5 Ways Upskilling Will Cut Costs and Boost Productivity at Your Company
Companies invest in several kinds of capital, from technology to equipment to facilities. Perhaps the most important capital at an organization, however, is the human capital. Unlike a piece of equipment or software that is ready to operate at full capacity upon purchase, human capital can take time to nurture and train before an employee is fully contributing to the operation and revenue of an organization. And unlike other types of tangible capital, human capital can be difficult to replace. Yet, replacement happens on a regular basis because employees frequently walk away from one job to take another. According to The Balance, the average worker today changes jobs 12 times during his or her career.
Employee turnover takes a toll on a business for several reasons, not the least of which is strictly financial. However, employers can be proactive by taking steps to reduce turnover and retain that human capital, while also cutting costs and increasing productivity. One of the most effective steps is up-skilling, the process of training existing employees to have new skills and knowledge they can put to use in the workplace, either in their current jobs or in a new role within a company. Five significant benefits can be realized by employers who take this initiative:
Avoid the High Costs of Employee Turnover
Every time an employee leaves, you are faced with the burden (and cost) of replacing that employee—and it’s not an apples-to-apples comparison. According to some sources, replacing a salaried employee can cost 6 to 9 months of salary. If your IT employee was earning $60,000 per year, it will cost about $30,000 to $45,000 to recruit a replacement and get them trained. For more educated and senior-level positions, that percentage is even higher. Then, you also have to account for the lag time during which the new employee gets fully up to speed, which can take up to two years. Choosing to upskill employees can improve your retention rate and reduce costs, and it’s a much more cost-effective alternative to recruiting, hiring and training replacements.
Employees Want Opportunities to Learn and Grow
Research shows your employees want to keep learning, improve their skillsets and increase their value to the company, but many feel they’re stuck in their jobs and falling short of what they’re capable of. Gallup research shows 70 percent of employees are not working at their full potential. When you offer opportunities to learn new skills, your employees are given the chance to develop and therefore, they feel more useful, empowered and fulfilled at work. As a result of up-skilling, your employees will be less likely to leave for another job. Since boredom is the number one reason for leaving a job in 2018, give them opportunities to learn and grow.
Learning Leads to Engaged Employees and Increased Productivity
Providing learning and development opportunities can dramatically improve employee engagement. Currently, employee disengagement is endemic—and costly. Research shows that disengaged employees have a negative impact on teamwork, quality, customer service, and revenue, among other ill effects. That disengagement is widespread. According to a Gallup poll, only 15% of employees worldwide are engaged at work. When an organization offers learning and development opportunities, employee engagement increases. Up-skilling delivers not just new skills, but also renewed enthusiasm and therefore productivity. This is particularly true among Millennials: 86 percent would stay at their current job if they were offered learning and development.
Training Employees Preserves Relationships and Teamwork
Upskilling also helps to improve teamwork and therefore productivity because it retains social capital. When new people start work at your company, they lack social relationships with existing employees and must develop them from scratch. This process disrupts teamwork and therefore productivity. In addition, not every new hire will be a fit within an existing organizational culture and it could be they are a perennial misfit, causing long-term disruptions to productivity.
On the other hand, upskilling that helps you retain employees also helps you to maintain the integrity of the social capital at your company. Newly trained employees will have additional skill sets and knowledge to bring to their jobs, but the social networks and relationships they’ve already established stay in place. An employee is able to focus solely on putting new knowledge to work.
Upskilling Offers a Competitive Advantage
Organizations that train existing employees for new tasks or roles are able to retain those employees which save the cost of hiring a replacement. Upskilling also increases employee engagement and retains social capital, both of which improve productivity. All four of those factors give you a competitive advantage.
However, upskilling can also provide a competitive advantage when you’re able to staff new positions right away rather than go through the arduous process of hiring someone for a specific job. This makes an organization much more agile and responsive to ever-changing needs. Consider cyber security, for example. People trained for these roles are scarce and companies wait for months to find and hire the right candidate. An organization that chooses to train an existing employee through cyber security certification fills that job (and need) faster and more cost-effectively. The same can be said for data and analytics: By getting an employee trained as a data scientist or business analytics expert, an organization can have the expertise they need in-house without the costs of recruiting and training, and without disrupting the social capital of the organization.
Tips for Choosing a Training Partner for Your Company
Once you realize the benefits of upskilling—including employee retention, cost savings, and improved productivity—you will need to choose a training provider. Organizations should vet potential training providers by considering the qualifications and expertise of the faculty, the quality of the content, the structure of the curriculum, and how the instruction is delivered. They should also seek out a provider that offers training in emerging technologies such as cloud computing, cyber security, digital marketing and data and analytics—as well as needs particular to your business such as project management. Making sure the curriculum is accredited and aligns to professional training institutes such as the PMI or OMCP adds another level of assurance that you’re getting the industry ‘stamp of approval’.
Organizations that choose to offer learning and development opportunities to their employees proactively increase employee engagement and retention. As a result, they also gain loyalty, increase the value of your employees, grow your company’s knowledge base, and gain a distinct competitive advantage over the companies that don’t choose to invest in upskilling.
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