Upskilling and reskilling: Different strategies for training your people

From brand strategy to working with data, skills have become a key focus area for businesses in the last few years.

The pandemic has accelerated change in this area, primarily due to economic uncertainty that requires businesses to operate more efficiently by reinvesting in their current workforces rather than spending money on new hires.

In 2021, 58% of business leaders said that closing skills gaps in their workforces had become a higher priority since the start of the pandemic, making skills-building initiatives more common than they had been prior to the lockdown.[1]

Upskilling and reskilling are two of the most effective skills-building strategies, but what’s the difference between the two, and when should you use each one?

Are there situations in which the right move is just to hire someone new?

In this blog post, we demonstrate the difference between reskilling and upskilling and explain when to use each strategy.

What is upskilling?

Upskilling employees is when you supply your current team members with training to add to the skills they already use in their current line of work, whether you do this through a classroom program or on-the-job instruction. 

The goal is to equip the employee for additional tasks and responsibilities in their current job in preparation for either future promotion or immediate advancement.

What is reskilling?

Reskilling refers to when you equip employees with the skills to pursue an entirely new line of work. You might choose to do this simply because the employee expresses an interest in another area of work or to fulfill a business need.

Reskilling works best when the employee already has some of the skills required in their new role or some adjacent skills, for instance:

You can refer to employees with this potential for multiple career paths “multipotentialites.”

Though reskilling sounds like a radical move, business leaders in 2020 predicted that around 40% of their employees would require reskilling in the near future.

Upskilling vs reskilling: Similarities and differences between these two training approaches

You might already have an idea of the difference between these two approaches from the above descriptions, but before we get into when to use each one, let’s deep dive into their similarities and differences.

Similarities between upskilling and reskilling

First up, what’s similar about upskilling and reskilling – apart from the fact that they share eight out of ten letters?

They require you to have an overview of the skills in your workforce

First, both upskilling and reskilling require employers to have a pretty good idea of the skills they have in their workforce. In order to know what kind of training employees need, either for progressing in their current roles or moving into a different career, you first need to know what skills your staff has and what skills are needed in their target role.

The best way to achieve this is through talent mapping using skills testing.

They require career pathing to map the employee’s career

Although upskilling and reskilling can both be used to further your business objectives – more on this in a moment – they require you to invest in the individuals in your organization.

This is done through “career pathing”: Helping employees understand the different options available to them in their career and what learning and development support they need for each path.

You should use career pathing to assist employees in understanding how their career options map onto the opportunities available at your organization, both now and in the future.

This ultimately aids retention and engagement because they envision their future at your company.

Don’t believe us? McKinsey found that organizations that align their HR processes to match the skills requirements of their employees see a 50% increase in engagement, halved training and development costs, and 40% higher productivity.[2]

They can be accomplished using many of the same methods

As we mentioned above, an understanding of the skills your employees already have can serve as a solid foundation for both upskilling and reskilling, so you can use the same methods to take the next steps.

For example, you can use skills tests to assess employees’ progress as they develop new skills.

They both encourage retention by promoting internal mobility

Both upskilling and reskilling are about moving talent around inside your organization, whether that’s vertically through promotion or laterally through retraining. 

In this way, they’re both important tools to use when promoting internal mobility, which, as we’ve already seen, brings positive effects for engagement and therefore retention.

Differences between upskilling and reskilling

Now for the differences. They’re few but significant, so don’t skip this section.

Reskilling prepares employees to change roles or careers; upskilling prepares them to advance on their current track

As you may have already guessed, the crucial difference between reskilling and upskilling is that where upskilling helps employees advance in their current careers, reskilling is about changing their careers, usually by being redeployed into a different role at a similar rank in the company hierarchy.

Upskilling should be offered to all employees; reskilling should also be deployed strategically

Additionally, we believe that upskilling should be offered to all employees as part of any employee engagement strategy.

At TestGorilla, we give each employee a learning and development budget equal to 3.5% of their salary to use on skills development.

Reskilling, on the other hand, is a slightly more nuanced issue. While it certainly can be offered to any employee – and indeed, most employers should consider it – it is usually used as part of a strategic initiative, examples of which we’ll get into shortly.

Why are both reskilling and upskilling so important in 2023?

Upskilling and reskilling should be your business priorities in 2023 primarily because if you fail to develop your employees, they simply won’t stick around for long. 

A recent McKinsey report found that one of the biggest factors driving attrition was a lack of career advancement and development. It makes sense: if companies aren’t facilitating internal mobility, their employees have to look elsewhere for advancement opportunities. 

It’s imperative, therefore, that employers break this cycle by providing upskilling and reskilling opportunities to enable employees to stay longer in their organizations.

The process of upskilling and reskilling can also have big benefits for your talent management plans because the process of assessing and investing in your workforce helps you not only identify talent gaps but also bridge them in your organization.

This is especially important as hybrid work environments become more entrenched and automation ramps up across industries. The Brookings Institution found that a quarter of all jobs have high automation potential and are at risk of becoming obsolete:

While this isn’t cause for serious alarm – the World Economic Forum predicts that machines will also create as many as 58 million new jobs – it is a signal for businesses to reskill the minority of employees whose roles may be eliminated. 

It’s also an opportunity to use upskilling to maximize efficiency. Task automation may take some work off your employees’ plates, but it will also give them more time to dedicate to higher-value tasks. 

For instance, computer programming roles may be at risk from AI-driven automation, but you may still require technical writers. If a skills gap analysis reveals a lack of technical writing skills in your organization, upskilling and reskilling can help you bridge this talent gap by reskilling computer programmers as technical writers.

The benefits of upskilling and reskilling programs

Why should you take on upskilling and reskilling programs – not just as nice-to-haves, but as a real business priority? 

Here are six of the biggest benefits upskilling and reskilling can have for your organization:

1. The number of skills required for a single job is increasing by 10% each year. As we’ve already mentioned, upskilling and reskilling help you bridge talent gaps and help you keep pace with the competition.

2. It also makes you less reliant on external hiring, empowering you to use the cheaper, faster, and more sustainable route of internal hiring.

3. By investing in your employees, you create a bond of trust, which is proven to help with retention: Research shows that 70% of employees who are promoted within three years stay with their employer, compared to just 45% of those who didn’t get a promotion.

4. Upskilling and reskilling help you retain institutional knowledge and even distribute it more widely throughout your organization. For instance, a warehouse technician being upskilled to an engineer in your corporate office can bring invaluable knowledge of your ground-level processes that an external hire wouldn’t have.

5. On the occasions you do have to hire someone new, upskilling and reskilling can be used as an incentive for top talent to flock to you since the number one reason people left their jobs in 2019 was a lack of learning and development opportunities.

6. Finally, putting your money where your mouth is in terms of investing in your employees helps you build a people-first culture regardless of whether your office is in-person, fully remote, or hybrid.

Upskilling, reskilling, and external hiring: Which one to pick?

Now that you know the differences between upskilling and reskilling and why so many leaders are talking about them, it’s time to:

• Look at when you should use each strategy

• Consider the situations in which you can only turn to external hiring

In this section, we use common business scenarios, along with specific examples, to help you decide which method to use.

When to choose upskilling: 3 scenarios

As we mentioned above, we believe that upskilling should ideally be offered to all employees. But in what situations is it particularly effective?

1. When you’re just starting out

In a small startup team, unless you find yourself with a miracle investor willing to throw cash at you, there’s no way around the fact that the members of your team have to wear many hats.

There simply isn’t enough money to hire a different person for every job that needs doing. And even if there were, hiring the person to do the hiring would also take skills you didn’t have. That’s why startup founders might pursue upskilling in the fundamentals of HR right when they start growing their teams.

This might be especially true right now, as organizations are taking significantly longer to fill open roles and new hires are therefore able to demand the highest average salaries in a decade.[3]

In this instance, upskilling might look like:

• Seeking out mentorship from other startup leaders about how to build a team sustainably 

• Using free online resources to familiarize yourself with employment law 

• A paid crash course in recruitment marketing 

2. When you’re adapting to increasing automation and digitization

PwC research has found that most workers (60%) are worried that automation is putting many jobs at risk.

As we mentioned above, most employees aren’t at risk of replacement by computers, and reskilling can help you repurpose the ones that are. Upskilling can help the majority of employees who can save time with automation to create additional value. 

For example, a salesperson might use the time saved by AI-generated leads to accelerate their outreach strategy or hone their pitching skills to make more sales.

However, it’s important to be aware of your bias here. While the PwC research found that 80% of employees are confident they can adapt to new technologies, not all are offered the same opportunities to upskill, with younger employees being twice as likely as their older colleagues to receive opportunities for skill development.

By upskilling older workers or those returning to the workforce after a long absence, you can combine more traditional knowledge and experience with up-to-date skills to create a dynamite employee.

3. When a junior employee shows promise

You should pursue upskilling when you notice that a junior employee shows to be overqualified for their role. 

Skills testing is a great way to conduct regular sweeps of your workforce and check for future managers and directors with leadership skills. You can supply employees that perform well with both hard and soft skills training to help them move up the ladder.

This strategy also enables you to identify those with the technical skills to take on more responsibility. An example of this in practice might be upskilling a marketer so that they can take on a role as a brand manager.

Their existing skill set already makes them a good communicator and great at positioning the brand; equipping them with skills like brand strategy could put them in the running for a brand manager role.

When to pick reskilling: 3 scenarios

As we mentioned above, reskilling has direct strategic benefits that upskilling doesn’t always offer, but when should you take advantage of this? Here are three examples.

1. During a difficult restructuring

One of the most common times to reskill employees is during a restructuring period or a round of cost-cutting layoffs. 

This is where the talent mapping we spoke about earlier comes in.

By mapping the skills in your workforce and identifying the areas in which you are over- and under-saturated, you can make strategic decisions not only about layoffs but also about how to bring talent from a swollen team into one that needs more support.

For our examples, we just need to cast our minds back to the early stages of the Covid-19 pandemic. When society went into lockdown, many businesses found themselves having to pivot their strategies and make hard decisions.

Let’s say you decided to pull back on marketing spending and focus more closely on client acquisition and engagement. With this in mind, using your talent map, you could look at which junior marketers have the most sales-adjacent skills – for instance, good presentation skills – and offer them the chance to reskill as junior sales associates to further this goal.

2. When a great employee wants to change career

You can also use reskilling as a focused retention strategy to keep valuable employees at your company. 

Take the example of our colleague Joey, who now works in our user experience (UX) team. Joey started as a customer success representative but soon realized she was passionate about customer experience.

After discussing her career goals with her managers and colleagues, she used her learning and development budget to improve her UX skills and move internally into UX research.

3. When the open market lacks the skill you’re looking for

Finally, it’s worth remembering that skills gaps don’t just exist within your organization, but outside of it, too.

The fact is that many professions are under-subscribed, and you may find that it is cheaper and easier to reskill a talented employee than it is to find a required skill in the open talent market. Almost three-quarters of Fortune 1000 chief executive officers expect work shortages brought about by the Great Resignation to continue to disrupt their organizations.

Take the example of data science. There is a scarcity of data scientists in today’s workforce at the same time that data is becoming an evermore important resource for businesses to tap into.

Instead of spending money on marketing and hiring for a data scientist role – not to mention offering the kind of salary that would motivate a top data scientist to choose you over your competitors – you might consider reskilling a data entry specialist to fill this role.

When to turn to external hiring first: 3 scenarios

We’ve painted a pretty rosy picture so far, but are there situations in which the talent simply doesn’t exist in-house and you’re forced to hire from outside?

Despite the praise we’ve given upskilling and reskilling, there are always exceptions – here are three you should look out for.

1. When you’re scaling your startup

This isn’t an either/or situation: Scaling a startup involves both upskilling your core team and hiring more members when that core team becomes overburdened with tasks.

Particularly when it comes to scaling hiring, you need to hire a dedicated recruiter or HR manager to take over, and that means looking for skills in:

1. Recruitment marketing, including social media skills

2. Data analysis (for use when evaluating skills assessments) 

3. Critical thinking and decision-making

2. When a team needs additional support

Sometimes, moving around the people you already have won’t help because you’re just shuffling around the same 40 hours per person, per week. Instead, what you need is an additional 40 hours, worked by another employee.

It’s also important to remember that new hires can bring in more than just their hard skills, but also new perspectives and ways of working that can help your teams innovate by providing a diversity of thought. We call this “culture add,” and if you’re not already hiring for it, you should be.

3. When you’re taking on a new project

Finally, you likely need to hire new employees over upskilling or reskilling when you’re launching a new initiative or venturing into a different industry or niche.

While you might upskill an existing manager to lead these kinds of initiatives, the fresh skills, perspective, and experience brought by an outside hire are invaluable. This isn’t to say that they need to be a permanent addition: more organizations are embracing project-based hiring to tackle experimental or short-term needs like this.

Use skills testing to drive your upskilling and reskilling initiatives and determine when to hire externally

In the past, many employers got away with leaving skills development up to employees. 

But with all the benefits upskilling and reskilling can bring – such as greater efficiency, healthier, happier employees, and not to mention reduced hiring costs – why would you not want to facilitate it yourself?

Now that you know when to deploy each tactic and the tools you require, it’s time to get started. 

Here’s our introduction to upskilling so you can craft a great upskilling strategy – and don’t forget to read our guide to best practices when upskilling and reskilling to ensure you start off on the right foot.

Or, if you’re ready to jump right in, test your workforce’s leadership skills to identify employees who are management material.

Sources

1. Billing, Fabian; De Smet, Aaron; Reich, Angelika; Schaninger, Bill. “Building workforce skills at scale to thrive during—and after—the COVID-19 crisis”. (April 30, 2021). McKinsey & Company. Retrieved February 8, 2023. https://www.mckinsey.com/capabilities/people-and-organizational-performance/our-insights/building-workforce-skills-at-scale-to-thrive-during-and-after-the-covid-19-crisis

2. Jost, Gregor; Kirchherr, Julian; Pfülb, Sebastian; Rupietta, Kira. “Using skill gap assessments to help future-proof your organization”. (May 23, 2022). McKinsey & Company. Retrieved February 8, 2023. https://www.mckinsey.com/capabilities/people-and-organizational-performance/our-insights/the-organization-blog/using-skill-gap-assessments-to-help-future-proof-your-organization 

3. “9 Talent Management Statistics That Might Surprise You”. (n.d.). Job Holler. Retrieved February 8, 2023. https://jobholler.com/employee-engagement/9-talent-management-statistics-that-might-surprise-you/