WORKOUT Build or buy talent, that’s the dilemma
COMPANIES are increasingly choosing to build talent internally, a Mercer survey shows. This solution to the make-or-buy dilemma has been the result of the wider talent shortage in the market, and the resultant increase in salary premiums paid to candidates.
Creating a better, skilled workforce and preparing internal candidates for higher functions is being done through a system of rewarding employees selectively, the survey says.
‘‘ Historically, organisations have been simply spending reward dollars where they had the biggest problems in attracting and retaining talent,’’ says Mercer’s business leader of human capital, Ken Gilbert. ‘‘ But the results of our survey show a growing shift in businesses choosing to build talent internally, rather than buy it.
‘‘ In the future we can expect at least a 20 per cent drop in the number of businesses that will opt to simply buy talent as their main solution to attracting and retaining key people,’’ Gilbert says.
‘‘ More than 25 per cent will opt to build it internally and 64 per cent will implement a balance, up from only 59 per cent that currently prefer a balance — buying and building.’’
A dramatic shift in how businesses develop the talent for their growth has been necessitated by staff turnover, which continues unabated. About 39 per cent of the respondents in the Mercer survey of 300 organisations reported an increase in voluntary staff turnover. It was 28 per cent last year.
Faced with the challenges in the labour market, companies may have to align reward systems in areas of business that are more crucial to their success, Gilbert says.
To some degree, this realignment of rewards is already happening: higher salary increases were given to those in engineering (11.3 per cent), construction (8.8 per cent) and marketing (8.7 per cent). Average salary increases were 4.2 per cent across all sectors.
Other sectors receiving higher than average increases were education and research (6.2 per cent), health care (6.2 per cent) and business and professional services (5 per cent).
Below average salary increases were recorded for manufacturing (4.1 per cent), transport and logistics (4.1 per cent), hospitality (4 per cent), not-for-profit (3.9 per cent) and local government (3 per cent). Among the states, Western Australia (5.6 per cent), South Australia (5 per cent) and Queensland (4.4 per cent) were ahead of average. NSW and Victoria (4 per cent) were below average.