'How Employee Upskilling Benefits Your Company's Bottom Line'
Ensuring a healthy bottom line is essential for all businesses. Many things are critical to achieving that ' a high-quality product or service, a deep understanding of your audience's needs and how you solve them, and the strategies necessary to connect the dots.
However, you cannot overlook the importance of your employees in that equation. In particular, the skills your employees bring to the table.
Today's employers can no longer assume that their employees' skills are enough to drive growth and profitability. Instead, it's critical to invest in upskilling.
The Skills Shortage
According to Reuters, '75% of companies surveyed by ManpowerGroup across eight countries and regions reported talent shortages, creating profound implications for the retention and upskilling of workers.' The group went further, predicting at DAVOS 2023 that 'talent shortages in key sectors are likely to remain a feature of Western economies left with persistently tight labor markets.'
Fortune magazine backs that up, even though the US added over 500,000 jobs in January 2023, dropping the national unemployment rate to 3.4%, a 53-year low. The magazine noted that employers were 'scared to let go of workers' and were suffering from 'pandemic paranoia.'
Of course, the truth goes much deeper. The global skills shortage is nothing new. Many sectors, notably information technology, have struggled with dramatically increased demand for skilled employees with a rapidly decreasing supply of trained professionals.
As far back as 2017, McKinsey Global Institute predicted that up to 375 million workers would have to upskill or reskill by 2030. That prediction did not include the fallout from the COVID-19 pandemic, the subsequent shift to remote and hybrid work, or the so-called Great Resignation that followed.
How can employers overcome this shortage and close the skills gap? More and more are upskilling their current workforce. Investing in your employees can ensure you have access to the skills necessary for growth while employees benefit from having a more in-demand skill set. Upskilling allows you to enhance productivity, increase your ability to compete, satisfy your customers, and control costs. It also boosts employee retention and satisfaction, which are crucial today.
Productivity is a measure of how efficient your employees are at completing tasks and reaching goals.
Upskilling can provide a dramatic boost to employee productivity. Your employees are more capable, complete tasks quickly and accurately, and have fewer revisions or changes. Plus, training in-house employees allows you to develop cross-functional expertise, which means employees can work well within different teams.
Upskilling drives enhanced employee engagement, which in turn affects productivity. According to Zippia, engaged employees are 21% more productive than disengaged employees. That engagement also provides additional benefits that speak to productivity, efficiency, and other metrics, including reduced absenteeism, reduced internal theft/shrink, and more productive hours per day.
You don't operate in a vacuum, no matter your industry or niche. You have competitors. Upskilling your employees allows you to compete better in key ways.
Skills Gap ' You can close your skills gap by upskilling your employees. If competitors have not taken similar action, their employee productivity will remain low and continue decreasing.
Flexibility ' Upskilling makes your team members more versatile. They can easily change roles, ensuring that you can achieve a flexible workforce to accommodate shifting needs in production/service delivery.
Accuracy ' Upskilled employees complete their tasks with greater accuracy. That means fewer errors and revisions, improved quality, and reduced time and materials consumption.
Efficiency ' Productivity is only one measure of success. Upskilling increases your employees' efficiency, which drives down costs while improving outcomes, helping you outcompete others in your industry.
You cannot build a thriving business without satisfied, loyal customers. And you must eliminate the unlimited growth mindset that encourages businesses to focus on enticing new customers to make up for those who defect because they're not satisfied.
Unlimited growth is a myth. Plus, it costs considerably more to attract and convert new customers than to keep the ones you already have. But keeping current customers is no easy task. Consider the following:
Gartner points out that 81% of marketers see customer satisfaction as their 'main competition,' not other companies within their industry.
PwC notes that 59% of customers will jump ship after several bad experiences, but 17% will do so after just one.
The solution? Upskilling your employees.
Upskilling allows you to achieve several critical goals. First, it improves the customer experience at every touchpoint by ensuring that employees have the knowledge and skills required. That includes people skills and knowledge of advanced analytics systems that can provide employees information to customize the buyer journey, personalize interactions, and more.
Second, upskilling ensures that your people have the knowledge necessary to resolve issues as they arise. Your customers have their problems accurately handled with the first contact in most cases, dramatically decreasing the number of return calls.
Third, improved communication and personalization make your customers feel valued and respected. That strengthens the emotional connection between them and your brand, increasing satisfaction and retention.
One of the most pressing reasons to upskill your current employees rather than hire new ones is to reduce costs. The HR Director points out that upskilling can cost 70% to 92% less than hiring.
Some of the key savings here include:
No onboarding costs
No job advertising costs
No costs associated with interviewing resume/CV review
No cost to backfill open roles
Reduced cost due to understanding and further turnover
No reduced productivity as the new hire gets up to speed
Consider that hiring a cloud architect could cost almost $180,000 for the first year when everything is said and done. Now, compare that with the cost of upskilling, which could be $70,000 at the high end. Depending on the training resources used and the amount of training needed, that figure could be much, much lower.
Employee Retention and Satisfaction
Finally, understand that upskilling can dramatically increase your company's employee retention and satisfaction. Both are essential to creating and maintaining a stable, developed workforce and building a reputation as an employer of note.
Employee retention is a measure of how many employees you lose over time. According to CFO magazine, 36% of US employees plan to leave their job in 2023. One of the major reasons cited was a greater desire to feel like they're contributing to the company's greater good and feeling a strong connection with company culture. Upskilling programs help build that connection and give employees the feeling that they're bringing more value to the table and building a stronger business overall.
Of course, keeping the employees you have also means improving their overall satisfaction. That's harder today than in years past, thanks largely to shifting employee satisfaction drivers. For instance, financial compensation was the primary metric of satisfaction decades ago. Today, though, it's a mixture of things, and compensation is surprisingly far down the list.
A sense of having a future with the company
Feeling valued and supported during their career path
Access to benefits, such as healthcare and mental healthcare
An upskilling program shows employees that you're committed to providing them with opportunities for advancement. It proves that you value them and want to help them enjoy a rewarding career that offers new challenges rather than just the 'same old, same old.'
This also helps improve your reputation with potential job seekers. Employees want to work for a company that shows them loyalty and support, and instituting upskilling programs positions your brand as one that does just that.
Virtually every industry today faces a growing skills gap. Talented, trained, credentialed workers are growing scarcer, and the plunging unemployment rate means fewer and fewer will come your way in the future.
The good news is that upskilling allows you to overcome that hurdle while simultaneously avoiding the costs of hiring new employees. It also ensures that you can improve productivity, efficiency, competitiveness, and improved customer satisfaction while driving better employee retention and satisfaction.
With the range of tools and platforms available today, it's also easy to find affordable upskilling solutions that provide the training and knowledge necessary without a high price tag. That'as a win-win for your business and your employees.