As industries race to secure talent for emerging technologies and large-scale projects, compensation continues to rise across sectors. Yet talent shortages remain a persistent concern.
According to Dr. C. Jayakumar, EVP & Head – Corporate HR (CHRO), Larsen & Toubro (L&T), the issue goes far beyond pay. In a conversation with People Matters, he said organisations are facing a capability challenge as demand for specialised expertise grows faster than the supply of future-ready talent.
His perspective comes at a time when sectors such as infrastructure, engineering, manufacturing, digital technologies and energy are expanding rapidly and competing for increasingly scarce technical skills.
Capability creation is the real talent challenge
Dr. Jayakumar said talent shortages continue because organisations are not simply looking for more people. They need professionals with deep technical expertise, strong domain knowledge and the ability to operate in complex environments.
“Talent shortages persist because the challenge is not compensation alone; it is capability.”
He pointed out that business growth across multiple sectors is outpacing capability creation. As organisations enter new technology domains, the gap becomes more visible.
“For example we need expertise in Electrolysers, Semiconductors, but find scarcity of talent.”
While India benefits from a large workforce, he believes the more important question is whether enough of that workforce possesses the skills needed for the future.
“India has a strong demographic advantage, but the real differentiator is not talent availability; it is future-ready talent availability.”
He stressed that capability cannot be created instantly through hiring. “Compensation can attract talent, but it cannot build capability overnight.”
Instead, expertise is developed over years through technical training, project exposure, mentoring and experience.
Why employees are looking beyond compensation
Compensation remains a critical factor in career decisions. Dr. Jayakumar described it as a reflection of fairness, competitiveness and how organisations value their people.
However, he noted that employees increasingly evaluate opportunities through a broader lens. Key factors shaping career decisions today include:
- Learning opportunities
- Career growth
- Leadership quality
- Organisational culture
- Long-term employability
- Meaningful work and impact
“People are asking simple but important questions: Will I learn? Will I grow? Will I remain relevant?”
According to Dr. Jayakumar, these priorities vary across career stages. Younger employees often place greater emphasis on growth and learning, while experienced professionals may focus more on purpose, leadership quality and meaningful contribution.
“Compensation may attract talent, but growth, culture and future readiness determine long-term commitment.”
The limits of a salary-led talent strategy
As competition for specialised talent intensifies, many organisations continue to use compensation as a primary attraction tool. Dr. Jayakumar believes this can create an imbalance.
“Salary is the most visible lever, so organisations often over-rely on it.”
He observed that compensation is easier to benchmark than leadership quality, organisational culture or career development frameworks. Yet those factors often play a larger role in retention.
In high-demand fields, professionals frequently look for:
- Challenging assignments
- Exposure to advanced technologies
- Strong mentorship
- Greater autonomy
- Visible career progression
“Compensation can help attract talent, but it is rarely enough to retain the right talent.”
He added that while a compensation-led approach may support short-term hiring objectives, it rarely creates lasting engagement.
“Salary matters, but salary alone does not build loyalty.”
Workforce challenges money cannot solve
Dr. Jayakumar described compensation as an important hygiene factor but said it cannot address several structural workforce issues.
Among the challenges he identified are:
- Skill obsolescence
- Weak career architecture
- Poor manager capability
- Burnout
- Employee disengagement
- Limited internal mobility
“If employees feel their skills are becoming outdated, higher pay may offer temporary comfort but not long-term confidence.”
He said employees want visible investment in their development and confidence that they can remain relevant as industries evolve.
Trust also plays a central role.
“Similarly, if employees do not trust leadership or see no meaningful career path, compensation alone will not create commitment.”
In his view, organisations must focus on the broader employee experience rather than treating compensation as a standalone solution.
Rethinking the employee value proposition
Dr. Jayakumar noted that employee expectations have become significantly more holistic.
In the past, attraction strategies were often centred on compensation, employer brand and job title. Today, employees assess the complete employment experience.
He said workers increasingly expect:
- Fair compensation
- Learning opportunities
- Flexibility
- Inclusion
- Career growth
- Well-being
- Meaningful work
“This is forcing organisations to rethink the employee value proposition.”
As a result, talent strategies must extend beyond recruitment and compensation benchmarking.
“Talent strategy today cannot be limited to hiring and compensation benchmarking. It must include capability building, leadership development, internal mobility and employee experience.”
He believes the strongest organisations will continuously develop talent rather than focus solely on acquisition.
Building expertise through long-term capability development
For industries that depend on deep technical expertise, Dr. Jayakumar sees deliberate capability building as the most effective approach.
He highlighted several elements that support sustainable workforce development:
- Structured learning academies
- Technical career pathways
- Apprenticeships
- Mentoring
- Project-based exposure
- Succession planning
“Deep expertise is not built in classrooms alone. It is built through real assignments, problem-solving and repeated exposure to complex challenges.”
He also underscored the importance of knowledge transfer from experienced professionals to future generations of talent.
“Knowledge transfer is equally critical. Organisations must systematically capture expertise from experienced professionals and institutionalise learning.”
The objective, he said, is not simply to acquire scarce talent but to create it.
“The stronger strategy is not to buy talent at a premium, but to build, grow and retain talent at scale.”
Capability will define future talent leaders
Looking ahead, Dr. Jayakumar expects successful organisations to treat compensation as a foundation rather than a complete talent strategy.
“They will pay fairly and competitively, but they will also build strong talent ecosystems around learning, leadership, culture, internal mobility and long-term employability.”
He believes organisations that help employees build meaningful careers will have a stronger advantage than those relying primarily on salary-led approaches.
“The future of talent will be shaped more by capability than by cost.”
As industries confront accelerating technological change and rising demand for specialised expertise, his message is clear: compensation remains important, but long-term workforce success depends on the ability to create capability at scale.
“In the long run, the real differentiator will not be who pays the highest salary. It will be who creates the strongest environment for talent to grow and thrive.”