Episode 88 - Top Predictions for HR and Compensation Management in 2024

[00:00:00] Hello and welcome to the first episode of Comp Coffee in 2024. This is Episode 88. I hope you all had a great festive period and got

[00:00:29] to spend some time with your families and loved ones, a bit of rest and relaxation. I know this time of year is particularly difficult for those of us working in HR and compensation with many year end review processes in play. So I hope you manage to get some downtime.

[00:00:44] We're going to start this first episode of the year, not surprisingly, some predictions. We did a little bit of this in our last episode where we looked at our end of year report with Amy Stewart. But now we're going to be focusing on some predictions from our thought leaders here at Payscale and I'm delighted to introduce James Atkinson who is vice president of data products and I think this is James's first comp and coffee so I'll let him introduce himself briefly in a minute and I'm pleased to welcome back Lulu.

[00:01:13] Lulu who has been here many times are senior corporate attorney and they are two of the thought leaders who featured in the downloadable guide top predictions for HR and that we will make available to you in the episode summary.

[00:01:28] So welcome James to this first episode for you. Do you want to give the audience just a quick overview of how long you've been with Payscale and what your role is?

[00:01:36] Yes, but thank you so much. Ruth delighted to be here as you said I'm relatively new to Payscale started back in August and I'm overseeing all of our data products here and I've been in the compensation industry for about a decade now having spent the last nine or so years at Gardner overseeing all of our data products there.

[00:01:57] So I excited to be here and have a chat with you today.

[00:02:00] Well, thanks for joining in Lulu do you want to remind our audience about what your role is here at high scale?

[00:02:06] Hi everyone, happy new year. I'm Lulu psychly senior corporate council here at Payscale and Payscales in house employment council but work very closely with Ruth and the thought leadership team to track all things legislation pay transparency legislation pay equity legislation globally so very happy to be back.

[00:02:24] Well, before we dive into predictions, let's just reflect on that festive period and did you have a good break both of you and what was your what was the thing you enjoyed the most about your time off James do you want to go first?

[00:02:36] Sure. You know I really just enjoyed taking a step back and relaxing. We didn't do any traveling.

[00:02:44] We just kind of hung out as a family had some great food and just just rested so that's what I really enjoyed.

[00:02:53] Yeah, I think like me we traveled a lot in the back end of 23 and I think for just waking up and knowing I didn't have to go anywhere was probably one of the nicest things for me during this time off what about you Lulu?

[00:03:05] Well, I took a little bit of PTO before the holiday so this is your friendly reminder to play your PTO for 2024 make sure you take it you deserve it.

[00:03:14] But my family night we went and did some of the Christmas markets in Germany and France before the holiday and then luckily we were home for the holidays and traveled didn't do anything but one thing I always look forward to for the holidays is Christmas Eve we have the same meal every year.

[00:03:30] It is a Swiss meal called red clat where you melt red clat cheese you eat it with potatoes and prosciutto and dried meat and little cornichons and it's a very heavy wintery cozy meal and so all out.

[00:03:45] It's a meal once a year because it's very heavy but I always look forward to that meal on Christmas Eve with my family.

[00:03:51] That sounds fairly amazing. I'll have to arrange an invite for next year then Lulu.

[00:03:56] Okay, so let's start thinking about predictions for 2024 we know that there's still a certain amount of uncertainty in the labor markets and the economy and increasing tension over the health of the job market.

[00:04:13] We covered some of that as I mentioned in our last episode but two of the key drivers have changed I think that will continue this year has been legislation and advancements in technology which is why we have the perfect panelists here today with James and Lulu joining me today.

[00:04:30] So Lulu as you mentioned earlier really are eyes and ears here at pay scale on what's happening in the legislative landscape.

[00:04:36] What do you think is ahead in 2024 that will impact those of us managing compensation.

[00:04:42] Well, what I'm about to say next will probably not surprise anybody who has been paying attention to the landscape because pay transparency legislation has really, really caused a shake up in compensation management and I think it's truly the biggest we've seen in some time in 2024 my predictions surrounding this area are that we could see states more states proposing pay transparency legislation and maybe even being successful at passing it.

[00:05:10] So we could see states like Wisconsin, New Jersey, Maine, Massachusetts and maybe even Washington DC in the next few weeks Washington DC in the next few weeks pass them sort of pay transparency laws in 2024.

[00:05:24] So we saw in 2023 over a dozen states proposed some sort of pay transparency law and there were a lot of states where I was surprised about so I think that more and more legislators are finally coming to understand that this is important, this is important for employees for candidates.

[00:05:43] It really now seems like a time that no state wants to be left behind and I think too with that pay transparency legislation in 2024 we are going to see more states tack on additional requirements for pay communications and communicating to incumbent employees what career progression looks like.

[00:06:03] Now if you've been following kind of what we've been following over the last year, you'll remember that in the late spring early summer of 2023 the European Union did pass their pay transparency directive and each member states, each of the 27 member states have until June of 2026 to start passing the laws to comply with that directive.

[00:06:26] I do think in 2024 we are going to see some of these member states start passing these type of laws to get their houses in order.

[00:06:34] And so just as a quick reminder, it's very similar to the US legislation this EU pay transparency directive is truly intended to help close the gender pay gap and there are other sorts of other pay transparency enforcement mechanisms that this directive has taken into place as well.

[00:06:51] So I know there's a lot, but I think a lot is going to happen this year.

[00:06:55] 2024 is also a big year for democracy, a big year for elections globally not least in the US, what impact do you think that might have on some of that legislative progress?

[00:07:07] So in 2024, for those of you who aren't aware there's a presidential election happening this year we are underway right now for a presidential election here.

[00:07:15] So I don't think the 2024 presidential election will impact this type of legislation now in 2024.

[00:07:22] It will surely impact the number of states we do see proposed pay transparency legislation, I think in 2025 when we have a new president sworn in a new Congress sworn in new state legislature sworn in.

[00:07:36] So those of you who've been following closely we typically see states who are more blue, more democratic cleaning be the ones who are the most successful at passing this type of legislation.

[00:07:47] So we're really going to have to see what these elections, what happens with these elections at the end of this year.

[00:07:52] Great thank you.

[00:07:54] And generally what impact is that legislation having on compensation practice what should all listeners be thinking about do you think?

[00:08:03] I mean, if these elections come out a certain way, you know we're going to see a lot more states expanding the legal requirements.

[00:08:11] So that's going to start pushing employers to start modernizing their compensation practices and standardizing paid communications so from a legal perspective I can explain to you what the law says all day long but as an HR professional as a

[00:08:26] professional your best friend is your employment council whether that person works for your company or if it's an employment attorney that works for a law firm that you contract with.

[00:08:35] That person should be your best friend because that person can be the best person to explain the legal requirements to use specific to your organization kind of what ducks you have to get in a road to be able to comply and just generally help you navigate these laws.

[00:08:50] But also consider your stance on legal obligation versus best practice and I say this because there will be some states that don't require this type of pay transparency.

[00:09:02] On a legal basis but maybe as an organization you've decided that you do want to be more transparent about your pay regardless of what your state law says so decided this is something that you want to make as part of your compensation strategy just across the board.

[00:09:18] And I think one thing we have seen in terms of impact on compensation practices that pay transparency legislation is having impact on data and how we think about data how we try and access data and what data we can access James so you've been observing this year you know 23 and kind of going into 20 for 24 what are your thoughts on this.

[00:09:38] Yeah thanks for transparency it's really having an impact on the demand for data in the company industry so if you think about how employees and job candidates you know they have so much more access right now to reliable data to equipping them to better understand how to advocate for fair pay and to really engage in these compensation professionals really need to demand more reliable certainly more timely data for them to stay competitive.

[00:10:06] In the talent market especially with the crazy kind of ebbs and flows of the talent market we've seen across these last few years and you know here at Pesco we're certainly helping employers by ensuring we're providing that accurate and timely data to help them build out those pay structures and post salary ranges with confidence and so that's one of the ways that we're trying to make sure that we are providing for our clients what they're demanding now based on how things are going to be.

[00:10:36] And another interesting side effect I guess of the pay transparency legislation is we see more organizations either in states where they're required to or doing it through best practice posting pay ranges on job advertisements and so that kind of makes the process of scraping data from job postings potentially a more viable data source what's your view on that James I know you've been taking a close look at that.

[00:11:02] Absolutely job posting data it's a really interesting source of data for understanding compensation now it's not new in the HR space and that it's been used for several years and more recruiting and talent management just to really understand how jobs are changing what competitors are doing certainly trying to understand how skills are evolving so there's a lot of ways in which it's being used but we're really seeing a shift to where it's making its way and so.

[00:11:32] So you kind of the compensation world in the last couple of years and that's driven by a couple of key things you know what's exactly what you were just describing which is that this pay transparency legislation means that simply there's just more data that's available across all of these job postings and I saw.

[00:11:50] A report a few months ago that upwards of 40% of job postings on indeed for example have some sort of salary data so it really has changed dramatically across the last couple of years as a result of all of this pay legislation but I think it's not just that there's more data available I think it's also that there's just that greater demand for data as we were just talking about those wildly changing wage markets in the last couple of years people.

[00:12:19] Need to not just understand kind of where the market is but but also really understand or get a sense of where the markets going and you know finally job postings data also provides us an opportunity to understand some of those different compensable factors to that may impact those salary ranges so given that there's a wealth of that data job in a typical job posting I can see it being another source for compensation professionals to be using moving forward and I think that's.

[00:12:49] You know while it's certainly different than a typical comp survey and do you think we'll see this trend of of using it more as a new.

[00:12:58] Cont data source especially as a compliment to other things to really help understand where the market's going yeah I think.

[00:13:06] You know those challenges you mentioned in the labor market which is impacted you know trying to find market competitive pay and as meant we're having to work harder as compensation professionals in terms of getting access to the information that is right for our organization because I think what I've observed is even within sectors organizations have have different talent requirements and have different.

[00:13:30] Pay requirements so I think we're having to work a lot harder like an only scene looking down the line more data becoming available so I think it's going to be important for those of us using that data to make sure we understand you know when is the best time to use that data and how to bring that data together and inform the decisions that you're making but it's going to be an exciting thing to observe over the next couple years I think now I think.

[00:13:55] Back to our predictions guide the other kind of big topic of 23 was.

[00:14:00] Generative AI that became and don't believe you know a hot topic last year how do you see that shaping up now as we go into 2024 will there be rapid adoption have people like calm down a bit now when they're going to be a bit more cautious how do you see that playing out particularly in the field of compensation.

[00:14:18] You know I think in generative AI it really has that potential to just revolutionize how we think about talent talent acquisition kind of across the H. R. industry of course as far as legislation will allow it but in an era where we have lots of talent shortages we need to skill up skill we skill these things are becoming increasingly pressing you know it's it's really an opportunity for us to leverage this new technology and.

[00:14:46] Generative AI definitely made a big splash in 2023 and you know across the board made a big splash but there was a little more caution in probably the H. R. industry initially but I think that as we are moving into 2024 I think some of that caution is going to change I think we're going to see more AI experimentation and adoption that's really going to kind of expand and almost super charge H. R. Tech.

[00:15:15] We're certainly going to see new AI related jobs emerging across functions across industries the race to higher AI talent is also going to continue it to emerge and I think if we think about what the best organizations are going to be doing they're going to be looking to leverage AI in generative AI specifically to accelerate and really improve their compensation functions so I think there's a lot of exciting things on the horizon for us as we think about how we're going to do that.

[00:15:44] As we think about how that can change what we're doing in in the space.

[00:15:49] Yeah but I think as momentum gathered during 2023 I think the one question that started coming up was no ethics and how do we control this and you know James is outlined Luley they need to proceed with caution are you seeing any legislation that may put guardrails on how AI is used in nature yeah absolutely I mean in the province of Ontario up in Canada we recently saw proposed.

[00:16:13] Proposed legislation it was it's a pay transparency law that they proposed.

[00:16:17] A very similar to what we've seen in the US side in terms of requiring certain employers to post salary ranges and job postings but what was interesting about this piece of legislation in particular is that Ontario was the first I guess legislative body to add a provision stating that if that law passes and if an organization uses AI during any point of the hiring process think of you know 80 T.

[00:16:42] Resume reviews things like that then those employers must disclose that they're using AI just a few weeks ago on the US side not surprisingly but California is taking the charge to tackle workplace AI as well so the California privacy protection agency.

[00:16:59] Proposed a regulation which would require employers using AI during the hiring process to disclose that any decision made was based on the use of technology and took it a step further that the affected individuals have the right to know how the technology was used so this is going to be an interesting I think change here on the US side in addition to pay transparency legislation.

[00:17:26] I think a lot of states are also going to tack on this AI piece of it in California the proposed regulation also can allow employees and candidates to opt out of using certain technology including AI tools use in the hiring process so just this morning we just came to find out that California seems to be moving quickly in terms of this kind of regulation.

[00:17:50] So we are actually anticipating this regulation could be ready for a final vote in q 2 or q 3 at 2024 so they're moving quite quickly here.

[00:17:59] So that regulations many focused on candidates were employees understanding what AI is being used during the talent acquisition process yeah I mean I think it's worth not forgetting there's obviously a whole raft of other legislation out there that you should continue to think about as you'll deploying AI so

[00:18:18] if you start to deploy AI in making compensation decisions for example you can't just kind of assume it's going to be right and you will still need to ensure that equal pay for example or you know pay equity is being adhere to.

[00:18:34] And just because AI made the decision means it's right you know there's still a lot of biases I think in data James that you know is feeding those AI algorithms and you know the machine learning that has a lot of biases built into it.

[00:18:47] And I think to when AI started becoming a really big thing and I think I said this on a previous webinar podcast I know a lot of professionals were getting nervous like is AI going to take my job and the answer is no because AI still has biases AI can still discriminate against groups of people that have historically been discriminated against.

[00:19:07] And you'll always need that human check so just to double down on what Ruth just said you always need that human check yeah and I think we've talked about this before James you know market data as it exists today has certain biases built in it because it reflects the pay market which we know not everybody has paid equally in the pay market.

[00:19:27] And the more organizations that address you making sure that they're paying equitably within their organizations then the market data will kind of become more equitable but there's also that risk using that data and I that we may we're not guaranteeing that just because AI made the decision it's equal and all things are equal.

[00:19:45] Yeah absolutely you know the data is there AI is a layer that's put up across that but it's the fundamental underlying data has those biases are in it that's neither going to get improved or get worse with kind of that AI layer on top of it so it's important to remember that those biases are are big dent you do this system overall.

[00:20:08] So what are we thinking about AI how are we using it here at pay scale James what's the plan going forward yeah you know so AI is not new to pay scale we actually use a variety of different technologies based on AI across our products things like machine learning natural language processing data science.

[00:20:30] You know for example we have natural language processing models that recommend matches for jobs within a user's organization to those within our compensation data sets.

[00:20:41] We have a compensation model based on employee reported data that's machine learning model it helps predict pay ranges based on different principal factors so things like experience education industry and so on.

[00:20:57] So we're already leveraging that kind of in our products today but we're staying very focused on how we can continue to use this technology in a way that will be helpful for for all of our clients and so we actually have some new AI based technology powering these new solutions on the kind of near horizon as well.

[00:21:17] So for example this quarter we're launching a new AI powered tool that will automatically match clients jobs to our pure data set based on some predefined criteria that our clients and said so you know it allows our clients to kind of quickly and confidently match multiple jobs automatically without having to kind of work through that process themselves now of course clients can accept they can change they have all the power to.

[00:21:46] To put their their layer of expertise on top of that but this new functionality gives them that had started it allows them to have kind of a starting point with a lot of confidence.

[00:21:59] We also are releasing an AI powered job summary generator so if you think about kind of writing those job descriptions that can be a pretty challenging part of job description management and so we've integrated with open AI.

[00:22:15] So we've got a lot of users to generate those job summaries and really just make one step in the process easier now again power is with the clients so they can keep what's been suggested they can change it they can generate a new one but we're really excited to help our clients get started on that process within our product so they can really manage their workflows more efficiently.

[00:22:38] We're continuing to research new applications of this technology to really help our clients more efficiently effectively solve the biggest problems so including things like how to better search for a match to their jobs how to provide you know more accurate data across those jobs and really just how to increase the performance of the overall experience with our products as well.

[00:23:03] Sounds exciting I think you know as a practitioner myself you know the whole market benchmarking writing job descriptions process was quite time consuming with many many kind of small tasks so it's great to hear that technology is going to make those workflows better as you said.

[00:23:21] So those have been the key predictions from Lou Lou and James as I mentioned at the top of this program they are all in our HR predictions guide you can download and will include the link to that in the episode summary a couple of more general questions for you before we close out I asked this of some of our senior leaders on a webinar at the end of December what was the one thing that surprised you most as you looked back on 2023 Lou Lou do you want to take that one first.

[00:23:51] I was mostly surprised in how many states proposed pay transparency bills in 23 there were some states I was not surprised about but some states like West Virginia and Montana I was very surprised about in spoiler alert those bills that echo anywhere but it was still nice to see so many states proposed pay transparency legislation and it really just means that these legislators are really starting to understand the importance of how this legislation can help close.

[00:24:21] So I think that's the most important part of the process is that you can see that the majority of the people in the world are the gender pay apps.

[00:24:31] Yeah, I think my big surprise was the EU pay transparency director because that was such a mammoth piece of legislation that actually getting past and the potential impact that might have so we were definitely on the legislation side you and I Lou Lou James what about you what was your big surprise in 2023.

[00:24:42] I was just surprised at how quickly generative AI just dominated the conversation and really in all walks of life.

[00:24:52] And the adoption cycle of this technology moves so quickly across consumer and commercial areas and you know a lot of companies were just so tense and scrambling to just figure out how to use it how to regulate it how to really take advantage of this this new technology that

[00:25:11] everybody is talking about and you know certainly in the compensation industry we've seen slower adoption than in some other areas but as we talked before I expect some of that caution to move to to greater excitement and ultimately greater adoption as we're heading into 2024.

[00:25:28] Yeah, it's going to just interesting to see if that pace continues you know in terms of rapid development of how we use that technology.

[00:25:36] And then maybe could just give our audience a minute or two to impart your biggest piece of advice for 2024 James do you want to take that one first.

[00:25:46] Yeah, so for me and it goes with what I was just saying is it's really just kind of buckle up and pay attention to what's happening.

[00:25:54] I think AI will continue to be such a game changer it really in all parts of our lives and in the compensation industry specifically I think it's going to take off.

[00:26:04] I think we're going to see kind of how it's going to change the ways we collect and process data how we're managing that data through our compensation tools how we're using data to make and communicate really more reliable and impactful compensation decisions so.

[00:26:23] It will be very important for our professionals to stay current on the latest advances and ensure that they are leveraging that AI power technology to really be more effective and efficient in their roles.

[00:26:36] And what about you Lillie what show your big piece of advice for 2024 prepare prepare prepare do not get left behind on this train even if you live in a state that will likely never see pay transparency legislation.

[00:26:51] It's coming to a state near you or it's coming because the federal government is going to require it and even if the legislation isn't coming to a state near you or even if the federal government isn't going to take a stance on this candidates are expecting you to be transparent about pay so I've used this analogy before but there was a time when I was a young lady where you know we would answer the phone not knowing who the heck was on the other line.

[00:27:19] And now caller ID is the thing and now I never answer my phone if that phone number is not saved in my phone.

[00:27:26] This caller ID analogy is so perfect when it comes to pay transparency now that a lot of organizations have opened the doors and let candidates in to see how much they're willing to pay candidate candidates now know that that's the expectation they don't want to go applying to a job lined anymore.

[00:27:43] So if you're not going to get on board you're going to get left behind and you're going to feel that in the quality of your candidates and you're going to see that in your nutrition numbers as well.

[00:27:52] Well thank you great advice both of you know that pay scale here will be aiming to keep you up to date with what you need to be thinking about as you progress through 2024 so do you come back to comp and coffee and we'll keep you up to date with the hot topics as we go through 2024.

[00:28:09] Do you think we've missed anything are there any topics that you would like us to discuss if you email us at coffee at pay scale.com will pick up both suggestions and make sure we incorporate them into a future episode so thanks very much James thanks Lulu for joining me today really engrossing conversation and I look forward to having you both back soon on comp and coffee thank you everybody.

[00:28:32] Thank you.

[00:28:39] Music