Chasing AI Talent? Don’t Lead with ‘Runaway’ Pay

The race for AI talent is on—and it’s expensive. As companies scramble to secure the engineers, scientists, and strategists who can unlock the next wave of innovation, Semler Brossy warns against leaning too heavily on sky-high compensation packages. While cash and equity may open doors, overreliance on pay can quietly undermine culture, sustainability, and long-term flexibility.

The Risks of Overpaying for AI Talent

‘Runaway’ pay isn’t just a financial issue—it’s an organizational one:

• Culture erosion: Companies that lead with purpose, not pay, build stronger engagement. When employees view compensation as the only glue, mission and values suffer.
• Unsustainable: Business cycles ebb and flow. Locking into inflated pay levels creates a cost structure that can’t sustain slow growth periods
• Limited flexibility: Over-investing in today’s hot skillset risks under-investing in tomorrows. AI may dominate now, but agility is needed for emerging technologies.

Smarter Ways to Win the Talent Race

Companies should balance premium compensation with a broader employee value proposition. Here are some suggestions to stay on pace.

• Targeted investments: Identify where premium talent is truly essential and measure the ROI.
• Disciplined exceptions: Limit special awards to ~5% of the workforce to avoid an entitlement culture.
• Performance differentiation: Tie variable pay to results and reduce compensation for underperformers.
• Board visibility: While comp committees don’t oversee broad pay positioning, sharing premium talent strategies with the board ensures alignment and discipline.

The Bottom Line: Yes, AI talent matters. But pay alone is not a long-term solution. Companies that balance compensation with growth opportunities, flexibility, strategic benefits, and a strong culture will not only attract top performers—they’ll keep them engaged and aligned for the long run.