The Advisors' Blog

– Liz Dunshee

I’ve blogged a few times about the expanding role of the compensation committee. Yet the number of committee meetings in a year seems to be holding steady at 4-5 – and the number of hours in a day hasn’t changed either. This Semler Brossy memo says that to reach the next level, directors will need to leverage technology in decision-making. Here are three areas where artificial intelligence & machine learning could help compensation committees:

1. Workforce & executive succession planning: Committees need a sense of a company’s cost of labor as they oversee the HR function and strategize about workforce automation – and can use predictive technology in executive succession & recruiting.

2. Pay design & pay management: Eventually, committees may be able to get real-time performance info to understand whether incentives are working – and non-financial metrics can be better incorporated into incentive plans as data tracking improves.

3. Company values & risk management: AI & ML-related issues will surface in risk reviews and require advance thinking about the ethics of using these capabilities in the workforce.