Upskilling and reskilling: why you should invest in workforce development (and how to do it)

In today's rapidly evolving job market, technological advancements like artificial intelligence (AI) are making professional development through upskilling and reskilling more critical than ever. According to a survey by the American Psychological Association, nearly 38% of U.S. workers are concerned that AI may render some or all of their job duties obsolete in the future. A survey conducted by the Pew Research Center showed that 63% of respondents indicated that a lack of opportunities for advancement is among the top reasons Americans quit their jobs.

As businesses adapt to evolving job roles and employee needs, upskilling and reskilling have become critical strategies for maintaining a competitive workforce.

We recently sat down with Heather Bischoff from Upskill Consulting to talk upskilling and reskilling. In this blog, we explore key takeaways from that conversation, including the importance of upskilling and reskilling, their impact on an organization’s bottom line, and how HR leaders can implement effective programs with measurable ROI.

What’s the difference between upskilling and reskilling?

Before diving into strategies, let’s clarify these two concepts:

• Upskilling: Enhancing employees' existing skills to improve performance and career growth within their current roles.
• Reskilling: Training employees to take on entirely new roles, often because their previous job functions have changed due to automation or industry shifts.

Both approaches are essential for companies to stay competitive, retain talent, and ensure a future-ready workforce.

Why traditional employee training programs fail to bridge skill gaps

Despite significant investments in training, many programs fall short in closing skill gaps. Common challenges include:

• Lack of clarity in job roles and required skills: Organizations often rush to implement employee training programs without assessing what’s truly needed.
• Engagement gaps: Not all employees are equally motivated, so training must be tailored to different engagement levels.
• Failure to integrate learning into daily workflows: Without practical application, employees quickly forget what they’ve learned.

To drive real impact, companies must adopt a strategic and structured approach to workforce development, rather than relying on one-off training sessions.

How Skill Gaps Impact the Bottom Line

HR often prioritizes engagement and development, which are essential, but securing buy-in from decision-makers requires demonstrating measurable results. Here’s how skill gaps directly affect profitability:

Employee engagement and retention

Engaged employees reduce costs for companies by increasing productivity and loyalty. Research from Gallup shows that unengaged employees can cost their organization between 18% and 34% of their annual salary.

Performance disparities

High performers are valuable, but without upskilling, they risk becoming overqualified and disengaged. 74% of employees view learning and development as equally or more important than a promotion or title change. Additionally, 25% of employees say they’re likely to leave their job within the next six months due to a lack of career growth opportunities.

Time and cost of hiring replacements

Reskilling and upskilling are often more cost-effective than external hiring. SHRM benchmarking data estimates the average cost to hire a new employee at $4,700, with some employers reporting total costs reaching three to four times the position's salary.

Effective Tools and Strategies for Upskilling and Reskilling

A successful workforce development strategy must align with organizational goals and budget constraints. Here’s how HR leaders can optimize training investments and achieve meaningful results, even with limited resources:

Conduct skills assessments

Use surveys, self-reports, and focus groups to identify gaps and employee interest.

Leverage existing tools

Before investing in new programs, assess how current technology and resources can be optimized.

Implement targeted training programs

Focus on training that directly supports company goals. For example, if efficiency is a priority, invest in automation software training. Tailor programs to team-specific needs and personalize learning to ensure employees gain the most relevant skills.

Integrate training into daily workflows

Set realistic goals and embed learning into everyday tasks to prevent training burnout and maximize adoption.

Increased managerial support

Leaders play a critical role in driving engagement, so encourage them to actively support and advocate for training initiatives.

Use data

Leverage performance metrics, employee feedback, and retention trends to identify key skill gaps and allocate training budgets effectively. If exit interviews show career growth concerns, invest in upskilling. If productivity lags, focus on efficiency training. A data-driven approach ensures training is intentional, impactful, and cost-effective.

Measuring the Success of Upskilling and Reskilling Initiatives

To determine whether training programs are successful, HR teams should track key metrics such as:

• Retention rates: Are employees staying longer after upskilling efforts?
• Performance improvements: How do trained employees compare to their untrained counterparts?
• Exit interviews: Are employees leaving due to skill mismatches?
• Department performance trends: Are training efforts leading to tangible business results, such as increased task efficiency and higher work output quality?

Creating a Culture of Continuous Learning

A company-wide commitment to learning is essential for long-term success. Here’s how to build a sustainable upskilling and reskilling strategy:

• Regular check-ins and feedback loops: Ensure employees feel supported throughout their training journey.
• Recognize and reward progress: Celebrating small wins keeps employees engaged.
• Encourage cross-training: Exposure to different roles enhances flexibility and career mobility.

Final Thoughts

Investing in workforce development isn’t just about employee growth—it’s about driving business success. Companies that prioritize intentional upskilling and reskilling efforts benefit from:

1. Higher retention rates
2. Stronger internal talent pipelines
3. Increased productivity and innovation
4. Reduced hiring and training costs

By taking a strategic approach to learning and development, HR leaders can help future-proof their organizations while ensuring employees feel supported in their careers.

Watch Heather's full session and hear from more HR pros like her at our next Missing Chapters webinar.