The Importance of Reskilling and Upskilling Today's Workforce

January 24, 2024 | Reskill Your Workforce | 8 min read
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Within the decade, the global workforce will experience widespread disruption, with many jobs being created and lost — or changing for good. That's according to joint research between PwC and the World Economic Forum (WEF).

Nearly one-quarter of all jobs will be impacted by technology like generative AI, as nearly half of all tasks become automated. The repercussions of this mean that some jobs will be replaced, and at the same time, new jobs will emerge.

Knowing this, it begs the question: How can the global workforce sustain 24/7 service from anywhere to anyone when there are simply not enough skilled workers to fill the demand?

“Organizations have to act differently,” said Jonas Prising, CEO, ManpowerGroup, to the WEF. “Creating shareholder value can only be done in conjunction with taking care of employees, customers and communities. And that includes the responsibility to help people learn new skills, adapt for future jobs and to become creators of talent.”

We know that the skills gap continues to dampen productivity for many global enterprises. Some studies also reveal that the skills shortage is one factor contributing to the inflationary pressures as employers continue to outbid each other for the same constrained pool of skilled talent.

According to Korn Ferry’s report, Future of Work: The Global Talent Crunch, if left unchecked, by 2030 the cumulative impact of this talent shortage could cost $8.5 trillion dollars in unrealized annual revenue. As consequential as the cost of inaction is, the projections of taking a stand are just as prodigious. Consider the WEF research:

“… investment in reskilling and upskilling of the current global workforce has the potential to boost GDP by $6.5 trillion by 2030 while investing in future-ready education for today’s generation of school children could add an additional $2.54 trillion over the same period.”

What research like this shows is that the skills deficit is pervasive and daunting. And yet, the rewards that we all stand to reap from overcoming this great challenge will be far-reaching and significant.

But it will require a collaborative approach to solve — partnerships that go beyond the support side of global business.

Organizations are challenged to find innovators who can provide business creativity to solve problems and drive sustainable, valuable outcomes. Hiring managers struggle to find qualified individuals with mission-critical leadership skills, business acumen, artificial intelligence, data and analytics skills, software development experience, and cloud computing and cybersecurity expertise.

The skills gap is further exacerbated as technology evolves at an accelerated rate and redefines how to do business globally.

On an individual level, the economic disruption created by the pandemic gave people an opportunity to rethink and rebalance their lives and careers. Today, people view their jobs in a different light; they want careers that have a meaningful impact on their communities and enrich their own lives.

Businesses are being forced to adapt. Developing new skills is often cited as a key motivator for many workers. We have observed in our own work that organizations that meaningfully invest in upskilling and reskilling their employees materially improve employee retention and improve outcomes. This ultimately leads to sustained productivity and value for the business.

Businesses Must See the Importance of Reskilling and Upskilling

As this is largely an issue of supply and demand, it follows that businesses must close the gap by investing in the supply-side of their skills pipeline. Our traditional education institutions simply do not produce enough skilled talent to meet the demand, and they do not respond quickly to changes brought on by technology and other factors.

The need for people to learn new skills is paramount, but it also compounds the problem. Since these are skills that run the gamut across silos and verticals, it becomes challenging to find a single solution that can empower success for all.

Not just “hard skills” like coding, data science, cybersecurity, and cloud computing are lacking. The need for effective leadership has never been more important in what has become a highly virtualized, remote, and socially distant world.

In a time where most people are always online, connected, and instantly accessible, it is stunning how isolating and lonely the virtual workplace can be. The need for leadership has never been more critical in bringing teams together and rallying around a common goal.

Unfortunately, only 41% of organizations believe their leadership development programs build leaders in a way that benefits the business (Global Human Capital Trends 2019 report published by Deloitte).

Successful programs have adapted to develop a curriculum that offers balance, encompassing hard skills and power skills, like communication and collaboration, critical thinking and problem-solving, empathy, teamwork, creativity, and adaptability.

Investing in employee skills is crucial for success, but only 34% of workers today feel supported by their organization’s skill development opportunities.

What Are Reskilling and Upskilling?

Upskilling and reskilling are two critical concepts that shape the landscape of professional development. Both are done in alignment with an organization’s strategic priorities and their current workforce or job architecture. In order to meet goals, organizations must have the right talent in place to carry out the work. If they don’t have employees on staff already, they must either hire someone new or upskill and reskill their existing base, which tends to be more popular and cost-effective.

Upskilling refers to enhancing existing skills or acquiring new ones that align with the changing demands of the job market. It's not just about learning new software or mastering a new tool; it involves broadening one's understanding of industry trends, emerging technologies, and evolving customer needs. By upskilling, professionals can enhance their marketability, improve their performance, and increase their value to their employers.

But what’s actually involved in upskilling individuals?

Learning programs often include a range of options to close a skills gap, including mentorship, on-demand courses, live training, and hands-on modules. At Skillsoft, we often see our clients create custom learning journeys that meet their unique needs at the time. Consider how DB Systel GmbH launched a program to upskill recent grads for the roles they need that require a specific skill set. Programs like this work to close a gap, while helping employees who have a baseline skill set build on their foundations.

On the other hand, reskilling focuses on learning entirely new skills, often to transition into a new career or adapt to significant industry changes. Reskilling is about reinvention. As industries evolve and certain roles become obsolete, professionals may find themselves needing to pivot into new areas. Reskilling is about leveraging transferable skills and experiences while learning new skills that are in demand in a different field or industry.

As employees build new skills, they can measure their progress through regular assessments. In Skillsoft’s case, these are called Skills Benchmarks, which test a person’s skills at one stage of their journey and then recommend training to close their skills gap — clarifying the exact training they should take to upskill or reskill. Then, employees test again later after completing training to see their progress. Along the way, they earn badges to recognize their efforts and validate their newly acquired skills.

As organizations launch programs to upskill or reskill their workforce, they often see the benefits take many forms, including a tangible return on investment. Cost savings in the form of reduced administration time, a lower training or talent acquisition cost, and even higher rates of productivity all contribute to a program’s success. Forrester Consulting produced Total Economic Impact studies for Skillsoft, showing how clients often see the returns for their training programs. See the impact of technology-focused training here.

Overall, upskilling and reskilling are strategic tools that individuals and organizations can leverage to stay relevant and competitive.

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A Robust Reskilling and Upskillilng Strategy Makes Sense

According to Gallup, the cost of replacing an employee can be as high as two times the employee’s annual salary. Comparatively, upskilling or reskilling is a much smaller investment for a company than recruiting, hiring, and training a new employee.

Reskilling and upskilling employees does more than boost a company's bottom line, it creates a happier workforce.

For individuals, upskilling and reskilling offer pathways to career advancement, increased job security, and higher earning potential. Moreover, individuals who actively engage in upskilling and reskilling are likely to perform their job duties more efficiently, make fewer errors, and exhibit higher levels of work engagement.

The benefits of reskilling to individuals:

  • It helps employees see career advancement opportunities
  • They often feel more engaged at work
  • It boosts morale and productivity

In addition, employees who invest in learning and skill-building are more likely to stay up to date with industry trends, make better recommendations, and offer keener insights to clients.

On an organizational level, investing in upskilling and reskilling programs for employees can lead to a more skilled and productive workforce. Such investment helps organizations stay competitive, adapt to technological advancements, and drive business growth.

Organizations that prioritize training their existing employees are more likely to foster an adaptable workforce that's resilient to change over time. Upskilling and reskilling programs can effectively address skills gaps within the organization, reducing the need for external hiring.

The benefits of reskilling to organizations:

  • It improves retention and attracts new talent
  • Skilled, certified staff often add more value to the business
  • Training closes skills gaps that hamper progress

While reskilling and upskilling are solid strategies, not all skills, positions, and roles are the same. So, the next hurdle is — how can you invest in all your employees’ skills cost-effectively?

Many first movers are taking control of their employees' professional learning experiences using the newest insights learning science offers.

Read Next: How a Job Architecture Can Help Streamline Workforce Transformation

How to Leverage Technology for Reskilling Efforts

The same advances in technology that are in part contributing to the skills gap can help to close it. Leaders are looking for trusted, reliable, and (most importantly) effective learning solutions — a mechanism that accelerates productivity and doesn’t disrupt the flow of work. Employees want a marketable and intuitive pathway to learn skills they can use to contribute to the success of the business and also build their own capabilities.

“We are moving out of the era of video-based training, which has dominated the learning and development space over the last 15 years, and toward a future where hands-on, human-centric learning experiences will become the norm. This is driven by two key trends: the rise of digital social interactions and the advancement of AI,” says my colleague and Skillsoft CTO and CPO, Apratim Purakayastha. “What’s key to blended, interactive learning modalities is the “human element.” It can include hands-on platforms like Codecademy or conversation simulators like CAISY, as well as online coaching, instructor-led training, or bootcamps.”

Curated pathways or journeys that guide learners are increasingly critical, especially for higher-stakes outcomes; not everyone is naturally curious or fully understands what they need to learn. With so many options available today, learners can choose to consume live instruction, video content, reading, audio, or whatever works best, but the myriad of options can be overwhelming. They need encouragement and a level of didactic structure to help them on their way. Learning pathways and skill benchmarks correlated to in-demand roles help learners find their appropriate learning journey more readily.

Similarly, for those in leadership positions, it’s easy to get overwhelmed when the task is to plan the career development for a range of individual employees. Leaders seek an intuitive and scalable solution that can serve the various needs of their workforce — to provide personalization and structure that doesn't require a massive investment of time to enable.

As the skills that learners need change, so should how organizations teach those skills. Businesses need flexible, more diverse learning experiences if they want a scalable outcome. They cannot just hire their way out of the problem. This leads to increased competition and wage inflation for the same constrained pool of talent. Ultimately, they will just trade resources and dampen productivity.

To address this constantly evolving skill landscape, Skillsoft leverages technology and learning science to provide tools and activities that address many of these issues directly.

We offer solutions for:

  • Onboarding
  • Upskilling
  • Reskilling
  • Learning in the flow of work
  • Coaching for leaders
  • Project-based learning and hands-on practice
  • Cohort-based learning

We curate these solutions into a system of learning journeys, which offers a blend of learning resources, including self-study on-demand courses, hands-on labs, live instruction, coaching, and an expansive digital books library. We align these learning journeys to in-demand skills based on the analytics of more than 45 million learners and skills insights from partners like Burning Glass Technologies.

We believe that these capabilities provide the foundation to achieve workforce transformation at scale, ultimately enabling employers and employees alike to close the skills gap and reach their fullest potential. See how it works by getting a demo today.

Editor's note: This post was updated with expanded material on reskilling and upskilling in Jan. 2024.