Buy vs. Build Talent: An Executive Perspective on Strategic Workforce Planning

In today’s dynamic business environment, the debate between “buying” versus “building” talent remains central to strategic workforce planning. For executives, particularly those leading within private equity-backed or rapidly scaling organizations, the decision is often influenced by time horizons, risk tolerance, and long-term strategic goals.

The Time Horizon Dilemma

Private equity (PE) firms typically operate under short-term timelines aimed at value creation and exit strategies. This creates urgency and often leans the decision towards “buying” talent, i.e. hiring externally experienced leaders who can hit the ground running. In contrast, public companies or family-owned businesses, with longer-term perspectives, might have the luxury of nurturing internal talent through structured development and succession planning.

Assessing Risk: First-Time Leaders in C-Suite Roles

One of the biggest risks in talent development is promoting a leader into a C-level role for the first time. While internal promotions can strengthen culture and loyalty, they come with execution risk. That’s where executive coaching and robust onboarding become critical. Tying performance management closely with coaching can mitigate this risk, ensuring that first-time executives have the support to succeed.

Key Indicators That It’s Time to “Buy”

There are clear signals when an external hire is the best option:

• Rapid growth mode: The organization is scaling faster than internal talent can be developed.
• Insufficient internal bench strength: Particularly after periods of disruption or change, the existing team may lack the capacity or readiness to step up.
• Imminent retirements: If anticipated exits haven’t been planned for, external hiring may be the only viable path to ensure continuity.
• Urgency to reduce risk: In critical roles, waiting for someone to grow into a position may jeopardize business stability.

Business Model Pivots: When You Need New Skills Fast

A shift in your business model can be one of the clearest signals that it’s time to bring in external talent. These pivots often require capabilities that simply don’t exist in the current team, or at least not at the level needed to lead the change.

Some common examples include:

• Retailers moving from wholesale to direct-to-consumer: This requires leaders with strong digital, e-commerce, and customer experience backgrounds.
• Product companies evolving into service or subscription models: Think about the shift from selling medical devices to offering them as a service. That demands different financial acumen, customer success thinking, and operational models.
• Manufacturers embracing sustainability and ESG standards: If you’ve traditionally focused on cost and efficiency, pivoting toward circular economy models or green compliance can call for fresh leadership.
• Local or regional players expanding globally: Scaling internationally means navigating new cultures, regulatory environments, and competitive dynamics.
• Digitally lagging businesses undergoing tech transformation: These organizations may need to bring in digital-native leaders, or those with experience in agile, cloud-first, or data-driven operations.

Each of these pivots has profound implications for leadership. It’s not just about managing change. It’s about driving it with the right mindset, experience, and track record. And that’s often when “buying” talent becomes not just an option, but a necessity.

Why Building Talent Still Matters

Even in high-pressure environments, building internal talent has strategic advantages:

• It strengthens cultural alignment and engagement.
• It signals to employees that the company invests in its people, enhancing retention.
• It supports long-term performance through leadership continuity.

However, building talent requires more than good intentions. It demands:

• Proactive succession planning with a 3- to 5-year view.
• Clear success profiles that define what “good” looks like (skills, attitude, competencies).
• Internal programs for education, stretch assignments, and mentoring.
• Transparent communication strategies to manage expectations and reduce turnover.
• Regular bench analysis to track readiness and identify gaps.

The Silver Medalist Strategy

Organizations that are truly strategic in their approach also recognize the value of “silver medalists” – those who were strong contenders for a role but were not selected. These individuals are key to succession planning and should be retained through clear development plans, meaningful assignments, and recognition of their potential.

Collective Responsibility, Not Just HR’s Job

Ultimately, the decision to buy or build talent is not the sole responsibility of HR. It’s a collective, strategic responsibility of the entire leadership team. When done right, talent development becomes embedded in the organizational culture and treated as a business-critical function rather than a reactive process.

Conclusion: A Balanced, Strategic View

There is no one-size-fits-all answer. The best organizations don’t choose between buying and building. Instead, they excel at both. They are proactive, not reactive. They make thoughtful decisions based on business needs, future direction, and risk appetite. And they understand that building a strong leadership bench is like playing chess – it requires foresight, strategy, and a keen eye on the future.

At SpenglerFox, we help leadership teams navigate these pivotal decisions with clarity and confidence. Whether you’re developing internal talent, building succession plans, or looking to make a key external hire, our tailored solutions align with your business strategy and growth trajectory. Let’s explore how we can support you in making the right call at the right time. For more information, please visit our website or contact us today for a needs assessment.