opportunity to see or hear from you in terms of what you're planning for pay increases.

[00:27:06] And we have a large response to that survey so we can cut it by segment.

[00:27:10] And we also get to hear like what are the top benefits that you're thinking about awarding

[00:27:15] and how those priorities are changing through the year.

[00:27:18] So that's, you know, keep in touch with our research as well.

[00:27:22] And we'll be keeping you updated as we go through 2025.

[00:27:28] Okay.

[00:27:28] So I think we've got a chance to talk about one more of our predictions before we close out this episode.

[00:27:35] Skills-based pay, Sarah, yours and my favorite topic.

[00:27:39] We keep monitoring this.

[00:27:41] We keep waiting for it to happen or become a reality.

[00:27:45] It didn't happen, probably other than beyond, say, hot skills or technical skill.

[00:27:50] Is 2025 going to be the breakthrough year?

[00:27:52] What do you think?

[00:27:53] I think progress is going to be modest.

[00:27:56] As far as I'm seeing, you know, even with AI and more data available,

[00:28:01] the quality of the data and the, it was just difficult to measure skills.

[00:28:06] And in a way that is consistent among people and companies, the skills that you have that matter for one job don't necessarily matter for another.

[00:28:15] I don't think that a boom in AI is going to fix this.

[00:28:18] So my prediction is there's no universal solution on the horizon that will live up to all of our skills-based talent management dreams.

[00:28:27] I do expect some movement, though.

[00:28:31] I think HR professionals that are interested in skills-based workforce and some of the promise of lower bias and more fair and good career mobility and such of that should pay attention to what's happening around job postings and AI tech.

[00:28:47] With more and more job postings coming out and with rich, rich descriptions of what the jobs are and the AI technology developments,

[00:28:56] I think we'll be able to see meaningful insights about how posted pay ranges vary by skill requirements.

[00:29:03] I absolutely expect that employees will be paying attention to this.

[00:29:07] Maybe not at the total data aggregate level, but they'll be looking at job postings and seeing their skills reflected there.

[00:29:15] So to retain and grow employees, I think organizations will need that aggregated data view of how much are particular skills worth within the job posting world.

[00:29:28] And I think that's coming.

[00:29:30] Yeah, I think the biggest problem today has been the identification of those skills and then how do you grade them or value them.

[00:29:42] Some organizations have successful implemented skills taxonomies, but they are few and far between.

[00:29:49] And I think the power now that we see with AI fueling the quality of job descriptions,

[00:29:55] I think that's going to be the lever that will probably start to shift the needle here in terms of, as you say,

[00:30:01] like having better data points around skills and then we can start to relate that to value.

[00:30:06] So will it be a breakthrough year? I don't think so. Maybe 2026, 2027.

[00:30:13] Benita will move in 2025, but I don't think it's going to crack open the egg.

[00:30:18] Okay. Well, thank you both for joining me today.

[00:30:21] Anything else you're going to be keeping an eye on in 2025, Lexi?

[00:30:27] I made this joke to Ruth the other day that every year that we've done this,

[00:30:31] we've talked about retention of employees, but it has been for a different reason.

[00:30:36] And, you know, I think a couple of years ago, Ruth, keep me honest,

[00:30:40] we talked about retention because we were coming out of great resignation,

[00:30:44] reconsideration, all of those things, retaining your key talent and making sure that you had an eye on what that looked like.

[00:30:51] Last year it was the market is cooling down.

[00:30:53] And for those of you who have done layoffs or may have to make cost cuts,

[00:30:57] it means that you're retaining the folks who held on to that extra work

[00:31:01] or may have experienced their colleagues or their friends leaving the business.

[00:31:05] This year will be retention.

[00:31:07] But I think retention for a different reason, which is, you know,

[00:31:11] that employer-employee friction that we talked about.

[00:31:13] I just don't think it's going away.

[00:31:14] And I think it's going to continue to, especially with all the generations

[00:31:18] entering the workforce in the workforce right now,

[00:31:20] there's just going to be a different demand.

[00:31:23] And so I think, you know, the advice that I would have is if you think that we're going into an employer market

[00:31:28] heading into next year, you know, I would really pay attention to what your employees are thinking

[00:31:34] or how they're feeling or that engagement sentiment,

[00:31:35] because I think having an eye on critical talent in the organization

[00:31:39] and being proactive about it as much as you can using any of those levers,

[00:31:44] fair pay is a huge one, transparency, not just pay transparency,

[00:31:47] but transparency around decision-making and an eye towards career growth.

[00:31:50] Like, I just think those are going to be the major movers for folks deciding to stay

[00:31:55] or deciding to depart the organization.

[00:31:58] Right. And Sarah, what about you?

[00:32:00] Anything that you're going to be keeping an eye on?

[00:32:02] Yeah. So agentic AI or AI agents was a big hype term this year.

[00:32:08] And over the last month or so, I've done a deep dive there.

[00:32:12] And I found about 10 companies that have AI agents that I think are really good

[00:32:17] and are solving a market need in a way that really works for their users.

[00:32:22] So hype, you know, it felt like, oh, there's millions of these agents out there

[00:32:26] and not every company is doing it.

[00:32:28] And I found 10 good ones.

[00:32:29] But I think next year, there will be a thousand good ones.

[00:32:33] And I hope we can learn from those patterns of what has worked in different domains

[00:32:39] of how these tools can really help people and not just be an annoying little burden

[00:32:45] that's making clippy-like recommendations in your Word document,

[00:32:48] but really help streamline those workflows.

[00:32:51] So that's where my money is.

[00:32:53] That's what I'm excited about learning more about

[00:32:56] and seeing how that world develops.

[00:32:58] Great. Well, thank you both very much for taking the time today to share those predictions.

[00:33:03] As we said, you can get access to all of our predictions

[00:33:08] in the guide that accompanies the end of year reports.

[00:33:11] That's all available at payscale.com underneath research and insights.

[00:33:15] And we'll include a link to that in the episode resources.

[00:33:20] So we hope you've enjoyed this episode.

[00:33:21] We will be intending to keep you up to date through 2025,

[00:33:25] through the podcast.

[00:33:27] If there's anything that you would like us to talk about in 2025,

[00:33:30] drop us an email at coffee at payscale.com.

[00:33:35] And we look forward to joining you again through 2025.

[00:33:40] But have a great festive period.

[00:33:42] Have a great holiday period.

[00:33:43] And I hope you get some downtime to enjoy some well-deserved time.

[00:33:48] Thank you very much, everybody.

[00:33:50] Happy holidays.