Here’s the bad news: It’s nearly impossible to pinpoint the exact ROI of upskilling and reskilling your employees.
The good news is that by fostering a culture of learning and investing in employee learning and development tools, upskilling can contribute to better business outcomes for any organisation. And while it's nearly impossible to attribute every dollar as a direct return on this investment, modern learning management systems can track outcomes that map back to an organisation's business goals.
A recent study found that organisations that already launched successful reskilling programs before COVID-19 were better able to address skills gaps caused by technological disruptions or implement new business models or strategies.
In other words, they had future-proofed themselves. And in many cases, improved their overall bottom line. The future is moving fast, but there's still plenty of time to change it if you take the right steps.
Want to understand how to upskill and reskill your workforce? Explore the Cornerstone 2022 Global Skills report.
This certainly points to a strong uptick in focus on learning and development endeavours. The top three areas of focus for L&D programs in 2021 for organisations globally were (in order of popularity among L&D leaders):
1. Upskilling and reskilling — 59%
2. Leadership and management — 53%
3. Virtual onboarding — 33%
And, according to the same report from LinkedIn, 73% of L&D professionals expect to spend less on Instructor-Led Training (ILT), and 79% expect to spend more on online learning.
These same CEOs, whose organisations offered more advanced upskilling, had more confidence in their revenue. An upskilling program may contribute to confidence-building within organisations because it provides a clear, real-life action plan. Upskilling increases loyalty, productivity, and retention, and builds community.
A study by MIT Sloan School of Management found that a 12-month workforce training program focused on soft skills delivered a 250% return on investment (ROI) within eight months of completion. The gain was mainly due to increased productivity due to a focus on the essential soft skills the modern workplace requires, like knowledge, flexibility, and resilience. Adaptation and resilience likely are two of the most valuable skills workers can possess. In addition, interpersonal skills such as critical thinking, communication, and collaboration are crucial.
In an increasingly tight labour market, the opportunity for workers to reskill and upskill has narrowed. According to The World Economic Forum, for those workers set to remain in their roles, the share of core skills that will change in the next five years is 40%, and 50% of all employees will need reskilling. Skills gaps will remain high as in-demand skills across jobs change in the next five years. The top skills and skill groups employers see as rising in prominence in the lead-up to 2025 include:
- Critical thinking
- Analysis
- Problem-solving
- Active learning
- Resilience
- Stress tolerance
- Flexibility
The World Economic Forum’s The Future of Jobs report includes several eye-opening statistics that underscore how important upskilling and reskilling have become to businesses' viability.
- Approximately 40% of workers will require reskilling in six months or less, and 94% of business leaders expect their employees to pick up new skills on the job, up from 65% in 2018.
- More than six out of ten employers expect a return on investment from upskilling and reskilling within a year.
- It has been estimated that employers will offer reskilling and upskilling to more than 70% of their employees by 2025.
By 2020, 50% of the U.S. workforce was made up of Millennials. By 2030, it’s predicted to be 75%. For Millennials, on-the-job training is a decisive factor in deciding whether to accept a position or leave an organisation.
Turnover can cost an organisation more than half of the salary for entry-level jobs and up to 200% for senior executive-level positions. Upskilling leads to less turnover because upskilling employees costs a fraction of recruiting and helps increase retention rates.
The evidence for instituting robust upskilling and reskilling programs is in, and it’s clear: it drives a healthy ROI for those organisations that commit to it.
But where should your organisation focus its efforts at first?
An excellent place to start is by creating a simple framework to hone skills developed toward your organisation's strategic priorities since those can impact the core business. HR and L&D departments need to ensure they are aligned with business objectives and measure the impact of their efforts using business-aligned metrics.
As we know, the need to upskill and reskill employees has increased as the future continues to remain uncertain. But most don't know how to do it quickly, effectively, and at scale. Those that do have learned it’s key to automate their upskilling and reskilling so that overall ROI is optimised.
