The Upskilling Imperative:

In the quest to maintain an edge, one of an enterprise’s most vital resources is its workforce. The last five years, however, have brought new levels of uncertainty in how organizations should best allocate their training dollars to stay ahead.

The COVID-19 pandemic and subsequent lockdowns — along with accelerating digital transformation — have ushered in a remarkably uncertain era for workers and the organizations that employ them. According to the World Economic Forum, employers are now projecting that 44% of workers’ skills will face disruption within the next five years. And that may be a low estimate depending on the particular industry.

Faced with this, upskilling employees has emerged as a powerful strategy for fostering growth and enhancing productivity. Smart leaders calculating the ROI of upskilling and realizing how valuable it can be.

Why is Upskilling Critical?

Upskilling refers to the process of providing employees with additional training and education to enhance their skills, knowledge and abilities. Solid upskilling programs allow companies that embrace them to:

• Stay competitive. Competition is fierce in the global economy. Enterprise organizations need to stay ahead to thrive. Upskilling their workers allows companies to stay competitive by ensuring employees can contribute new ideas and stay current on new trends and technologies.

• Attract and retain talent. Top talent seeks employers who invest in their growth. A commitment to upskilling can help enterprise companies attract the best and brightest in the job market. Plus, offering employees opportunities for growth and development positively impacts retention rates.

• Adapt to change. In a world that is constantly evolving, adaptability is key. Upskilled employees are better prepared to handle change, making the enterprise company more resilient in the face of uncertainty.

How Upskilling Drives Results

Upskilling employees leads to a significant ROI for enterprise companies. A study by the World Economic Forum found that closing the skills gap by upskilling employees could add $6.5 trillion to the global GDP and create 5.3 million net new jobs by 2030.

In addition, according to Gallup, companies that invest in employee training increase profitability by 11%. The ROI is even higher for upskilling in high-impact skills, such as critical thinking, data analytics and artificial intelligence.

As such, enterprise companies are investing in upskilling initiatives, driven by compelling, measurable outcomes. Here's a closer look at how upskilling pays off.

1. Improving productivity

Put simply, employees with updated skills perform their tasks more efficiently. They can embrace new technologies and work methods, leading to increased productivity and higher organizational effectiveness.

For example, a PwC survey revealed that a staggering 93% of CEOs who implement upskilling programs observe tangible benefits from increased productivity, as well as enhanced talent attraction and a workforce better prepared to overcome challenges.

2. Increasing quality and customer satisfaction

A workforce with advanced skills gives a business a significant competitive advantage. It can offer higher-quality products and services, attract more customers and charge higher prices.

3. Reducing employee turnover

Employee turnover is expensive. Upskilled employees are more likely to stay with the company, reducing turnover costs and keeping institutional knowledge in house.

The average expenditure for hiring a new employee stands at $4,700, but many professionals estimate the true costs far exceed this figure, potentially reaching 3-4 times the employee’s annual salary. These expenses include job advertising, recruitment fees, interview time, HR expenses team and training, among other costs.

Use our calculator to learn how much disengaged employees can potentially cost your organization.

4. Boosting employee engagement

It’s not just about a salary. Increasing employee engagement is pivotal. The decision of employees to remain with a company or seek better opportunities elsewhere transcends pure compensation, encompassing the entirety of their workplace experience.

Providing learning and development programs offer companies a key lever to increase employee engagement. Upskilled employees are more likely to stay with their companies because they feel valued.

In today’s talent landscape, the chance to foster personal and professional growth while on the job is a top priority. The availability of learning and development opportunities is now a defining feature of an exceptional work environment.

In addition, investing in upskilling fosters talent development within the organization. Employees are better equipped for higher-level roles, reducing the need to hire externally while giving workers new paths to grow without jumping to a new company.

5. Enhancing organizational reputation

A company that prioritizes employee development and upskilling enhances its reputation as a desirable employer. This reputation extends to the brand’s image, attracting both customers and investors.

According to the Harvard Business Review, job seekers from the Gen Z and Millennial generations especially value learning and training opportunities when they are choosing job opportunities. A company with a reputation for excellent learning and development programs gains the advantage in the competition for talent.

6. Innovation and problem solving

Upskilled employees are more innovative and adept at problem-solving. They can help the company adapt to market changes, potentially leading to new revenue and market opportunities.

Taking the long-term view, investing in employee upskilling helps future-proof your company. It ensures the enterprise is equipped to handle emerging challenges and opportunities.

Calculating the ROI of Upskilling

It’s true that putting hard numbers to ROI metrics for individual initiatives can be tricky. That said, there are several different ways to measure the ROI of upskilling. One way is to track employee productivity and customer satisfaction metrics before and after upskilling. You can also track employee turnover rates and the cost of hiring and onboarding new employees.

Some of the most common specific metrics that enterprise companies use to measure the ROI of upskilling employees include:

• Employee productivity metrics such as output per hour, sales per employee and customer satisfaction scores
• Quality metrics such as defect rates, customer satisfaction scores and error rates
• Innovation metrics associated with new patents filed, products launched and customer-centric solutions developed.

 Here are some additional tips for measuring the ROI of upskilling employees:

• Set specific goals and objectives. Before you start investing in upskilling, it's important to set measurable goals and objectives for what you want to achieve. This will help you to benchmark your progress and track your ROI.
• Use a variety of metrics. Don't just focus on one performance indicator, such as employee productivity. Instead, use a variety of metrics to get a complete picture of the impact of upskilling on your business.
• Be patient. Perhaps most critically, give upskilling initiatives time to prove their benefits. Don't expect to see a significant ROI overnight.

To help you calculate the overall impact of upskilling, use this ROI Calculator and discover achievable cost savings. 

Approaches to Upskilling Your Workforce

Enterprise companies can choose to upskill their employees in a variety of ways, depending on their budget, needs and employee preferences. It’s important to note that upskilling is an ongoing process, however. As technology and the business landscape continue to change, companies need to continually invest to stay ahead of the curve.

Upskilling methods include formal training programs to teach employees new skills and knowledge in a structured environment. Self-paced learning allows employees to learn new skills and knowledge at their own pace using online courses, books and other resources. In addition, companies often use mentorship and on-the-job training to connect employees with more experienced employees who can provide them with guidance as they learn new skills.

Savvy HR and L&D leaders also recognize that it’s not enough to simply offer upskilling programs—organizations must actively promote programs to drive participation. By integrating your learning and development initiatives with digital credentials, you motivate employees even as you gain the ability to assess data across the enterprise associated with the accumulation of digital badges. These insights give you visibility into skills across the organization while measuring in-house marketing campaigns for a given program.

As enterprise companies continue to face evolving challenges and opportunities, investing in upskilling is a proven strategy to stay competitive, adapt to change and secure a brighter future. The bottom line is clear: upskilling pays off in more ways than one, making it a wise choice for business leaders looking to maximize returns.

Would you like to learn more or take next steps to build an agile and adaptable workforce? Schedule a demo to see how our Workforce Solutions can work for you.