The hype around so-called “peanut butter” raises that distribute equal payments to every worker is falling flat as AI divides the workplace into super users and stragglers.
Companies have given out raises based on performance for years, but studies from earlier this year suggested this trend was shifting. About 44% of employers said they either planned to or were considering giving out equal raises to their employees this year, according to one study by compensation software company Payscale.
Yet, a new report by consulting firm Mercer shows this trend hasn’t actually panned out. Only about 4% of employers in the U.S. are giving out raises in this way, according to a recent survey by consulting firm Mercer.
Part of the reason why, may be AI’s influence on a rapidly changing workplace. Just under 60% of business leaders say technology is key to their business strategy, according to a recent report by the advisory, tax, and assurance firm Baker Tilly, and some companies have pushed employees to fall in line.
Google has begun incorporating AI usage into performance reviews for software engineers, though managers have discretion over how it is measured, The Wall Street Journal reported earlier this year. Meanwhile, Accenture CEO Julie Sweet said last month that AI fluency is required for workers to be promoted.
Still, some white collar employees are resisting. A global survey of more than 3,700 executives and employees by SAP subsidiary WalkMe found that 54% of workers were bypassing their company’s AI tools to do their work manually, while another third said they hesitated to use AI because it makes their work more complicated.
And yet, another group of workers has responded to management’s push for AI adoption by going all in. These AI “super users” were three times more likely to have received a promotion and a pay raise in the past year, Dan Schawbel, managing partner at Workplace Intelligence, previously said in a statement to Fortune.
This disparity between employees challenges the idea behind “peanut butter raises,” which aim to address some of the criticisms with merit raises, namely, that they are subjective and bias-prone, according to Payscale’s report.
While across-the-board raises may seem equal on the surface, high performers or AI super users may not see it that way, said Hannah Yardley, the chief people and culture officer at Achievers, a software company that tracks employee recognition and offers rewards.
“If you’re just being rewarded the same way as everybody else, or being told you’re doing the same job with everyone else, you’re going to feel that it’s equal, but not fair, if you’re contributing more to to the outcomes of what you’ve been asked,” she said.
Factors like performance, but also market competitiveness and internal equity also play an important role in pay decisions, added Mercer senior principal Mark Bowling.
“Fairness in compensation often involves more than equal treatment,” he told Fortune.
Because not all employee contributions are equal, organizations wanting to leverage AI should institute performance-based raises, but they should also be constantly recognizing employees that go above and beyond so others in the organization know what the company’s priorities are, Yardley said.
“Not all work is created equal, and so for organizations, they should be differentiating in order to be able to set that standard for what value really means in the way that you’re delivering,” she told Fortune.
