Door B: Why Now Is the Right Time to BUY Talent

“Everyone is breaking the rules. People are buying skills and talents everywhere, and they feel that they’re fungible. They’re moving away from the whole building approach.”
— AJ Chauradia, assistant professor, University of South Florida

Your company needs a certain skill set, and you need it now — it simply doesn’t exist within your current workforce, and you don’t have the time or infrastructure to teach it.

In this scenario, the “buying talent” approach may be the right choice for your organization. Opting for that strategy — shelling out for highly skilled external hires — over “building” talent, or training and developing workers over time, hinges on several factors beyond just innate preference, according to a study conducted by the University of South Florida, the University of Cincinnati and India’s Institute of Management Technology Hyderabad.

The study followed talent strategies utilized by about 175 large U.S. law firms over eight years, but its findings apply to any professional services organization, said AJ Chauradia, the assistant professor of instruction in the School of Management at the University of South Florida’s Muma College of Business and one of the study’s authors.

Three broad factors often drive the choice to “buy” rather than “build” talent, Chauradia explained:

• A lack of financial resources for an extended training endeavor;
• A dearth of senior leaders equipped to mentor new employees; and,
• Volatile, uncertain client demand.

“Nowadays, some organizations are finding that workers are less loyal, and their knowledge is much more transferrable,” he said. “If you spent nine months trying to [develop] this person and they leave after six months, that’s a lot of waste. Now, because there’s knowledge everywhere — it’s become a commodity, especially with AI [artificial intelligence] technology being able to do routine tasks — a firm may think, ‘Do I need to spend all this money training and developing workers?’ Everyone is breaking the rules. People are buying skills and talents everywhere, and they feel that they’re fungible. They’re moving away from the whole building approach.”

Access a related Workspan Daily article on this subject:

• Door A: Why Now Is the Right Time to BUILD Talent

Access a bonus Workspan Daily Plus+ article on this subject:

• To ‘Build the Best’ or ‘Buy a Star’: A Strategic Cost-Benefit Analysis

What Leads to the Choice to Buy

When you need a certain skill set or role within your organization, it’s generally a leading practice to first look internally, Chauradia said. But that’s not always realistic.

Choosing to “buy” external talent may stem from the following realities, according to experts interviewed for this piece:

• You are a a smaller firm or have a rapidly shifting client base.
• You have an urgent or immediate need for certain skills due to a time-critical initiative or significant business transformation (translation: talent development takes time).
• You need ready-to-go workers to help staff a new branch office or acquire new clients.
• You lack a robust internal framework that would allow your organization to retrain or upskill employees at scale.
• You have ongoing demand or frequent role turnover that necessitates external hiring to ensure a stable pipeline.
• You desire a shift in business culture through fresh perspectives or practices.
• You are in a mature industry with widely available top talent.
• You are able to find niche skills globally through a remote-work framework.

“Sometimes organizations simply don’t have the internal talent base to develop from, or they can’t develop the skills fast enough to meet business needs,” said Sue Holloway, CCP, CECP, a content director at WorldatWork. “When the market offers a strong supply of ready-to-deploy talent, external hiring can be the most efficient route.”

The HR and Total Rewards Role When Buying

In a “buy talent” scenario, the HR and total rewards functions have certain pitfalls to avoid and action items to consider.

One of those is communicating transparently with current employees — to address potential morale issues head-on — about the need for external hiring, Holloway explained.

“Balance market competitiveness with internal equity,” added Stella Ioannidou, the senior director of research at The Josh Bersin Company, an HR research and advisory firm. “Use current market data, but model how offers will sit relative to incumbents, and plan for adjustments where needed.”

Don’t assume that bringing in top talent means being completely hands-off from a development perspective. While these employees generally won’t need technical training, it’s important to onboard and integrate them thoughtfully to ensure they’ll deliver effectively — and stay, Ioannidou and Holloway said.

Networking is key when you know your organization has a “buy” strategy, Chauradia noted. Connect with talented industry leaders at conferences, and stay in contact with intriguing entry-level candidates who didn’t accept an offer — they may be looking for a change a few years down the road.

And while entry-level hires whom you’ll develop internally may be more focused on social interaction in the workplace and opportunities to learn and volunteer, experienced candidates being hired from the outside are often simpler in their rewards requirements, he said.

“In terms of compensation and rewards, a firm ends up paying people who they have to buy a lot more,” Chauradia said. “These individuals, when they’re being hired, they’re just looking for that higher pay. They’ve already learned and developed their skill, so it’s ‘Pay me; I’m delivering.’”

Most importantly, he added, don’t fall into the trap of waiting too long for a high-level outside hire to begin producing results or working well with your teams. While the instinct is to give them time to settle in due to the time, effort and expense of bringing them on, organizations need to shift their thinking to consider those pre-hire efforts a sunk cost, rather than continuing to pay the cost of hires that aren’t offering a return. In those cases, don’t wait too long hoping they’ll improve or choose to leave — cut your losses, Chauradia said.

Where a Hybrid Approach Fits In

While some organizations may tend more toward “build” or “buy,” a hybrid approach also is common — and often best, Ioannidou said.

“The most effective organizations don’t choose ‘build’ or ‘buy’ once,” Ioannidou said. “They manage talent as a portfolio, with AI-powered precision to continuously increase their talent density. They might seed new areas with a few external experts, pair them with internal talent, and then scale primarily through development and internal mobility. The key is to be explicit about the criteria and to communicate clearly so employees understand how decisions are made.”

Editor’s Note: Additional Content

For more information and resources related to this article, see the pages below, which offer quick access to all WorldatWork content on these topics:

• Career Growth
• Employee Benefits
• Employee Compensation
• Finance and Budgeting
• Total Rewards