3 Reasons why it’s worth investing in upskilling and reskilling

Skills are in the spotlight, and they’re there to stay. Gartner reveals that developing critical competencies sits at the top of leaders’ priority lists for 2022. Similarly, McKinsey recently identified skill building as the best way to bridge the gaps holding back business transformation.

But while most executives recognize the importance of skills, several challenges remain. Two in five leaders acknowledge that they don’t know what skills they have in their workforce and only 17% believe they can anticipate the skills their organization will need in the future.

With so much uncertainty, some leaders might be wondering if it’s even worth investing in upskilling and reskilling. The answer is yes—as long as you launch the right kind of skill-building strategy. But what does it take to get started? And how can you feel confident that your efforts will pay off?

The difference between upskilling, reskilling, and cross-skilling

Upskilling and reskilling are often used interchangeably, but there are several differences between the terms. Here’s how you can distinguish between them:

Upskilling describes any process that helps someone answer the following question: “What additional skills do I need to progress in my current career?”. It’s about enabling employees to accelerate their progression up traditional, linear career paths.

In contrast, reskilling is for employees who are interested in switching lanes. It empowers them to answer the question, “What skills do I need to transition from one department to another?”

Since there are some skills that everyone will need in the new world of work, businesses also need to prioritize cross-skilling. The purpose of cross-skilling is to develop a portfolio of skills that are valuable across multiple verticals, functions, or domains.

If you’re looking at T-shaped talent model in which the vertical bar represents an employee’s depth of skills and the horizontal bar depicts a range of skills, upskilling is about lengthening the vertical base of the T. Reskilling is what happens when you move that vertical line entirely. And cross-skilling is about elongating the horizontal top of the T.

The most common upskilling and reskilling challenges

Whether your employees want to prioritize upskilling or focus on reskilling, here are a few overarching skills challenges leaders should have on their radars:

Lack of visibility
When it comes to existing workforce capabilities and widening knowledge gaps, most leaders are still in the dark. Executives need full visibility into the skills within their business if they want to launch impactful initiatives that will stretch their dollars furthest.

For most enterprises, the biggest roadblock is that skills tracking was traditionally manual, making it cumbersome and nearly impossible to keep up to date. It’s only in recent years that AI platforms have begun to enable simple and personalized career experiences at scale, without herculean human efforts.

Lack of agility
The skills that might have set your workforce apart three years ago probably look very different from the competencies that matter today. That’s because the half-life of skills is quickly shrinking. Gartner research finds that in an average 2017 job posting, one in three skills have already become obsolete.

Lack of experiential learning
While engaging content is a step in the right direction, your people are going to need to do more than just read about new skills if they want to master them. Employees should also have the chance to participate in hands-on learning experiences such as projects, gigs, and mentorships.

As Amanda Nolen, co-founder of the educational transformation consultancy NilesNolen explains, “Learning requires involvement beyond binge-watching videos. Would you let a surgeon operate on you if she has binge-watched videos of other doctors in the operating room? Building real skills, let alone expertise, needs a lot more than that.”

3 Reasons why upskilling and reskilling initiatives pay off

Curious how focusing on skill-building ultimately leads to dollars saved? There are a handful of ways that upskilling and reskilling can generate savings:

#1. Develop the talent you need
It’s no secret that most businesses are grappling with a labor shortage. There have been months of sub-par jobs reports, quit rates that consistently break records, and headlines about the desperate lengths that employers are going to convince their people to stay. At many organizations, the war for talent is starting to look like a losing battle.

Fortunately, it’s not too late to turn things around. While it may be next to impossible to find the talent you’re looking for externally, there are plenty of opportunities to develop your people so they can take on the roles you’re looking to fill. Upskilling, reskilling, and cross-skilling can ensure that these internal candidates are ready for the challenge.

#2. Cut hiring and recruitment costs
Can you afford to lose top talent? For most businesses, the answer is a resounding no. The cost of replacing a skilled employee is one and a half to two times that individual’s annual salary, so it makes good business sense to strive for better retention.

Focusing on upskilling and reskilling is one of the best steps you can take to make hefty hiring and onboarding costs a thing of the past. PwC found that an impressive 93% of CEOs who introduce upskilling programs see an improvement in retention, in addition to productivity gains.

#3. Boost employee engagement
Want to inspire your people to achieve their full potential? Set them up with the tools and resources they need to achieve success, including upskilling and reskilling initiatives. 86% of CEOs reported that launching digital training and education programs led to improvements in employee engagement.

Since Gallup found that work units in the top quartile in employee engagement outperformed bottom-quartile units by 10% on customer ratings and 22% on profitability, it’s easy to see why it pays to keep employees motivated.

Prioritizing upskilling and reskilling isn’t just a win for your employees and their futures; it’s a crucial business investment that paves the way for resiliency. To learn more about what it takes to fuel the skills imperative, download our ebook, The ultimate guide to the skills-based organization.