Will Performance-Based Pay Make Managers Trust AI More Than Ever?
Artificial intelligence isn’t just for data scientists and IT teams anymore—it’s becoming a critical advisor to the people making the biggest business decisions. But while AI has the power to revolutionize management, not every manager is convinced, and the reasons might surprise you. New research uncovers how two often-overlooked elements—how managers are paid and how AI is framed—radically affect whether decision-makers actually trust and use AI. Ready to rethink how leadership could harness technology (or resist it)? Let’s dive in.
🤖 Rethinking AI in the Corner Office: Surprising New Insights
- AI Has Changed...Have Managers? AI has grown vastly more powerful and accessible compared to just a few decades ago, yet its adoption among top decision-makers remains uneven.
- Incentives Matter—But Not How You’d Expect: Old studies from the 1980s-90s argued that when you pay managers more based on their performance (or run office “tournaments”), managers actually avoid using algorithmic advice, believing they need to rely on their own skills to ‘earn’ success.
- But New Evidence Flips the Script: Groundbreaking new research led by Martin Wiernsperger at Cornell reveals that paying for performance can actually make managers more likely to use AI. That’s right—the reward structure encourages leaning on technology, not shunning it!
- The Power of Framing: Managers are more receptive to AI tools if they see them as blending rigorous data with human expert knowledge, compared to AI framed as ‘pure’ algorithmic output.
What’s happening here? AI has evolved. Modern decision aids are far more sophisticated and trustworthy, and the core psychology of managers and workplace incentives might be shifting as well.
🔬 The Breakthrough Study: How Did Researchers Uncover This Change?
- Who Did the Work? Martin Wiernsperger (Cornell) and colleagues at the Vienna University of Economics and Business.
- What Did They Test? They re-examined the classic theory of “algorithm aversion” using up-to-date, highly capable AI decision tools.
- What Did They Find? When managers’ pay is linked to their performance, they’re actually more likely to use AI in making decisions than if they got a flat salary. Framing the AI as a ‘hybrid’ (data + human expertise) boosts trust even further.
This research challenges old assumptions and could reshape how companies design compensation and deploy AI—especially as these decision tools get ever smarter.
✅ Solutions: Smarter Incentives and Smarter Messaging
Based on the findings, here’s how organizations are (or should be) responding:
- ✅ Performance-Based Compensation: Shifting pay to reward successful outcomes encourages managers to embrace AI, rather than ignore it. Forward-thinking companies can use this to boost both performance and technological adoption.
- ✅ Hybrid AI Framing: Presenting AI decision aids as “combining human expertise and rigorous data analysis” increases trust—helping to blend the best of both worlds for corporate decisions.
- ✅ Training and Change Management: Ensuring that leaders understand AI’s capabilities (and its limitations) further breaks down psychological barriers to adoption.
These approaches are already echoed by progressive enterprises, especially in industries like finance and supply chain management, where stakes are high and data is critical.
🚧 What’s Standing in the Way?
- 🚧 Cultural Resistance: Many managers may still distrust AI or feel their expertise is being replaced, especially when past research warned about “algorithm aversion.”
- ⚠️ Poor Communication: If AI is introduced as a black-box algorithm without transparency or human-in-the-loop explanations, skepticism rises and usage drops.
- 🚧 Mismatch in Incentives: Not all companies are ready (or able) to implement performance-based pay, especially in sectors where results are hard to measure directly.
- ⚠️ Regulatory and Ethical Hurdles: For some industries, using AI in critical decisions raises compliance and bias concerns that need to be tackled head-on.
🚀 Final Thoughts: The Future of Management Could Be Hybrid Human+AI
Performance-linked incentives and thoughtful framing are powerful levers to unlock greater trust in AI among decision-makers. The new research signals a shift: managers no longer need to ‘go it alone’ to prove their worth—the smartest ones will leverage every tool (human and algorithmic) to deliver results.
- ✅ Success will require open communication, modern incentives, and a willingness to evolve traditional mindsets.
- 📉 Failure will persist if companies cling to outdated compensation structures or introduce AI without addressing cultural and ethical concerns.
What do you think? Should your boss trust AI more if they get paid for performance—or does it make you nervous to see algorithms at work in the boardroom?
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Sources: Cornell Chronicle. Linking pay to performance boosts AI use in decision-making, May 30, 2025. https://news.cornell.edu/stories/2025/06/linking-pay-performance-boosts-ai-use-decision-making