Reskilling and upskilling have become key to HR conversations in recent years, especially with the advent of new technologies, but there are some key differences between the two terms. Reskilling is a talent management approach that involves identifying employees in jobs where the organization's needs are decreasing and training them to take jobs where the organization's needs are increasing. In contrast to upskilling, which refers to training to help employees continue to perform well in their current role, reskilling refers to training employees for their next competency. move You can take on a completely new role or profession.
Emerging technologies such as generative AI mean that many employees will need to upskill themselves to use these tools effectively in their current roles. However, some employees will also need to be reskilled and placed in new roles.
This article analyzes industry-wide data on the percentage of learning budgets that organizations spend on reskilling with new technologies. After unpacking your data, we provide guidance to help you decide when reskilling is appropriate for your organization and highlight some key practices on how to effectively perform reskilling.
Based on data from more than 1,100 organizations, APQC found that a median of a quarter of their learning budget is spent on reskilling in new technologies. At the 75th percentile, organizations set aside 40% (or more) of their budgets for reskilling to new technologies, while at the 25th percentile they allocate 15% or less.
Achieving good performance on this indicator does not mean spending the maximum on retraining on new technologies. Instead, the goal should be to ensure that funds invested in reskilling are well spent when considered as part of a broader human capital management strategy.
To better understand what money is good for your organization, start by benchmarking this metric against your peers. The impact of new technology and the resulting resources organizations spend on reskilling varies by industry. For example, the median for organizations in the consumer products/packaged goods industry is 35%, while the median for utilities is 21%. Find the organization closest to yours to get a better picture of your performance.
It is also important to interpret benchmark results by considering factors specific to your organization and its employees. For example, if your organization is undergoing digital transformation, it makes sense to dedicate a higher percentage of your learning budget to reskilling in new technologies. On the other hand, if a large proportion of the workforce is nearing retirement age, investment in reskilling may be lower. When interpreting what benchmark results mean for your organization, consider factors such as:
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When is retraining on new technology an appropriate action for an organization?
Done well, reskilling can have a variety of benefits for you and your employees. Employees can feel more secure in their employment knowing that their employer is more committed to reskilling than making redundancies. Additionally, by providing these internally and making them available to the entire workforce, they are less likely to leave the organization for new opportunities. Both of these benefits help increase engagement and retention.
Although these benefits are appealing, reskilling is not the right move for every organization. The following considerations can help you decide when reskilling makes sense for your organization or whether another strategy would be more helpful.
Reskilling is a good strategic decision if:
- The necessary skills are either scarce or prohibitively expensive to obtain externally.
- You have the time and resources to develop a comprehensive reskilling program that focuses on the required skill sets.
- There are workers with adjacent skills whose demand is decreasing.
- Employees are showing interest in career development and job change.
- And the potential benefits of reskilling far outweigh the costs and effort involved.
Reacquiring skills may not make sense in the following cases…
- There is no identifiable talent pool within the company.
- We are not interested in reskilling within the talent pool you have identified.
- There is not enough time to reskill employees.
- Skills are available externally and at affordable prices.
- Or if you need someone with extensive experience with the skills you need.
Two critical success factors for reskilling
Effective technology reskilling requires a combination of the right infrastructure and organizational agility. Both of these critical success factors are discussed in more detail below.
Build the right infrastructure for reskilling
Reskilling requires a holistic and well-integrated approach to human capital management, which takes time to develop. Broadly speaking, an organization's workforce planning, talent acquisition, talent development, compensation and retention, and communication practices all need to be aligned to support reskilling decisions and activities. For example, human resources departments can develop retention strategies to ensure that employees who acquire new skills remain with their current employer rather than acquiring new skills elsewhere. It is important.
Reskilling is a mature approach to learning and development that involves well-designed processes for analyzing learning needs, designing and implementing curriculum, and communicating about business needs, career paths, and learning opportunities. is also required. Leading organizations use job architectures, skill taxonomies (identifying skill adjacency), and employee skill profiles to understand the skills their employees currently possess and to determine which employees need to be reskilled. We are evaluating whether it is suitable for uploading. As with other L&D initiatives, leading organizations identify and track measures of success through reskilling programs, make data-driven decisions, and course-correct as needed.
While reskilling requires close alignment with broader HR processes, it is equally important to align reskilling activities and decisions with the business. Decisions about workforce planning and reskilling should not be made by HR alone, but should be part of a conversation between executives and business leaders that revolves around business goals and strategy.
Develop agility to stay up to date
While tools such as generative AI represent the cutting edge of today's technology, it is inevitable that they will eventually be replaced by emerging technologies that require new skills. That's why workforce planning, talent development, and other key HR processes need to be living processes that allow organizations to continually update information and activities to match the changing business environment.
For example, it's important to keep job structures, skill classifications, and employee skill profiles up to date so that you can make decisions based on what's happening in your business now and in the near future. Knowing which employee groups have skills close to what you need can help you get off to a smooth start, but only if the documentation for these skills is up to date.
Important points
Reskilling helps organizations acquire critical skills that are not available in the broader talent market, while promoting benefits such as increased employee satisfaction, engagement, and retention. However, reskilling is not the right course of action for all organizations, especially given that effective reskilling requires significant investment. If you decide to reskill your employees, try to align the reskilling with other talent management practices and the wider business. Keeping key resources such as job architecture and job profiles up to date strengthens alignment with the business and enables reskilling to ensure responsiveness to specific business needs and changes.
Data in this content was accurate at the time of publication. For the latest data, please visit www.apqc.org.
