Employers: Do you buy talent (hire externally) or build talent (develop from within)? It is not just a budget question. It is a strategy decision.
Both talent paths come with trade-offs and big implications for your compensation strategy.
Buying Talent - Pros:
· You get immediate expertise and a fresh perspective. You can also plug urgent skill gaps with this approach.
Buying Talent - Cons:
· Typically, this is a more expensive approach. Cultural fit isn’t guaranteed. And when you buy talent, you may cause internal equity issues if pay isn’t aligned to current employee pay levels.
Buying Talent - Pay Impact:
· To compete for in-demand skills, external hires often command higher salaries especially in hot markets. This can lead to internal pay compression (where new hires earn more than experienced current employees), which can hurt morale and retention if not addressed with transparent pay practices.
Building Talent - Pros:
· You increase the engagement and retention of employees with this approach. It also strengthens internal mobility and promotes loyalty and institutional knowledge.
Building Talent - Cons:
· It requires time and investment. Success depends on solid employee development infrastructure, planning, and execution. And it may not meet urgent skill needs.
Building Talent - Pay Impact:
Internal promotions are often made within existing salary ranges, which may save costs upfront. But underpaying internally developed talent can backfire. If they deliver results at market level, they should be paid at market level. Investing in internal equity protects both your culture and your talent pipeline.
Smart companies blend both approaches.
You can’t build everything. And buying talent alone is unsustainable. The goal is a balanced workforce strategy supported by clear compensation philosophy, transparent pay practices, and meaningful career paths.
If you're only focused on acquisition of talent and ignoring development (or vice versa) you may be limiting your talent potential and risking your employer brand.
How does your organization strike the balance?
#compensation #talentstrategy #paytransparency #payequity #careerdevelopment #humanresources #leadership #pay #fairpay #rewards #hr #compensationconsultant #careerpaths #careerladders