• Insights

Upskilling Employees

Global
10.02.22
3
Many skills that are considered indispensable today were rare or unheard of a generation ago. The world of work has transformed over time, particularly with the advent of new technology. And the trend is set to continue.

Changes in work practices necessitate changes to an employee’s skill set. According to a survey by the OECD, the higher the level of skill and education needed for a job, the smaller the risk of that job becoming automated in future. This means in practice that employers and employees both need to have an awareness of the kind of jobs that are ripe for automisation and the instinct to reskill and upskill employees at risk of losing their livelihoods. Many employers already do this, as, according to that study, in Germany, almost 40% of employees had at least one occupational re-qualification during their career, mostly related to their initial skill set.[1]

Regular training and upskilling are also key to the  success of a business. Back in 2014, IBM found that 84% of the employees of the highest performing businesses were receiving the training they needed, whilst this was the case in only 16% of the lowest-performing businesses.[2]      

Upskilling can foster a culture of learning and provide challenging opportunities for existing employees and avoid burnout. The new opportunities end up costing the employer less than hiring a new employees.  It is a win-win for both the employee and the employers and creates good will within the company’s existing employees.
Pay & Benefits - Pensions

The importance of upskilling reveals itself in employee-satisfaction levels too. A survey conducted by IBM showed that 43% of employees expected career advancement opportunities (which, presumably, needed a degree of upskilling), and 36% of employees expected to have continuous learning opportunities.[3] And having access to this kind of opportunity is known to reduce employee turnover. Studies show that ‘the relationship between total turnover rates and organisational performance is significant and negative’.[4] Of course, employee turnover costs dearly, and the higher the level of employee, the greater the cost. For hourly workers, it may cost an average of USD 1,500 per employee, while for C-Suite employees, it can cost 213% of their salary. Moreover, employee turnover may cause a loss of productivity and a decrease in employee morale.[5] 

The Covid-19 crisis has also shown how important upskilling can be. Many businesses have had to lay off employees and have not been able to afford to employ new ones to fill skills gaps. On that point, upskilling and re-skilling of employees could provide an answer – and may help a business survive.[6] But it has been a double-edged sword: because of the pandemic, much of the training that employees used to benefit from has been interrupted. The ILO has reported that, according to a global survey of 901 responses from 114 countries, training was somewhat interrupted for 90% of the employees they surveyed.[7]

So, what do employers need to bear in mind about training and upskilling?

Training and upskilling for employees - what to think about

References

[1] Nedelkoska, Quintini, “Automation, skills use and training”, OECD Social, Employment and Migration Working Papers, No. 202, 2018, https://www.oecd-ilibrary.org/docserver/2e2f4eea-en.pdf?expires=1640185659&id=id&accname=guest&checksum=3331BF2A490C45F4FCDF830280B5A105

[2] IBM, The Value of Training, 2014, https://www.ibm.com/training/pdfs/IBMTraining-TheValueofTraining.pdf

[3] IBM, What employees expect in 2021, https://www.ibm.com/downloads/cas/5BWJYEKZ

[4] Park, Shaw, “Turnover Rates and Organizational Performance: A Meta-Analysis”,  Journal of Applied Psychology Vol. 98,2 (2013) 268–309, https://moam.info/turnover-rates-and-organizational-performance-a-meta-polyu_5977e08d1723dde18bca342e.html

[5] PeopleKeep, Gabrielle Smith, Employee retention: The real cost of losing an employee, 17.09.2021, https://www.peoplekeep.com/blog/employee-retention-the-real-cost-of-losing-an-employee

[6] Forbes, George Elfond, Why Employee Upskilling And Reskilling Is So Important Right Now, 21.12.2020 https://www.forbes.com/sites/forbestechcouncil/2020/12/21/why-employee-upskilling-and-reskilling-is-so-important-right-now/?sh=1936fe953302

[7] ILO, Skilling, upskilling and reskilling of employees, apprentices & interns during the COVID-19 pandemic, 2021, https://www.etf.europa.eu/sites/default/files/2021-06/skilling_of_employees_during_covid.pdf

Authors
Tiffany Downs
Partner - United States
FordHarrison LLP
Sam Everatt
Executive Director - Belgium
Ius Laboris