What Are Upskilling and Reskilling? (And Why They Matter)

Upskilling and reskilling have emerged as crucial strategies for creating a robust workforce capable of adapting to evolving needs, getting excited about learning opportunities, and climbing higher within the organization.

But for HR managers and talent managers, boosting employee retention and promoting career growth comes with its own set of hurdles. If you’re a manager, you know what it’s like to deal with a lack of insight or direction, old tech, tight budgets, and short turnaround times. With these obstacles making the process of creating professional development programs overwhelming, organizations typically turn to external talent pools in an attempt to fill gaps quickly.

This article will delve into upskilling and reskilling, guiding you through important aspects including identifying skill gaps, selecting skills technology, and creating engaging learning environments. These elements are essential for transforming the challenges of talent management into a competitive advantage, ensuring your workforce is prepared for today's demands and poised for future opportunities.

What Is Upskilling?

Upskilling is the process of expanding the capabilities of your workforce through targeted training and development within their position or team. It involves creating programs to teach current employees new skills that align with the evolving demands of their roles and the industry at large. 

Did you know that around 87% of CEOs think they currently have a skills gap in their organization? Upskilling has catapulted from a nice-to-have advantage to a critical method for securing a competitive edge. It addresses the skills gap head-on, giving teams the ability to keep pace in their industry and set new standards.

Here are a few strategies to consider when thinking about how to upskill employees:

• Personalized Learning Paths: Create custom training programs for each team member. This way, everyone gets exactly what they need — and want — to learn.

• Skill-Based Workshops: Conduct workshops focused on specific, in-demand skills relevant to your industry or the future direction of your company.

• Mentoring and Coaching: Pair employees with mentors or coaches who can provide them with guidance, insight, and feedback as they acquire new skills.

• Online Courses and Microlearning: Use online platforms offering in-depth courses and bite-sized learning opportunities that employees can engage with at their own pace.

• Cross-Functional Projects: Encourage employees to participate in projects outside their usual scope of work, providing them with a practical, hands-on approach to learning new skills.

Example of Employee Upskilling

To better understand upskilling, take this example into consideration:

In a forward-thinking move, Kuehne+Nagel took a transformative journey with the rollout of a comprehensive upskilling initiative targeted at their recruitment team. The organization meticulously crafted the program to align with their internal-first strategy, focusing on both the philosophical and practical embrace of internal talent cultivation. The purpose was to give recruiters advanced skills and insights so they could fully leverage their technological tools, turning the company's vision for internal talent growth into tangible outcomes.

Claudia Harms, who leads Operational Excellence in Talent Attraction & Acquisition at Kuehne+Nagel, underscored that the essence of this upskilling effort was to reshape the recruiters' approach to talent acquisition. Harms highlighted the program's strategic dimension, noting its role in dismantling barriers to internal mobility, such as managerial hesitance to share talent and employees' reluctance to explore new team opportunities. The initiative encourages a culture of open communication about internal career paths, transforming recruiters into pivotal figures driving strategic shifts across the company.

Related: How Kuehne+Nagel Empowers Employees To Own and Grow Their Careers

This example demonstrates just how valuable upskilling can be for employees who want to continue on their career paths. But if you want to help employees create new internal career paths, reskilling may be a better choice.

What Is Reskilling? 

Reskilling is the process of providing employees with the opportunity to learn new skills outside of their position or team, enabling them to transition into different roles within the company. This plan is essential in today's rapidly changing business environment as it allows organizations to be agile, keeping their workforce relevant and engaged. 

Reskilling addresses immediate skill shortages and prepares the company for future challenges by creating a culture of continuous learning and adaptability.

To effectively reskill your employees, consider using these tools and methods:

• Career Transition Programs: Design programs that provide a roadmap for employees to shift into new roles, including the skills and experiences they need to acquire.

• Role-Specific Training: Offer comprehensive training sessions focused on the skills required for new roles within the organization, ensuring employees are prepared for their new responsibilities.

• Learning and Development (L&D) Platforms: Use L&D platforms that offer a wide range of courses and learning materials for employees interested in exploring new career paths.

• Short-Term Project Opportunities: Create opportunities for employees to apply their new skills within the organization through short-term projects or assignments in different departments that can prepare them for a role change.

Example of Employee Reskilling

Businesses that have made the shift to prioritize employee engagement have unlocked the power of investing in your team. They've turned to AI and the Phenom platform to get a clear picture of how upskilling and reskilling can boost long-term employee growth. By partnering HR with business leaders, they're mapping out career paths and skill development, ensuring their workforce is ready for what's next. This approach keeps their team growing in alignment with their goals and the company’s direction.

A company’s use of AI for strategic planning helps identify areas that can efficiently be reskilled to fit their future needs, ensuring that their workforce is agile and ready to meet market changes head-on. This is a prime example of how nurturing internal talent can lead to mutual growth for both the business and its employees.

As we see with this example, while upskilling and reskilling may take different forms, they both contribute significantly to the development of employees and the overall success of the organization.

Upskilling vs. Reskilling

Upskilling and reskilling, while sometimes mentioned in the same context, cater to distinct needs within an organization. Upskilling is about enhancing existing skills to meet the evolving demands of an employee's current career path, whereas reskilling focuses on teaching employees entirely new skills to help them transition into different roles within the company. Both upskilling and reskilling are critical pillars of professional development programs, allowing organizations to develop a culture of continuous learning and adaptability.

Benefits of Upskilling and Reskilling

There are several benefits of upskilling and reskilling that organizations can reap as they create internal programs to support these initiatives. These programs offer a multifaceted approach to professional development based on immediate and future needs, including the ability to:

Close Skills Gaps

Upskilling and reskilling programs identify and address the mismatch between current employee skills and those required for success in today’s rapidly evolving job market. With an expected 1.4 million people requiring reskilling by 2026, it’s more important than ever. By focusing on developing skills that are in short supply, organizations can stay ahead of industry trends and prepare their workforce for the challenges of tomorrow. They also allow the organization to compile crucial skills data management teams can use to track proficiencies and gaps.

Increase Employee Retention

Creating an upskilling and reskilling strategy is a proven way to boost employee retention rates. About 94% of employees say they would stay at a company longer if it invested in their career development. This statistic underscores the critical role that professional growth opportunities play in an employee's decision to remain with their employer. Upskilling and reskilling demonstrate an organization's commitment to its workforce while encouraging loyalty by investing in employees' futures.

Facilitate Internal Mobility

A robust upskilling and reskilling program lays the groundwork for enhanced internal mobility, allowing employees to move seamlessly across roles and departments. This mobility satisfies employees’ desires for growth and new challenges while also filling critical positions within the company from its existing talent pool. Statistics show that organizations with active internal mobility programs retain employees for an average of 5.4 years, compared to 2.9 years for those without such programs.

Promote Organizational Growth

Organizational growth relates directly to the development of its workforce. By implementing upskilling and reskilling programs, organizations can confirm their teams are keeping pace with technological advancements and industry shifts while driving innovation and competitiveness. Research indicates that organizations focused on employee development see a 34% higher profitability rate than those that don’t prioritize these initiatives.

Enable Adaptation to Change

The ability to quickly adapt to change is a hallmark of resilient organizations. Upskilling and reskilling programs empower employees to embrace and lead through changes, whether they stem from technological advancements, market shifts, or internal restructuring. With over 85% of CEOs recognizing their organization's ability to adapt to change is lacking, adaptability can become a competitive advantage in any market.

Boost Employee Productivity

Upskilling and reskilling also have a direct impact on employee productivity. When employees have the latest skills and knowledge, they can perform their roles more efficiently and effectively, leading to higher quality work and increased output. Research suggests that the most productive companies have an operation margin of 30–50% higher than companies that don’t focus on boosting productivity.

Improve Job Satisfaction

Upskilling and reskilling programs significantly contribute to job satisfaction by showing employees that their employer cares about their growth and success. With only about 51% of people citing satisfaction with their current jobs, investing in greater employee satisfaction can be an effective tactic for building a more resilient and loyal workforce. And job satisfaction is critical to retention, considering nearly 70% of people would commute two hours each day for a job they really wanted instead of taking a mediocre job two minutes from their homes.

Fuel Innovation

An environment where upskilling and reskilling are priorities can help spark creativity among employees. Employees who are committed to expanding their skills and knowledge are more likely to think outside the box and bring innovative solutions to the table. The fact that organizations that prioritize learning are 92% more likely to innovate highlights the need for robust learning programs for upskilling and reskilling.

Reduce Costs

A common concern for HR and talent management leaders who are considering L&D programs is the investment. But while upfront expenses may seem daunting, upskilling and reskilling programs can actually yield high ROIs and contribute to reduced costs in areas like recruiting and onboarding. Instead of spending over $4,100 on new hires, you can invest in the awesome team you already have, create opportunities for internal mobility, and streamline succession planning.

Solidify Succession Plans

A strong upskilling and reskilling policy doesn't just upgrade skills — it also powers your succession planning process. 61% of professionals surveyed said that the opportunity to upskill at work is “very” or “extremely” important in their decision to stay in their role. And when you have employees who are happy with the organization and have the skills to grow within it, you have the foundation for an effective succession plan. Focusing on customized upskilling and reskilling programs is key to tackling challenges that can lead to high turnover and costly external hiring campaigns.

How to Upskill and Reskill Your Employees

Each company has its own path to successfully upskill and reskill employees. By planning strategically, you can make sure your efforts meet your company's goals and support your employees' development. Here are a few basic steps that can help you develop an upskilling and reskilling program:

• Identify employees’ skills: Begin by mapping out the current skills landscape within your organization. Using HR technology can streamline this process by using automated data collection processes to make the identification of existing skills and skills gaps quicker and more efficient.

• Validate their skills: Once identified, it's important to validate skills so you’re accurately representing them and that they’re up to date. HR technology also plays a vital role in this process, particularly AI-powered solutions that automatically analyze data from multiple sources.

• Offer curated recommendations: To drive engagement and effectiveness, leverage technology that makes personalized recommendations for upskilling and reskilling that tie to specific career goals and outcomes. This helps employees understand how closing skills gaps can directly affect their career trajectory — and gives them the means to do it.

• Provide resources and opportunities: Equip your employees with the resources and opportunities for learning. This includes access to training programs, workshops, online courses, and hands-on projects. An AI-powered talent marketplace can gather upskilling opportunities for employees based on their current skills and career goals, making learning opportunities personalized and accessible.

• Track employee goals: Keep track of employee goals with HR technology that monitors L&D achievements. By evaluating employee progress, you can measure the impact of upskilling and reskilling efforts. This can help you support employees in their journey toward career advancement by determining where they’re excelling and where they can benefit from improvement.

Implementing a robust and intelligent talent marketplace enables customization of upskilling and reskilling opportunities, ensuring they meet the specific needs of your employees and the organization.

Simplify Upskilling and Reskilling With Phenom Talent Marketplace

Navigating the complexities of upskilling and reskilling can be challenging, yet these strategies are pivotal for future-proofing your workforce and maintaining an advantage. At Phenom, we streamline the upskilling and reskilling journey by harnessing the power of AI to optimize HR workflows and prioritize the employee experience. Our platform provides comprehensive solutions for talent development, including access to learning resources, career pathing, and visibility into skills gaps.

Phenom offers personalized upskilling and reskilling opportunities by curating recommendations based on each employee’s skills and goals. With our innovative platform, you can unlock the full potential of your workforce, ensuring your organization and its employees can thrive in the ever-evolving business landscape. 

To learn more about using AI and automation to offer personalized upskilling and reskilling opportunities, explore the Phenom Talent Marketplace or book a demo to see it in action.