Upskilling vs. hiring new employees: What should you choose?
Machine learning, artificial intelligence, Blockchain, robotics are words that are looming large over the organizations and workforce today. How does one efficiently tackle this disruption? The most obvious answer is ‘upskill’ the workforce. But the dilemma comes on whether to upskill the existing workforce or hire resources skilled in new and emerging technologies. Before going ahead in answering this, let's take a look at what upskilling is and the pros and cons of the same.
Upskilling, in its simplest form, means training employees with the required new competencies to bridge a skills gap. With the way the world is moving forward digitally, upskilling has become imperative to maintain relevance in the market. Upskilling an existing workforce comes at a price, but if this cost is considered an investment, there are many other benefits that come with it:
- Improving employee engagement and retention: When trained with a new set of skills, employees are better equipped to take on challenges. They also become a better contender for promotions; from the organization's point of view, the retention of employees will also go up as an engaged employee is a productive employee.
- Increase in morale, loyalty, and motivation: The training will give employees a sense of recognition and boost their confidence. It will also provide impetus to perform better.
- Succession planning: To ensure smooth operating of an organization when the critical personnel leave, upskilling will help a successor to step into leadership roles with the least disruption.
- Attracting talent: When an organization is known to invest in its employees in terms of training and development, talented people will be naturally drawn to seek employment.
Having stated a few pros of upskilling, it is also required to look at what could throw a spanner into it:
- Resistance: Challenging, but anticipated and solvable. Any change in the status quo will naturally be met with resistance. But this can be overcome through creating awareness and transparency of the process.
- Loss of talent: Loss of a trained employee to a competitor
- High cost of upskilling: If done right, an effective training and upskilling program might require high resources and funds.
- Inadequate vision and monitoring: Improper planning in upskilling activities will give rise to poor results.
Going back to the dilemma of whether to upskill or hire, the simplest way to reach a solution is by calculating the ROI on upskilling vs. the cost of hiring new employees. According to a World Government Summit 2019 report The Lost Workforce - Upskilling for the Future, the ROI of investing 1 Euro in upskilling, saves or generates 2 Euros. Similarly, Matt Powell says that each time a business replaces a salaried employee, the cost of replacing him/her can be equal to 9 months’ salary.
In addition to the advantages stated earlier in this article, there are other equally important reasons for upskilling the current workforce:
- Creating a sense of ownership amongst the employees: Empowering employees through training allows them to see that the organization acknowledges their worth and appreciate their challenges in the workspace.
- Utilizing existing knowledge: The wealth of experience of an existing employee will help the organization in achieving its goals and increase productivity.
- Cultivating a healthy culture: Upskilling within the organization will create a learning culture that can go a long way in innovation and creativity. Current employees are more in tune with the organization's vision, mission, and culture and are more likely to adapt to changes. Upskilling also cultivates a culture of achievement and healthy competition.
Thus, when the choice is between upskilling existing employees vis-à-vis hiring new employees, go with the former, unless the unique skills required are highly technical and require expert knowledge. In the words of Peter Drucker, ‘The only skill that will be important in the 21st century, is the skill of learning new skills. Everything will become obsolete over time.’