Upskilling is the answer for a tight labor market

To hire or to train — this has long been a key decision for employers. The continuing labor crunch has raised the stakes even higher. 

Sometimes an external hire is the right solution. If a company is seeking entry level staff, or is expanding into a new sector, or needs an infusion of new thinking, then outside help may be the way to go.

But external hiring can be risky, especially when the current job market is on fire. Finding an applicant who looks perfect on paper doesn’t guarantee success. False positives — new hires whose skills aren’t as strong as advertised, or who don’t fit the workplace culture — are all too common. 

Read more: How Amazon is upskilling their hourly employees 

Even when everything goes right, hiring is costly — an average of $4,129 for each open position, according to the Society for Human Resource Management. In addition to the cost of finding a new worker, there are hidden costs associated with weeks of onboarding, training and lost productivity.

By contrast, targeted upskilling delivered with precision can be cheaper and more effective. We’ve seen large businesses enact learning programs that average out, across the company, to as little as $20 per employee per year. These programs not only save money — they build company loyalty and efficiently deliver crucial skills to unlock business agility.

During the pandemic, many businesses relied on advanced learning programs to boost promising employees into management. They also taught current bosses how to manage work-at-home employees remotely. Other companies relied heavily on training programs to put existing workers on new career paths for IT, accounting, and human resources. 

Read more: This platform is giving employers a training and development blueprint

However, skills development is not one size fits all. One key to successful learning programs is targeting based on the needs of your organization and the skills of your workforce. 

Today, many organizations rely on learning solutions that suggest a vast catalog of courses. Some courses deliver useful new skills — many don’t. But the organization pays for them all regardless. Often, the result is what’s been called the peanut butter approach. That is, training that is spread like peanut butter across everyone, regardless of whether the employer needs it, regardless of whether it cultivates skills every employee can use.

That is unnecessarily costly, and worse, it fails to unlock the opportunities that meaningful training can provide. 

An even costlier alternative is hiring consultants to build customized learning programs. These programs can be harder to scale across an organization. They also are harder to adapt as employer needs shift and employees develop new skills.

Read more: Fiverr’s staff doubled in size during the pandemic. Here’s how they upskilled a surge of new managers

The better answer is to continually evaluate the existing skills base in the organization’s workforce, identify the specific skills that are needed, and then create training opportunities that close those skills gaps. 

Companies also can employ new technologies that match employee aspirations with company needs.

With recent developments in Artificial Intelligence, companies can maintain a near real-time inventory of skills in their workforce and create a learning pathway that connects the employee directly with a potential career progression, as well as identifying opportunities for the employer to upskill existing talent for critical open roles. 

One key here is to be specific — let employees know that if they take these courses and acquire these skills, then they can expect a particular career boost.

This targeted approach works across industries and at all levels within an organization, but it can be particularly beneficial in rapidly changing areas like cybersecurity and data analysis. Another natural is in leadership and management skills. 

In addition, companies nationwide are struggling to fill entry-level positions. Those that are most successful have learned how to paint a picture for prospective employees of possibilities for growth, through acquiring new skills, within the organization. Advanced skills training becomes a mechanism to attract talent, a recruitment tool.

In the past two years, spending on corporate training has increased by an average 20% per year. Yet, three out of four employers continue to report high levels of concern about the turnover rate in their company in a recent University of Phoenix Career Institute study. Nearly seven of ten employees surveyed for the same study indicated that they would be more likely to stay throughout their career if their company did more to upskill them.

Workers with a clear pathway to enhance their careers are more excited about being part of an organization. That’s good for the worker — and good for the company.