Built vs. bought: How to create a better compensation strategy

TOGETHER WITH

Hiring great talent shouldn’t be a headache. Let LHH help ease the pain of a tedious talent search. Their recruitment and talent solutions can help you find the right fit for your org. Get a dedicated talent partner.

You’ve gone through hundreds—maybe thousands—of resumes, countless candidates, and rounds of interviews. And it all paid off! You found the right person for your role.

But it only gets harder from here. Because now you need to offer the perfect compensation package: one that gets a candidate to not only say yes but also stay at your org for a long, long time.

We teamed up with LHH to take a look at the three main workforce tensions to consider when building a compensation package—and why total rewards are so important for creating a compelling compensation package.

Ready to see what it takes to create a compensation package that actually packs a punch? Let’s get into it.

One part of the whole package

Got a number in mind for your new hire’s salary? Great. But you’ve also got to think beyond base pay to get your new hire to stay long term.

This is where a li’l somethin’-somethin’ called total rewards comes in. Think of it as an investment in high performance. To get your high performers to stay, you need to consider the entire employee value proposition.

That’s because engagement and retention don’t depend on compensation alone. They actually depend a lot more on career progression, work-life balance, and professional development opportunities.

What does this mean for you? Well, you need to look at the employee value prop when building your pay strategies to find areas where you can make the most impact. Invest in what your people value most.

You might be surprised to find that some of your employees prioritize more than just the number on their paychecks.

AI skills are shaking things up

Another huge factor that’s changing the way you should be creating your compensation strategy is—you guessed it—AI, specifically AI skills.

Here’s why: Years ago, you might be hiring an analyst to dig into your data and gather insights for their team. With AI, though, the same analyst today now uses AI to analyze the numbers. Those are two very different jobs.

The problem? You’re still paying the same person the same amount to do those jobs, with no recognition of the new AI skill they had to develop. That leaves a gap between what the market says their AI skill is worth and what you’re actually paying based on your internal pay system.

So you know what you have to do, right? Yep—close. that. gap. If you keep asking your people to evolve and pick up new skills, you should reward them when they do.

The right skill premiums and incentives will build trust with your employees and keep them much happier in the long run.

The balance between build vs. buy

One last variable to consider when it comes to compensation: the age-old question…build or buy?

“Build or buy?” isn’t *just* a question. It’s an entire strategy that affects cost, speed, and long-term capability. You can’t always default to buy—instead, you have to consider each new capability, skill, and role you might need.

But defaulting to build doesn’t work, either. When you always develop internally, you pay the cost in slower capabilities, stalled transformation, and missed opportunities. That’s why nuance and precision are necessary—and why you need to consider both internal and external talent every time.

Turn to total rewards

Phew, that’s a lot to consider when creating a compensation strategy, amirite? That’s why we recommend the total rewards deal. Total rewards treats the full compensation package as one integrated system.

Instead of looking at pay, progression, and development independently, total rewards connects all of them together. That way, you can direct behavior at scale and get the greatest return from your investment in your people.

Total rewards only works when it functions as a system. So build a system that connects pay, skills, and mobility + sets your people up to keep winning.

Here to help you find great talent

When you’re ready to buy (read: to find talent outside of your organization), turn to a partner like LHH. They’re dedicated to helping you find the right fit for your needs by:

• crafting a recruitment solution that fits what your organization is looking for
• pairing you with a consultant who has expertise in your area
• leveraging data and insights to help you understand the talent market
• taking a holistic approach to hiring and investing in new hires beyond recruitment

Team up with a partner that can help you meet all sorts of talent needs across the entire talent life cycle.

Think beyond the paycheck

Compensation goes way beyond a simple payroll decision. It’s how you invest in your talent—the high performers you want to keep around for a long time. That means designing a total rewards deal that addresses their values and skills, especially the new skills you ask them to acquire.

Pay should just be one small part of your talent strategy. The real work comes when you invest in all your people to keep them around for the long haul.