Importance of upskilling in preparing for the future of work

As a business or HR leader, you’ve probably noticed that employee upskilling and reskilling are getting a lot of traction lately. Skills have emerged as a key area of focus for 2024, with Gartner highlighting skills management as one of the most crucial HR technologies.

It’s no surprise that so many executives are setting their sights on skills, given that skills-based organizations are 49% more likely to improve processes to maximize efficiency than their job-dominant competitors.

While skill-building is an essential component of any future-fit talent management plan, many upskilling strategies are missing the mark. Without a comprehensive view of workforce capabilities, leaders will struggle to devise skill-building initiatives that bridge knowledge gaps and drive maximal impact. Fortunately, there are a handful of new tools and tactics that executives can harness to take their upskilling and reskilling approach to the next level.

What is upskilling?

Upskilling is the strategic enhancement of an employee’s skill set, aimed at boosting their proficiency and adaptability in their current roles. Typically, as employees gain more experience within their current field of expertise, their capabilities and mastery of their role will also expand.

Upskilling is usually an intentional learning process where employees gain exposure to deeper knowledge through content-based coursework and experiential learning opportunities. For example, someone who works in software engineering may choose to take online courses in another coding language as a form of upskilling.

Upskilling can include developing employees’ mastery of both technical and soft skills. The goal of upskilling is to help employees gain the competencies needed to take on a more advanced role within their organization.

That’s why upskilling is typically a core component of most succession planning strategies—in order to move into a leadership role, employees must first build up the skills and experience they’ll need to not only execute their responsibilities but also guide their colleagues. Managers and employees will often come together to discuss the upskilling opportunities that align with every individual’s long-term goals, as well as business-wide objectives.

Upskilling not only enhances individual performance but also plays a crucial role in continuous organizational growth.

Differences 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 must also 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 a 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.

Upskilling and reskilling vs. external hiring

There’s no denying that upskilling and reskilling initiatives require an investment in both money and time. Superior approaches generally include both compelling content as part of a Learning and Development (L&D) curriculum, as well as experiential opportunities such as mentoring, projects, and gigs.

Given the effort upskilling and reskilling require, some might wonder if it might just be easier to prioritize external hiring. While it might sound like a simpler strategy on the surface, turning to new talent won’t solve your skill-building concerns. First off, today’s record-breaking labor shortage will make finding the right people exceptionally difficult. And even if you manage to recruit employees with the skills you’re looking for, they’re still going to need to build new capabilities down the line. Since the pace of change is accelerating, there isn’t a single person who can afford to skip out on upskilling and reskilling.

Consequently, the only way to prepare your organization for the future of work is by putting skills at the center of your strategy. As a bonus, prioritizing internal mobility over external hiring comes with its own set of advantages, including improved retention and engagement. 86% of CEOs reported that launching digital training and education programs led to improvements in employee engagement.

Importance of upskilling for the future of work

Skill-building has always been important, but recent events are raising the stakes. We’re now in what’s often called “the Fourth Industrial Revolution”, a time in which advances in AI and automation are revolutionizing the way we work. Since the pace of change is accelerating and the half-life of skills is shrinking, developing new competencies can no longer be an afterthought.

Instead, research points to upskilling and reskilling as prerequisites for success. The World Economic Forum predicts that half of all employees will need reskilling by 2025, as the adoption of technology increases. While the rise in automation and AI isn’t going to push employees out of the job market as some people once feared, The World Economic Forum predicts that it will create as many as 69 million new roles. And although that’s good news, these jobs are going to come with new sets of required knowledge, which is where the increased need for upskilling and reskilling comes into play.

When to upskill?

Ultimately, upskilling will never be a one-and-done process. As the speed of digital innovation accelerates and the half-life of learned knowledge shrinks, employees will need to continue honing new competencies to keep pace. Since the World Economic Forum predicts that nearly a quarter of all jobs will change within the next five years and 69 million new jobs will be created, employees must keep developing their skills so they’re qualified to take on these shifting responsibilities.

The most successful learners are always striving to acquire new skills, and leaders and managers are no exception. While reaching a management position requires a certain level of expertise, the process of learning and development should not end there, especially in today’s digital age, where new innovations are constantly emerging and changing the skills required for all roles.

Given the way technological innovations and evolving consumer demands are reshaping operating models, even employees who are very senior will benefit from upskilling initiatives. Similarly, new members of the workforce should be encouraged to hit the ground running by participating in experiential learning and content-based curriculums shortly after joining your organization.

Companies that empower employees of all ages and backgrounds to continue building new skills will be in the best position to pivot to meet new demands or respond to emerging challenges.

Who gets reskilled—and when?

By now, most leaders know that upskilling and reskilling will be essential in the new world of work. However, there’s still a lot of uncertainty about the best approach to skill-building. Should all of your employees be included in upskilling and reskilling? Or is it better to save it for the high performers and the high potentials?

The best skills strategies aren’t limited to a select few. Instead, they give everyone an equal opportunity to progress in their careers by identifying and participating in learning experiences that align with both personal goals and business priorities. But how can you make your people’s ambitions match up with business-critical objectives?

That’s where career pathing becomes critical. Career pathing enables your workforce to pursue relevant opportunities within your organization. The most impactful tools don’t just show people one potential path; they present users with a few different options for what direction their careers can take, so they can choose the path that fits best. Ideally, these tools might help workers discover roles that they never knew existed within your company, giving them new reasons to stay.

The best career pathing tools take it one step further by presenting users with an immediate solution to start turning their career goals into tangible realities. AI-driven tools can identify the skill gaps that employees need to bridge to reach their desired roles and show them learning and development resources to get them up to speed.

4 ways to develop a successful upskilling strategy 

If you’re ready to launch an upskilling initiative that empowers your workforce to expand their expertise, here are a few tips to get started:

#1. Evaluate your existing skill set

Leaders must root their upskilling strategies in the skills their workforce currently has. Traditionally, a unified view of all your employees’ skills has been hard to come by because this information is typically siloed into a few different HR systems. Most taxonomies are also out of date, leading to upskilling strategies that may not address the actual needs of the organization.

Rather than settling for this subpar view of workforce skills, companies are harnessing skills intelligence tools like Gloat’s Skills Foundation to gain an in-depth understanding of their entire organization’s capabilities. These systems are updated in real-time and pull from an employee’s LinkedIn profile or CV, in turn capturing the full range of knowledge and experience they’re bringing to the table.

#2. Forecast future skill requirements

Once you understand the current state of skills in your organization, the next step is predicting which capabilities will become increasingly important in the years to come. Once again, AI is the game-changer here; while executives in decades past had to make educated guesses about future skill needs, skills intelligence tools harness market research to present leaders with data-driven insights into the capabilities that will soon surge in demand. Equipped with this information, executives can then devise learning and development pathways that center around these specific competencies.

#3. Establish objectives aligned with business outcomes

To maximize your upskilling program’s impact, make sure people are developing competencies that align with your business needs. The best skill-building strategies take enterprise-wide objectives into account from the start. Leaders can then encourage employees to develop the skills needed to support these strategic goals and redeploy team members with transferable skills that align with the outcomes that your organization is looking to achieve.

#4. Regularly identify new skill gaps

Upskilling isn’t a one-and-done initiative; instead, it’s a continuous process. Consequently, leaders should always be on the lookout for emerging knowledge gaps so they can launch skill-building pathways to prevent these shortages from snowballing into bigger problems.  Skills intelligence tools can help pinpoint emerging disparities between the skills your people have and the capabilities your business will need so that executives can stay one step ahead of these upskilling priorities.

3 ways to upskill your workforce

Here are a few best practices for executives who are looking to maximize the impact their upskilling strategy has:

#1. Enhance employee versatility through cross-training

In addition to encouraging employees to deepen their expertise, workers should also have the opportunity to broaden their knowledge by participating in cross-training opportunities. For example, now that AI use cases are rapidly evolving, every employee should have the chance to develop skills that will help them harness these innovations effectively, such as learning how to write meaningful prompts for tools like ChatGPT.

#2. Integrate learning into expanded roles 

From your newest interns to your most senior executives, upskilling strategies should be designed to offer value for all employees. To integrate learning into the fabric of your company’s DNA, consider making upskilling a core component of every employee’s role. Skill-building can take the form of L&D coursework, in addition to experiential opportunities such as projects, gigs, and mentorships.

#3. Challenge your team with ambitious goals 

Motivate your entire workforce to keep their skill-building efforts going strong by setting goals around these initiatives. Whether you decide to create benchmarks for L&D coursework participation or strive to hit a certain number of mentorship pairings, creating some objectives will help you measure the progress your workforce is making and hold everyone accountable.

How upskilling can set your business up for success

Upskilling is a surefire way to help your organization prepare for the next wave of market shifts and changes in consumer demand. When your workforce has a breadth of capabilities and leaders have complete transparency into where knowledge lies, redeploying talent to meet emerging priorities becomes an efficient process. As a result, your business will be able to respond faster and in turn maintain a serious edge over your competitors.

Additionally, ongoing upskilling initiatives are a cost-effective way to ensure hiring managers have access to the talent they’re looking for. Since it’s 1.7 times more expensive to recruit, train, and onboard talent from outside your organization and these employees are 61% more likely to be terminated, it makes good business sense to focus on prioritizing internal mobility by empowering your workforce to build new skills.

Finally, upskilling is linked with greater workplace satisfaction and reduced churn risks. 93% of CEOs who introduce upskilling programs see an improvement in retention, in addition to productivity gains.

If you’re looking to learn more about the AI-powered technologies that visionary leaders are harnessing to upgrade upskilling and bridge knowledge gaps before they emerge, check out Gloat’s Skills Foundation.