What Is Upskilling?: Definition and Guide for Employers

Summary

Upskilling is the practice of teaching employees new or improved skills to close a skills gap and grow within their current role. It usually involves training, mentoring, or online courses aimed at a specific gap rather than preparing someone for an entirely different job.

That gap has become harder to ignore.  AI and automation are reshaping what roles need almost as fast as companies can retrain for them, and employees who don't see a growth path are the first ones to leave. Growing people internally also feeds directly into succession planning, since a workforce with visible growth paths is easier to readily draw on when key roles open up. This guide covers what upskilling means, why it matters, how it differs from reskilling, and how to build a strategy that actually holds up.

In This Article

What Is Upskilling?

Upskilling is a process organizations use to enhance their workforce's skills and competencies. By offering L&D programs, organizations help employees acquire new skills or update existing ones so they can navigate industry changes, fill identified skills gaps, and work efficiently in their roles. 

It's a strategic effort that keeps the organization competitive and underscores its commitment to employee development. Upskilling promotes a culture of continuous learning and adaptability that serves as a cornerstone for developing a resilient and forward-thinking workforce.

Upskilling vs. Reskilling: Key Differences

Upskilling is forward motion within the same role. Reskilling is changing skills for a different role.   

Why Is Upskilling Important?

Upskilling is important because it allows organizations and employees to thrive in a dynamic business environment. Here are several key reasons why upskilling matters:

• Adapting to change: Upskilling enables employees and organizations to conform to industry changes and technological advancements that are essential for maintaining operational effectiveness and seizing new opportunities.

• Staying competitive: With the increasing pace of innovation, upskilling keeps your employees’ skills relevant so your workforce is prepared to compete with other top performers in your industry.

• Closing skill gaps: Upskilling addresses the discrepancy between the skills employees have and those required for optimal performance. By closing these gaps, organizations can work toward increased productivity and innovation.

• Promoting job satisfaction: L&D opportunities like upskilling may boost job satisfaction because they show employees their management teams care about their success and value their contributions.

• Motivating employees: Upskilling offers clear paths for professional development and growth, which can motivate employees by helping them plan and prepare for career advancement within the organization.

• Retaining top talent: By investing in workforce development, employers can help their top talent develop long-term career paths within the organization.

Creating and implementing an effective upskilling strategy — particularly through the use of specialized technology — can elevate your organization's capabilities and enhance employee satisfaction and loyalty.

Benefits of Upskilling

By investing in the development of their workforce through upskilling, companies can achieve tangible benefits that help them develop dynamic, adaptable operations and foster an engaged and committed workforce. Here are some examples:

Increased Employee Productivity

70% of leaders feel pressure from executives to increase overall employee productivity, and upskilling can help them do this. By providing them with L&D opportunities, you can give employees the knowledge and skills they need to perform their tasks more efficiently and to a higher standard. 

Considering 98% of employees say they perform better when they feel confident in their skills, employees who grow professionally through upskilling initiatives are more likely to work effectively and contribute to the overall productivity of their organization.

Improved Employee Engagement

A November 2023 survey found that only about 33% of employees in the US said they were engaged with their work — and that employees who feel that their employer is invested in their personal and professional growth are more likely to be engaged. 

Upskilling programs can contribute to employee engagement by demonstrating a company's commitment to its employees' success, showing that it values their contributions and is eager to support their career development. This is essential to organizational success, too, as the same survey found that engaged teams contribute to better business outcomes for the most important operational functions than disengaged teams.

Higher Employee Retention Rates

As of January 2024, employee separation rates were at about 3.4%, identifying a need to focus on retention and engagement. Nearly 80% of employees said better professional development opportunities would make them more likely to stay with their current employer, and 55% said they wanted L&D options to help them perform better in their jobs. It’s clear that offering the right upskilling resources plays a critical role in promoting job satisfaction and reducing turnover, both of which increase engagement and retention.

Optimized Adaptation to Change

Upskilling — particularly when powered by AI and automation technologies — can significantly improve the way organizations adapt to change. These tools enable organizations to provide their workforces with relevant learning opportunities that help them adapt to technological advancements and market changes. When employers need to develop skills to meet updated requirements and continue to work efficiently, they can look internally to fill skills gaps instead of hiring external candidates. 

This is ideal for both the organization and its employees — one survey reports that 63% of respondents who left their jobs in 2021 cited a lack of advancement opportunities as a reason. By harnessing AI and automation to eliminate manual maintenance of their development programs, companies can ensure employees' skills are always in line with current and future needs.

Better Allocation of Time and Resources

Implementing technology-driven upskilling initiatives offers more efficient allocation of time and resources. By streamlining the upskilling process, organizations can more easily identify internal candidates for new roles. And when organizations hire from within as often as possible, they significantly reduce hiring costs associated with external recruitment. 

Using upskilling technology allows employers to allocate time and financial resources to employee growth and development opportunities that encourage retention. In fact, studies suggest that employees hired from within are 70% more likely to stay with an organization long term.

Upskilling vs. Reskilling

Upskilling is an L&D strategy focused on the enhancement and expansion of an individual's current skill set, enabling them to succeed in their existing role or advance to the next step in their career path. It emphasizes continuous learning and the development of skills that are complementary to their current skill sets or the improvement of existing proficiencies. This approach helps staff members work efficiently in their roles and adapt to evolving job requirements and technological advancements.

Reskilling is an L&D strategy that involves learning new skills that prepare employees for a different type of role than the one they currently have. This approach sometimes becomes necessary due to shifts in the job market or changes within the organization that make an employee’s current role obsolete. Reskilling allows employers to show employees they’re valued in the midst of change by encouraging them to transition to new areas within the company.

While both approaches are beneficial to employees and organizations, developing an upskilling strategy is a good starting point for organizations aiming to enhance their workforce's skills and flexibility.

Learn how the right intelligence can help you upskill and reskill faster, improve your employee experience, and enable internal talent mobility. Watch the webinar.

How to Develop an Employee Upskilling Strategy

Creating a robust upskilling strategy involves identifying skill gaps, creating personalized development plans, and providing diverse learning opportunities. Here are some steps you can take to develop a strong upskilling strategy.

Identify Employee Skills Gaps

Identifying employee skills gaps is the first step in developing an upskilling strategy. This involves understanding the skills that are currently in demand within your industry, as well as in the specific context of your organization, and comparing them to the skills your workforce possesses. Tools like employee surveys, performance reviews, and skills assessments can be instrumental in pinpointing areas where upskilling is potentially necessary. Skills ontologies are also valuable resources for leveraging AI to rapidly develop a gap analysis that can be augmented by the other tools mentioned.

Related: Cracking the Code: Explaining the Skills Gap and Its Impact on Careers

Create Personalized Development Plans

Creating personalized development plans means developing a tailored approach to upskilling that considers the individual needs and career path of each employee. Organizations can achieve this by setting specific, measurable goals that align with both the company's objectives and the employee's professional growth. Personalization can be achieved at scale using AI to craft detailed journeys for all employees. 

Provide Learning Opportunities for Employees

Offering a variety of learning opportunities is key to a successful upskilling strategy. Here are some effective methods:

• Online and virtual courses: Providing flexible learning options that employees can access at their convenience allows them to improve existing skills or learn new ones anywhere, anytime. Curating these opportunities ensures that the content is relevant and beneficial to both the employee and the organization.

• Mentoring programs: Pairing employees with mentors can facilitate knowledge transfer, provide valuable industry insights, and create professional growth. The right mentor can guide an employee through their development journey, offering advice and support tailored to their needs.

• Microlearning sessions: These short, focused training sessions are designed to teach a specific skill or concept in a compact format. Microlearning is particularly effective for busy employees, as it allows for skill development without overwhelming time commitments.

Allow Employees to Learn and Train on the Job

Allowing employees to learn and train on the job requires integrating learning opportunities into their daily tasks and projects. Some organizations offer gigs or project-based work to provide employees with practical experience and help them apply their new skills in real-world scenarios. This interactive approach can help accelerate learning and improve job performance. Encouraging a culture of learning and experimentation, where employees feel safe to try new approaches and learn from mistakes, is key.

Use Technology to Support Your Upskilling Initiatives

Using technology to support upskilling initiatives enables organizations to deliver personalized, efficient, and scalable training programs. Digital platforms can simplify the process of identifying skills gaps, creating personalized learning paths, and providing individualized learning resources, from online courses to virtual simulations.

The best option is a talent management solution that manages each step of your upskilling strategy and optimizes the efficiency of the entire process.

How to Build an Upskilling Strategy

1. Identify employee skills gaps: Compare the skills your industry and roles need against what your workforce currently has by using surveys, performance reviews, identifying skills gaps, and skills ontologies. The smart play here is to compare current skills against where the role is heading over the next 12 to 24 months. Roles shift as tasks get automated; this requires leaders to be abreast of new technology entering the market. 

2. Create personalized development plans: Set specific, measurable goals for each employee that align with both company objectives and individual career paths. Employees disengage from development when they can't see where it leads, so each plan should point to a visible destination: a target role and the specific gap between the employee and it. A plan tied to "here's what this gets you" holds attention in a way a generic list of goals doesn't.

3. Provide a range of learning opportunities: Combine online courses, mentoring programs, and microlearning sessions so employees can learn in the format that fits their role, schedule, and personal learning style.

4. Build learning into the workday: Use gigs, project-based work, and a culture that tolerates experimentation so employees apply new skills in real scenarios, not just in training modules. This step tends to stall when managers hold back their strongest people, since growth often means losing them to another team rather than a training problem. Leadership needs to normalize internal movement and recognize managers for developing talent, not just retaining it.

5. Use technology to scale upskilling: A talent management platform should identify skills gaps, personalize learning paths, and manage the process end-to-end, rather than relying on manual tracking in spreadsheets.

Measure whether it's working. Track participation across formats (courses, mentoring, hands-on projects), watch your internal hire rate, and compare how often employees who complete development activities move into new roles versus those who don't. Offering training isn't the same as it working; these three numbers show whether it's landing.

Upskill Your Workforce With an AI-Powered Solution From Phenom

The challenge of keeping your workforce's skills in line with industry demands is a common obstacle for employers, and struggling to overcome it can negatively affect the employee experience — and your bottom line. Upskilling allows employees to receive the training and skills they need to stay engaged at work, productive in their roles, and committed to organizational goals. This makes an effective upskilling strategy essential for addressing issues like skills gaps, employee turnover, and excessive hiring costs.

Phenom addresses these challenges with an AI-powered solution designed to streamline the upskilling process. Phenom’s platform enhances every aspect of employee development, from rapidly identifying skill gaps using advanced analytics to creating personalized learning pathways and tying this recommended learning to career outcomes to drive higher engagement. 

By leveraging AI, Phenom facilitates a more dynamic, responsive approach to professional development, aligning employee growth with organizational goals. This approach supports internal mobility and significantly boosts engagement and retention, offering a comprehensive solution to the upskilling challenge.

To explore how Phenom can transform your approach to upskilling and empower your workforce for the future, explore Phenom Workforce Intelligence or book a demo today.