In-House or Contracting Support: Finding the Right Compensation Expertise for Your Organization
Deciding between in-house expertise or consultants for your compensation needs.
One of the most common questions I hear from leaders is: “Should I hire an in-house compensation expert or work with a consultant?” And, like many things in the world of compensation, the answer isn’t simple. It depends.
Your company’s size, growth stage, goals, and culture all play a role in determining the best approach. While I can’t give you a black-and-white answer, I can provide guidance to help you navigate this important decision.
When a Consultant Makes Sense
For early-stage companies (under 100 employees), hiring a full-time compensation professional may not be practical or necessary. Compensation management at this stage often involves creating pay bands, benchmarking salaries, and developing equity frameworks—tasks that consultants excel at.
Consultants bring:
- Broad Expertise: They stay current on market trends, best practices, and compliance requirements.
- Partnerships and Resources: Their network and tools can provide insights you might not have in-house.
- Flexibility: You can engage a consultant for specific projects without committing to ongoing overhead.
For companies in growth mode, consultants can be invaluable. They help you scale compensation structures to support rapid hiring while keeping you competitive in the market. However, relying solely on external expertise isn’t a long-term solution.
When to Hire In-House
As your company grows—typically around 250–500 employees—compensation becomes more complex. At this stage, having someone in-house who “owns” compensation can be a game-changer. By 500+ employees, you really should have a head of Total Rewards who truly owns comp and benefits—someone who can be more strategic about those decisions.
An in-house compensation professional offers:
- Day-to-Day Access: They’re immersed in your company culture, understand your business goals and org’s philosophies, appreciate the impact of the pay strategy, and can collaborate seamlessly with HR, finance, and leadership teams.
- Long-Term Ownership: Compensation is too impactful to leave entirely in external hands. Having someone dedicated ensures consistency and alignment with your overall strategy.
- Proactive Management: An in-house professional can identify trends, anticipate challenges, and continuously improve your compensation approach.
- Comp Communication & Education: With more employees comes more responsibility and lift to train and education about the compensation and pay strategy.
The question then becomes: what type of in-house role do you need? For some companies, compensation might be an added responsibility for an existing HR leader. For others, it could mean hiring a dedicated, full-time professional.
A Hybrid Approach*
In many cases, the best solution is a combination of in-house and external expertise. While your in-house team handles the day-to-day execution and alignment with your company’s goals, a consultant can provide strategic guidance, market insights, or support during critical projects like merit cycles or equity refreshes.
For example:
- In-House Focus: Manage internal equity, compensation strategy, and employee communications.
- Consultant Support: Provide benchmarking, compliance updates, and insights on industry best practices.
This hybrid model ensures you have both the deep internal knowledge and the external perspective needed to stay competitive and agile.
*I don’t actually think this is a good long term solution, but it can be a good approach as you transition from external to internal.
Key Questions to Ask
When deciding between in-house and external support, consider the following:
- What stage is your company in? If you’re still defining your compensation philosophy and structure, a consultant may be ideal. If you’ve already scaled, it’s time to bring someone in-house.
- What expertise do you need? Do you need strategic insights, tactical execution, or both? Is your pay strategy very complex—maybe it needs to be untangled and reworked?
- What’s your budget? Consultants can be cost-effective for short-term needs, but over time, an in-house professional may provide better value.
- Who will own compensation internally? If you don’t have a dedicated professional, will it be part of an HR leader’s responsibilities?
- How dynamic is your workforce? Rapidly changing needs may require a combination of in-house and external support.
The Bottom Line
There’s no one-size-fits-all answer to the in-house versus consultant question. The right choice depends on your company’s size, needs, and goals. Early on, a consultant can help you lay the foundation. As you grow, bringing someone in-house ensures consistency and alignment with your long-term strategy.
Ultimately, compensation is too critical to your organization’s success to leave entirely in external hands. Whether you choose in-house, a consultant, or a hybrid model, the goal should be to build a structure that’s fair, competitive, and aligned with your business objectives.
To learn how CandorIQ’s platform can support your compensation strategy—no matter where you are in your journey—reach out, I’d love to chat.