Inflation, economic headwinds, dynamic client preferences, demand-supply gaps, and talent shortages are only a few challenges that organizations face in this rapidly changing world. These challenges have forced leaders to change their approaches toward business to mitigate and optimize operational costs. For instance, the acceleration of digital transformation and availing global talent services are some of the approaches highly acknowledged by businesses today. An American Staffing Association report suggests that three million temporary and contract employees work for America’s staffing organizations during an average week. The report adds that staffing organizations in the US hire 16 million temporary and contract employees during a year.

While working with a global talent organization can benefit you on a larger scale, organizations themselves must take steps to cope with a disrupted job market. All the help and assistance of the world is inadequate until one helps themselves. Thus, organizations must invest time and resources in upskilling their workforce.

What is upskilling?

Upskilling refers to the practice of providing the existing employees or workforce the opportunity to learn new skills and advance their capabilities. While it can be short-term or long-term, upskilling allows the employees to gain new knowledge and acquire relevant competencies to excel in their current or desired line of work. It improves the skillsets of employees and assists them to advance in their jobs through additional training, employee training programs, mentoring, or peer coaching.

Upskilling allows employees to perform tasks more effectively and proactively. It is one of the best investments employers can make to augment the skills of their current employees and workforce.

In the last couple of years, businesses have been struggling to close the skill gaps and manage costs effectively. Technology is changing rapidly, and the demand for digital skills has surged significantly. For instance, an analysis by the National Skills Coalition (NSC) (in partnership with the Federal Reserve Bank of Atlanta) finds that 92% of jobs analyzed in the U.S. labor market require digital skills. The analysis indicated a strong demand for digital skills across every industry and in all occupations – including entry-level and frontline positions. It has eventually increased the importance of upskilling.

What is the importance of upskilling today?

Amidst economic uncertainties and labor shortages, organizations need to reimagine their talent development strategies. Upskilling is one of the best ways to mitigate skill shortage challenges and save money. Various studies back that upskilling the existing workforce and training employees in new capabilities is more cost-effective than hiring new resources.

Here are some other aspects that assert the importance of upskilling in today’s business landscapes:

1. Close the digital skill gaps

Upskilling the workforce is as important as recruiting and developing talent in the digital economy. Today, the demand for skilled digital workers is rising as organizations align their efforts to keep pace with technological advancements, fill vacant positions, and contribute to the growing economy. Unfortunately, the supply is limited, which has created a significant skill gap. However, upskilling and training the workforce in new skills can help an organization close the digital skill gap and meet objectives.

• Organizations need to future-proof businesses

As per a report by the World Economic Forum, more than one billion jobs, which is almost one-third of the total jobs worldwide, will be transformed by technology by the next decade. With technology moving at such a high pace across industries, organizations must invest in upskilling their workforce and future-proofing their businesses. Organizations must focus on training their staff to learn new skills and promoting them to new roles.

• Artificial intelligence / machine learning is booming

Artificial intelligence and machine learning are gradually taking over the world and may have irreversible effects. A report by PwC suggests that 30% of jobs are at potential risk of automation by mid-2030. Many highly skilled and process-oriented jobs that involve repetitive tasks will be automated to save time and resources. However, jobs that require attributes like analysis, problem-solving, creativity, and social skills will remain exclusive to humans. Thus, upskilling is crucial to building a workspace – where humans and AI share workloads and work cohesively.

Today, the demand for employees proficient in digitally driven technologies like data science, business analysis, programming, data visualization, and digital marketing is high and will continue to remain so in the years ahead. Upskilling the current workforce can help organizations adapt to digitally governed changes better and faster. Moreover, it imparts benefits that make it highly relevant today.

What are the benefits of upskilling?

Before discussing the benefits of upskilling, it is important to mention that training and upskilling employees is expensive and time-consuming. However, it is an investment worth making as it can deliver high returns on investments (ROIs) and cost-benefits in the long run. For instance, nearly 66% of employers see a return on investments within a year through upskilling and reskilling.

Here are some primary benefits of upskilling the workforce:

• Increased employee retention

A study by Willis Towers Watson suggests that more than two-thirds of high-retention-risk employees (about 70%) want to leave their current jobs as they see no future advancement. All good employees want to grow and advance in their careers. Upskilling focuses on providing growth opportunities and improving learning curves, which makes the employee feel valued. It increases employee satisfaction which further contributes to improving retention rates.

• Improved productivity

Upskilling training programs and initiatives improve employee morale and motivate them to work with more passion. Highly motivated and satisfied employees are more productive. They contribute to a more acceptable workflow, high employee engagement, and better communication. Moreover, upskilling introduces new proficiencies in the working patterns and delivers a good competitive benefit.

• Foster a learning culture

Organizations that neglect the importance of a learning culture feel troubled in managing human capital. They are prone to experience high employee turnover and fail to keep their client base intact. On the other hand, a strong learning culture can increase employee retention rates by 30 to 50%. Upskilling fosters a culture of learning which eventually helps in enhancing an organization’s reputation for supporting staff and job satisfaction. In a survey, about 76% of employees said that an organization offering additional skills training to its staff is more appealing.

• Attract new and high-quality talent

Demonstrating commitment to employee development and sharing a good reputation for making the employees feel valued attracts new and high-quality talent. About 59% of millennials believe that development opportunities are extremely important when they apply for a position. Upskilling is not only a key to retaining talent but also to attracting top market-leading talents. Moreover, employees that feel valued will spread a good word about the organization and provide great references.

• Save resources

Hiring a new employee is time-consuming and expensive. For instance, the cost of replacing an individual employee can be 1.5x to 2x the employee’s annual salary. In such scenarios, upskilling can help you save resources in the form of time, money, and energy. Upskilling is more cost-efficient than hiring a new employee and ensures the placement of a trustworthy resource.

While enabling employee growth and ensuring personal and professional development, upskilling helps in building an adaptable, flexible, and agile workforce. It allows your organization to level up internally and prepares you for new challenges.