As a business leader, you need to hire skilled talent. However, if your company is like most, your HR team finds it challenging to recruit qualified candidates to fill critical jobs across your organization.
The worldwide talent shortage is part of the reason hiring has become more difficult. However, the biggest problem is a massive skills misalignment due to applicants not having the right skills. Numerous companies have job vacancies they cannot fill because they cannot find qualified talent.
Industry experts say this problem has been growing for the past 10 years. Organizations have upgraded technology and implemented digital transformation solutions to streamline operations and improve productivity. They have eliminated positions that were obsolete, changed the requirements for other jobs, and added new ones to support and manage their new infrastructure.
Applicants’ skills have not kept pace with these changes, which has resulted in a shortage of candidates with in-demand skills. The problem is so serious that 71% of CEOs say a skills shortage is their biggest business challenge and will be for the foreseeable future.
Organizations have concluded that developing current staff is the solution, which means they need to help workers enhance existing skills and learn new ones, which is why upskilling and reskilling have become popular workforce skills assessment development strategies.
What are Upskilling and Reskilling?
Many clients and prospects ask, “What is the difference between upskilling and reskilling?” Upskilling and reskilling programs are similar because both aim to develop talent. However, they are designed to achieve different results.
While the meaning of upskilling can differ by organization, the widely accepted definition of upskilling among HR and learning development leaders is “providing employees with training that helps them expand their existing skill set.” The new and enhanced skills help the worker improve their current job performance and advance their career.
When clients ask us, “What is an example of upskilling?” we tell them that a Java developer could learn C++ or Python, or a marketing web content specialist could master search engine optimization (SEO) and social media best practices.
Reskilling means teaching employees new skills so they can take on a new role job in an organization. It often occurs when an employee’s previous responsibilities become irrelevant due to advances and changes in technology. For example, a recruiter could transition into corporate training, or a “bricks and mortar” retail manager could train to become a web content manager for an e-commerce company.
Many business leaders agree that implementing upskilling and reskilling programs is the key to redeveloping and retooling their workforces. The federal government agrees. The U.S. Department of Labor saw the need to provide training and temporary employment to dislocated workers. So, it created a Dislocated Worker Grant program in 2014 and recently increased its funding by $100 million.
While upskilling and reskilling can be used to develop and promote internal talent, it’s important to note that recruiters can use upskilling methods as a means of skills assessments when searching for new hires. This can help gauge skills and comprehension of potential candidates against your current employees.
What is the Effectiveness of Upskilling and Reskilling
Organizations need employees who can adapt to marketplace changes and quickly pick up new skills so they can adjust to unforeseen shifts in business demands. Implementing upskilling and reskilling programs that also serve as skills assessments is the first step toward building an organization agile and nimble enough to accomplish these goals. These are some ways industry experts say upskilling and reskilling help organizations:
- Minimize the Impact of Shifts in Labor Demand: The demand for specific skills changes constantly due to technological advances and shifting priorities. Around 1.4 million workers will need to be reskilled by 2026; for 70% of them, it will be because their job no longer exists. At least 54% of all employees will require significant re- and upskilling that could take anywhere from a few months to over a year. This means the future belongs to organizations that analyze which skills their staff has and identify knowledge gaps so they can define training needs and upskilling opportunities.
- Win-Win for Managers and Employees: Upskilling and reskilling programs benefit both companies and employees because they create shared value. Employees who are offered career development opportunities are likely to remain loyal to an organization. According to LinkedIn, 94% of employees say they would stay with a company longer if the organization invested in their development. Conversely, if a company has poor or no training, up to 40% of employees will leave within a year. This is why employers should view employee upskilling and reskilling initiatives as a priority instead of an “unnecessary expense” that can be cut if profits decrease.
- Upskilling and Reskilling Reduce Turnover: Upskilling and reskilling may seem like big investments, but they pay off in the long run through increased productivity and lower turnover. Recent statistics show turnover costs U.S. businesses over $1 trillion per year. The cost of losing an experienced employee is high, but the company also loses the staff member’s proprietary knowledge and experience. Turnover also risks disrupting operational efficiency and productivity while workers are hired and trained to replace those who left.
- Upskilling and Reskilling Employees Improves Productivity: Upskilling and reskilling increase productivity by enabling employees to work smarter and more efficiently. A McKinsey report showed that 91% of employers who upskilled and reskilled their workforce saw an increase in overall productivity. This is why organizations like Google, Wal-Mart, Verizon, McDonald’s, and Marriott International have invested billions in upskilling and reskilling.
How to Upskill Employees
As changes in technology create new opportunities and jobs, businesses need employees who are ready to assume additional responsibility and move into those roles. This means employees need specialized skill sets that are required for the jobs, and employers need skills assessments to make smart hiring choices.
Managers and training and development leaders should assess employees’ strengths and weaknesses and identify knowledge gaps. They can then create customized training programs to upskill and reskill employees so they can thrive with the organization while growing their careers.
Companies can leverage upskilling and reskilling to reduce their dependence on recruiting, hiring, and training. This is especially true if they concentrate on helping entry-level and low- and mid-skilled workers upgrade current skills and learn new ones. These employees are normally the ones whose jobs might be eliminated or disrupted by technology.
What Are Upskilling Strategies?
Technology is changing the way organizations operate, which means businesses must consistently enhance their staff’s technical knowledge and skill sets through upskilling and reskilling, making workers feel they are valued and have a promising future with the company. So, when clients and prospects ask, “What are the 4 strategies of upskilling and reskilling?” These are steps we recommend they take:
- Define Your Needs: You would not drive somewhere unless you knew where you were and where you wanted to go. So, your first step is to define what your current in-demand skills are and determine what they will be in the future. This means you must review your short- and long-term goals to see what skills employees will need.
- Create Skill Needs Forecasting Models: You cannot achieve goals if you do not have the right resources. So, your next step is to evaluate your current in-demand skills so you can maximize what you currently have. Meanwhile, you can implement upskilling and reskilling initiatives and start building a pipeline of highly skilled workers to meet future business demands.
- Conduct Skills Analyses: You cannot define which types of skills you need to develop until you know what you already have. So, you must analyze each team member’s skills to identify deficiencies and mismatches. For example, if a computer skills test shows an employee has strong MS Word and MS Excel abilities but is not proficient in MS PowerPoint, you can provide training to help them enhance their expertise in setting up, creating, and animating presentations.
- Set and Monitor Employee Development Goals: Upskilling and reskilling initiatives are worthless if they are not working. So, you must set and define measurable goals and constantly monitor them to ensure they are working. You can then make changes and adjustments as needed. For example, if you want to increase the number of IT employees who are proficient in Java, PHP, or Visual Basic by 20%, skills assessments can help you track how many employees have achieved the required proficiency level.
Why Organizations Upskill and Reskill Employees
Business leaders are receptive to upskilling and reskilling programs because they serve as reliable skills assessments tools and employers can see immediate results. Upskilling and reskilling directly impact profitability by making employees more productive, preparing them to assume additional responsibilities, and ensuring they are ready to take on new challenges. This contributes to overall efficiency, which makes managers happy. It also makes employees happy because they have the opportunity to improve their current skills and learn new ones. These are reasons organizations find it advantageous to upskill and reskill employees:
- Improve Productivity: Upskilling and reskilling team members increase productivity by enabling employees to work smarter and more efficiently. According to a study conducted by Capgemini Research, upskilled and reskilled employees can pivot quickly and focus on tasks that are critical to business growth, which improves organizational output.
- Retain Good Employees: Organizations risk losing good employees because many entry-level and low- and mid-skill-level positions can become obsolete or be disrupted by technology. Businesses can retain promising employees by helping them master the skills they need in order to take on a similar role or train for a different job. Organizations that use an industry-leading assessment solution can easily identify employees in this situation and create customized training and employee development programs for them.
- Build a Talent Pool: When 4.3 million Americans left their jobs in 2021, companies struggled to find qualified employees to fill critical positions. This taught them the importance of building an internal talent pool by developing current staff members. Having team members who are prepared and trained to accept new responsibilities is much less expensive and less risky than recruiting, onboarding, and training new talent. Organizations that use an industry-leading assessment solution can evaluate their current resources and plan for the future.
Upskilling and Reskilling Success Stories
The competition for talent is fierce, and industry experts do not see an end in sight. Some of the world’s largest companies have responded by investing in upskilling and reskilling initiatives to future-proof their workforces:
- Mastercard: The financial services industry has seen drastic changes to standard operating procedures, and Mastercard wanted to ensure all 24,000 of its workers were ready to pivot as needed. It implemented upskilling and reskilling programs that unlocked over $21 million in value through increased productivity and 100,000 hours of capacity gained and helped jumpstart the creation of a cryptocurrency and NFT (non-fungible token) group.
- Target: Target offers employer-funded college degree and certification programs for its 340,000 part-time and full-time employees with assistance from Guild Education. Beginning on their first day at work, employees are eligible for debt-free assistance to pursue select undergraduate degrees, certificates, and certifications from 250 business programs at over 40 colleges, universities, and technical schools at no cost.
- Seagate: As a leading provider of data storage solutions, Seagate wanted to ensure its employees were trained in emerging technologies and make talent redeployment simpler and scalable globally. It avoided layoffs during the COVID-19 pandemic by implementing upskilling and reskilling initiatives that created $13 million in savings from reduced external hiring costs, $20 million in savings from minimized termination costs, and resulted in 30% of full-time roles being filled internally.
- Unilever: Unilever wanted to provide more opportunities to its employees through training, mentorships, and projects aligned with their personal goals and ambitions. Its upskilling and reskilling initiative included launching FLEX Experiences, an AI-enabled talent marketplace to connect workers with opportunities and create a network of ready talent. It has seen a 41% improvement in productivity since implementation. Additionally, 70% of assignments are now filled with cross-functional teams.
Get Started with Upskilling and Reskilling
Implementing upskilling and reskilling initiatives will help you build a skilled talent pool that serves your current and future needs. Implementing an industry-leading skills testing solution like the eSkill Talent Assessment PlatformTM is the first step.
Are you ready to learn how upskilling and reskilling can help you prepare your workforce for the future? Contact eSkill to request a demo.
