The year in review: looking back (and forward)

Lauren Jenkins: You’re listening to Prosperity at Work from JP Morgan Workplace Solutions. The podcast all about equity compensation, financial well-being, and more. I’m Lauren Jenkins, Head of Executive Participant Servicing at Workplace Solutions.

Chris Dohrmann: And I’m Chris Dohrmann, Executive Director of Strategic Partnerships at Workplace Solutions. Lauren, I can hear a faint ringing right now, and I can’t tell if it’s sleigh bells or if it’s just the sound of everyone’s computer shutting down at the same time. But before you check out, dear listener, get a view of the state of equity compensation with our new survey. Download the report now at the link in the show notes.

Lauren Jenkins: I know I’m feeling ready for a break, Chris. So what do you say we take a look back at the year that was in the world of rewards and benefits and a look forward to 2025?

Chris Dohrmann: Oh, no. This isn’t good. My worry here is you’re gonna make me go back and look at all my predictions of 2024, aren’t you?

Lauren Jenkins: Consider me your own personal ghost of Christmas past. Let’s start with a look at those forecasts you made this time last year on the show. Okay, let’s take a look at your first prediction. It was on the return of M&A activity that we’d see an increase this year. How’d that one turn out?

Chris Dohrmann: I think I was probably a year ahead of myself. There was an increase in activity from 2023, but it’s not what I really expected it to go back to 2019 and 2020 when they were record years. And that’s probably out of my control ’cause I think it had a lot to do with when the interest rate cuts took place later in the year. I may be able to say I recaptured some of it, but I think this was a miss. And I think I was probably a little too optimistic about when the interest rate cuts were gonna be.

Lauren Jenkins: So the next thing you predicted was the end of the great resignation and the equity awards would be skewed much more towards high performers as compared to retention.

Chris Dohrmann: In this case, I think I was probably right. I think there’s still worry that people in STEM are gonna be very hard to replace. So they’re very competitive as far as equity awards, especially in certain sectors like biotechnology, biopharm or anything that’s really reliant on R&D. But generally, I think the great resignation has slowed. And I think we can see that almost directly by virtue of the fact that what was a shortening of vesting periods, down to almost three years as a norm has now gone back up to four years or is starting to go back up to four years. So I think this was probably on target as far as a prediction. But if you’re gonna be a real stickler, you could say that some sectors are still experiencing concern for lack of being able to control the attrition in certain areas.

Lauren Jenkins: That’s fair. It’s a very powerful tool to be able to use for retention. So, makes sense that that’s still going to be there to some extent. Next up, Chris, you predicted that AI would make a big impact on HR and total compensation, helping with reporting, getting things done quicker. I know this has been a huge theme over the course of this year, but were you right?

Chris Dohrmann: Let’s think local. You and I have access to an AI tool at JP Morgan, and so do many other people, including some of the big four, Deloitte, KPMG, both have access to their own AI. So what they’ve done and what JP Morgan has done is make sure AI is available to it’s employees when they need it. But it’s not gonna allow data to go up and out to the broader internet, which I think is good ’cause it affects a couple of the other areas we’re gonna talk about. If you talk about whether I was right or not, the SEC publishes their areas of examination every year. And there are three areas that we will talk about or probably have. One of them is AI, when they talk about listed companies and examinations and audits. The other two are cybersecurity and a little crypto. So we’re not gonna talk about crypto, but cybersecurity for sure, as it relates to data privacy.

Chris Dohrmann: So that’s the SEC. The other part is if you just look at the company’s spend and so the private sector spend on AI, it’s probably upwards of $150 billion this year, and based on basically big tech is the majority of that. But if you look at OpenAI’s valuation, what was, I believe, in $80 billion valuation in February is now close to $157 billion valuation in October. So I think the rest of the private sector and commerce in general thinks AI is looming, and I’m not sure it’s a bubble. I think everybody is afraid of the AI bubble, especially in investing. AI has been around for 10 years. This is really the next step for generative AI, where AI becomes a tool, whether or not it’s something where you’re bouncing ideas off an AI, whether or not you’re having AI reformulate your writing for a different tone or a different audience. Or whether it’s not, it’s just making research and search for the internet much more efficient. I think those things are gonna keep happening. And I think the rest of the industry is gonna continue to invest in it.

Lauren Jenkins: Absolutely. It’s been really incredible to watch over the last year or two how things have really become ingrained in our day-to-day. And we’re using these tools for, as you mentioned, nearly everything that we do.

Chris Dohrmann: Have you started using the one that we’ve been given as JP Morgan employees?

Lauren Jenkins: Yes. So we’ve started to think of a number of different uses for it from rewriting responses, helping research. It’s been very interesting.

Chris Dohrmann: I think rewriting, especially for an audience and making sure your tone doesn’t sound off, I think is really an added advantage that we can use almost immediately, and then… So it really helps us sound more personal. So, it’s not just a technology tool. It’s something that helps us remember or to think about how each audience likes to be spoken to or communicated with on their own terms.

Lauren Jenkins: So we also had a prediction on cybersecurity that protection was going to be very profitable and AI and cloud computing was going to change everything. How did we do on this one?

Chris Dohrmann: I would say we, it was probably almost there. So, going back to the SEC’s priorities, cybersecurity is one of them. So they think it’s going to be something that they have to keep watching. I think the fact that CrowdStrike and their miss in certain things earlier in the year came back and the valuation has gone back up, whether or not it’s something they did or whether or not it’s people realize that cybersecurity is very complex and it’s gonna take a lot of things to do that. And I think the fact that we’re subject to cybersecurity training every year. And it’s something that’s in the forefront of all the financial industry about something that we have to be very cognizant of and very judicious with because it’s something that happens. People are trying to penetrate our protections almost every day. And we have to make it, something that’s top of mind thinking. And I think all of the companies that are going into it, it’s well worth their spend because it’s gonna be very profitable.

Lauren Jenkins: Right. Cybersecurity has to continue to evolve as AI and these other tools evolve and give fraudsters more powerful ways to get past our protections.

Chris Dohrmann: And I think what I was most worried about there was the fact that AI is gonna be the key that unlocks the Pandora’s box of big data. So the more data that’s gonna be out there, the more data that has to be protected or the more data that’s gonna be vulnerable. That’s why I think cybersecurity is gonna continue to be something that’s gonna be at the forefront.

Lauren Jenkins: So as a follow up to our recent podcast on pay transparency, we also had a prediction here as it relates to that. So that there would be continuing evolution in jurisdictions like New York and California. What are your thoughts on that?

Chris Dohrmann: I think this is still early, but I think it’s a hit. I think I did at least identify this as a trend. And pay transparency is already a reality in Europe. So most of the folks or most of the companies that have their second largest population of employees in Europe are already dealing with this. And I think whether it’s pay equity, whether it’s pay equality, or whether it’s pay transparency, all of these are gonna continue to evolve and be something that’s at the forefront of boards and discussions that are on corporate boards, and whether or not it’s gonna be something also as part of the regulatory process.

Lauren Jenkins: It’s been kinda fascinating to see as we watch even just job postings and pay ranges posted there, how much more common that’s becoming, and you can imagine that the market is going to kinda demand that as we go forward. Job seekers are going to be more used to seeing that information and they’re going to expect to be able to see that up front.

Chris Dohrmann: Agreed. I really think that now that people realize that pay transparency is something that’s a topic for discussion, I think employees realize that their pay scale should be something that’s available to them, and it should be something that they’re very cognizant of. So it shouldn’t be what I’d like to make. It should be, I’d like the job that pays this, and I think I’m qualified for it, and I think we are well-suited for one another, the job and I.

Lauren Jenkins: So final prediction, pay versus performance. The institutional investors and proxy advisors would recognize that equity and pay transparency is probably part of good corporate governance. You did caution that this one might come in 2025. So what’s the verdict?

Chris Dohrmann: And I think I was probably closer on the latter, my caveat there. I think that ISS and Glass Lewis are gonna make pay versus performance part of their terms that they come out with or part of their guidelines. It’s just they didn’t do it for 2024. And I think that they were basically waiting for what is usually their wait period is usually two years after a new regulation. They start making it part of their guidelines. I didn’t see it in 2024 and I haven’t seen any early indications for 2025. But I do think that pay versus performance is not gonna be, it’s not gonna go away. I think people have, there’s been a cottage industry that’s almost grown up around it as far as making sure that corporations are able to do that. And I think it’s something that the guidelines will come out even in a soft way from the proxy advisors in 2025. So, again, I think I, I’m not to say I’m gonna miss there, but I think it was probably too early and I was probably too aggressive in my prediction.

Lauren Jenkins: Fair enough, Chris. We’ll keep an eye on how that one continues to evolve.

Chris Dohrmann: So now that I’ve been held accountable for my predictions, let’s talk about the ones where I was probably closer and was able to say I made an accurate prediction. Let’s talk about AI first. And if I could, let me see if I can get you to go first this time. AI, what do you think is gonna happen for next year?

Lauren Jenkins: Absolutely. So let’s talk about AI. As we touched on, I think a lot of companies have gotten their AI closer to where it needs to be in terms of licensed data pools, ring-fencing LLMs, protecting that data. So it’s interesting to see how things are going to continue to grow and change from here. My prediction is that AI is going to transform compensation and benefits roles next year.

Chris Dohrmann: Where do you think it’s gonna be able to do that? In what areas do you think AI is gonna help most?

Lauren Jenkins: I think that being able to use AI to monitor things like compensation across bands, across different roles or functions, it allows you to look at things a lot more holistically than maybe we’ve been equipped to do in the past. So I think it will be a tool, an important tool for people working in compensation and benefits to be able to better leverage data.

Chris Dohrmann: And I think you’re right. I think people realize that they’re using it already to monitor incoming resumes and CVs. And that’s something that’s being regulated, particularly by the city of New York, and making sure that there’s some audit there to make sure that there’s no bias. But I think people are gonna realize they have access through the AI to a wealth of data that they’ve had internally, whether it’s internally at a company, for a decade or more. And they can start to compare that to their peers. So they can start to structure compensation packages and the amount of equity offered, and to tailor that so that it can be competitive and it can meet the needs of the workforce they’re trying to attract. So I think they’re gonna realize that AI is gonna be able to do much more by culling data or reformulating data or making data available at their fingertips, much more so than they’ve ever been able to do before.

Lauren Jenkins: I know we’ve touched on before in our discussions, Chris, that AI has the potential to eliminate about 87 million jobs, but it’s predicted to actually create about 97 million. So you gotta embrace it. You’ve got to make it part of what you’re doing so you don’t get left behind.

Chris Dohrmann: And I think what I was trying to say before when I was talking about the fact that people are afraid of AI and whether or not it’s gonna be their job is going to be at risk. I don’t think people are gonna lose their job to AI. I think people may lose their job to somebody using AI, at least better than they are. So I think that’s what the risk might be. So prediction two, here’s one where he talked about how whether or not I was right or wrong about pay transparency. But my prediction is, that pay transparency is not going away. And we talked about it a little bit in the prior section. But I still think pay transparency’s first start is a job architecture. And do you see that coming about in 2025?

Lauren Jenkins: I do, I think that a job architecture is going to be essential to really accomplish pay transparency. So being able to outline which roles command which types of compensation, really the only way to address things like perception issues and making sure employees have that visibility and understand what may lay ahead for them.

Chris Dohrmann: I think you’re spot on. I think the fear that most people, most corporations have about pay transparency is what are we gonna do when people realize that they were hired at different salaries? And I think the first thing they can do is say, going forward, we’re making sure that you’ll know what your salary is before you’re hired, and you’ll know what your range is before you’re hired. And that way, it’s not gonna be the great unknown. It’s going to be you’re being hired for a position that pays this range, and your next progression in career goals is going to be to a new position with a new career range. So it’ll all be laid out and very transparent for people not only currently working for the company, but job seekers.

Lauren Jenkins: Right. And like we touched on earlier, as this becomes more and more common, the market will demand it. So applicants are going to expect it. Companies are going to have to start making that more transparent. So let’s move on to an issue that is touching really every sector. So our third prediction is that 2025 is going to be the year of doubling down on cybersecurity. So it’s going to be more important than ever.

Chris Dohrmann: And I think it’s gonna be more important than ever to people outside. Now, in this case, I would normally just say, areas of the company, like I think IT has been basically paying attention to cybersecurity for years. But I don’t think people in other areas of companies have been paying as much attention. I think those days are over. And I think the sectors that have been paying attention to cybersecurity, like finance, I think they’re not gonna be alone anymore. Because I think the penetrations or the risks that have happened or the cybersecurity exposures of data have come in all sorts of industries, including insurance, including medical insurance or medical areas. So I think basically US industry and the US private sector in general has to be paying attention to cybersecurity more so than ever because there’s more data there and more data being available and kept at fingertips, especially the things like AI, than we’ve ever had before.

Lauren Jenkins: Exactly. Going back to the AI point, the proliferation of misinformation is happening quite quickly. So being able to keep the reins on that and help decipher what is real versus not. Knowledge is power if it’s safe. If you start throwing in misinformation, it can diminish things that are really valuable, like these powerful AI tools.

Chris Dohrmann: Yeah, it’s funny how people realize that their investments are valuable, but they don’t realize that their investment in the knowledge and the data that they have, is probably equally as valuable. Because it’s what makes, it’s the tools that make investments or wealth accretion available for them.

Lauren Jenkins: 100%.

Chris Dohrmann: And for the fourth and I guess final one, let’s talk about data privacy and what can people do about, or are people gonna be paying attention to their personal data privacy in 2025?

Lauren Jenkins: Absolutely. So I think with things that we’re continuing to see develop GDPR and other types of regulations along those lines, this is going to be something that consumers are increasingly aware of over time and I think demanding increasing levels of data privacy.

Chris Dohrmann: I’m gonna try not to be judgmental in my… But I’m just saying regulators in general are not usually very proactive. They’re usually reacting to what their constituents want to see. And I think regulators in more and more US states are trying to do what GDPR did in the European Union years ago. So I think the fact that more and more states are starting to pay attention to their constituents’ data privacy, I think resonates. I think the fact that it’s really become a prime concern for constituents, as well as the regulators that are trying to protect their concerns.

Lauren Jenkins: I totally agree. And as things continue to impact those constituents, like identity theft or other repercussions of lack of data privacy, the demand for that is only going to increase.

Chris Dohrmann: And lastly, I think people are starting to pay attention that they can’t just leave data when they leave an app or when they leave a company. They should ask for their data to either be purged or they actually be exported. Whether it’s a new doctor, whether it’s a new banker, whether it’s a new relationship, whether it’s a new employer. I think they start to realize that leaving data is tantamount to just leaving it exposed. So they wanna do a little bit more control of that.

Lauren Jenkins: So I do have one more topic for you, Chris. One more prediction. I think the SEC oversight will increase next year.

Chris Dohrmann: See, I would have agreed. I think the SEC is already was fairly aggressive this year. And I think based on the areas that they’ve talked about as far as their priorities, their priorities aren’t new. Their priorities are… Many of them were repeats of 2024. So I think you’re right. I think they’re gonna try and continue to be more judicious in data privacy, cybersecurity, and AI. If they explore crypto, so be it. But I think that they have a lot on their hands just to address the emerging AI technologies and emerging data threats with cybersecurity. So I think you are right, they’re probably gonna be a little bit more aggressive because I think those areas are monumentally, are moving very quickly and the traction that they’re getting is monumental.

Lauren Jenkins: Right. Regulations have to keep up.

Chris Dohrmann: That brings us to the end of this episode and to the end of an epic year of Prosperity at Work from JP Morgan Workplace Solutions.

Lauren Jenkins: If you’ve made it this far, thanks for listening. And if you’ve enjoyed this episode, we hope you’ll review, rate, and subscribe to the JP Morgan Workplace Solutions Prosperity at Work podcast, available wherever you get your podcasts.

Chris Dohrmann: You can find more insights on equity compensation, financial wellness, and more by following us on LinkedIn or over at globalshares.com, where you can always download our new Global Equity Compensation Report 2024. Until next year, that’s Prosperity at Work. Happy holidays.

Lauren Jenkins: Happy Holidays.

Chris Dohrmann: Information provided in this podcast is intended for informational and educational purposes only.

Lauren Jenkins: It may contain views which differ from the views of JP Morgan Chase and Company. For specific guidance on how this information should be applied to your situation, you should consult a qualified professional.

Chris Dohrmann: For full details, see the show notes on your podcast player right now.

Lauren Jenkins: The Prosperity at Work podcast is produced by dustpod.io for JP Morgan Workplace Solutions.