'Upskilling' programs spread as employers try to retain top talent

One of the biggest challenges employers face is keeping their employees engaged and empowered to do their best. Over half of firms with fewer than 500 employees reported challenges in hiring or retaining qualified staff, according to the Fed Small Business' 2024 report on employer firms.

Upskilling is one staff investment industry experts say can pay off in dividends for employers. Though it may sound like a trendy phrase, upskilling invests in employees' knowledge and skills for the long term, helping them expand their personal and professional capabilities. Upskilling can help workers advance within their existing industry or career trajectory while allowing employers to fill vital roles.

Xactly compiled research, surveys, and case studies to explain upskilling and examine its benefits and current investments in the development tool.

The COVID-19 pandemic—and the Great Resignation of 2021 and 2022 that followed—pushed more companies to invest in upskilling programs. Pew Research Center survey data shows that the most common reasons Americans left their jobs during this time included low pay, a lack of opportunities for advancement, and feeling disrespected at work. Most people pursued better jobs with higher pay, flexibility, and advancement opportunities.

Building skills and acquiring further education opens more doors to career advancement and higher-paying jobs for individuals. When employers are the ones offering them, it can make a big difference in employee loyalty and retention.

What upskilling looks like

Upskilling can take different forms depending on a company's industry and the skills its employees need to improve upon. Employers often provide apprenticeships and other focused on-the-job training in some fields, particularly skilled trades and other physical occupations.

Others may offer internal education and training courses for more broad skills applicable within the company, such as technical skills, communication, critical thinking, management, and others. Amazon, for example, offers apprenticeships and on-the-job training for frontline workers hoping to advance into more technical roles as software developers, data center technicians, and others.

Many employers offer tuition assistance to employees who pursue a college degree, special certification, or other external training program. For instance, Walmart launched a program in 2021 to pay 100% of college tuition and book fees for associates who participate.

Additional opportunities for upskilling include online education, mobile apps, conferences, seminars, or government programs. The use of online and mobile resources have increased dramatically, thanks in part to the growing prevalence of these tools. The use of government programs more than doubled between 2018 and 2020, too, according to a Boston Consulting Group survey. This is likely thanks to a surge in these programs during the pandemic, as governments worked to combat rampant unemployment and create resilient local workforces.

Upskilling in practice

Employers spent about $1,220 per employee on workplace learning in 2022, according to the Association for Talent Development's "2023 State of the Industry" report. Companies that invest in employees' skills and career development see improved performance, productivity, reliability, engagement, and retention. These programs also help fill the void of qualified candidates for open positions.

One company, Medicus, implemented an upskilling program to address increasing turnover, and as a result, retention improved by 50%, as the Harvard Business Review reported. Workforces with access to upskilling and reskilling programs can better respond to current and future needs within their companies and industries.

Managers at Cengage Group, an educational technology company, receive training for meaningful one-on-one meetings with team members. In these meetings, employees are encouraged to advocate for themselves and the skills they wish to enhance. Those managers then work with human resources and company leaders to connect individual interests with overall goals and needs within the company to create learning and development opportunities.

Other institutions have virtual learning centers where employees can access courses on whatever skills they desire to learn, from coding to foreign languages. Insurance company John Hancock has this type of resource and specifically allocates paid time for employees to use it for one afternoon per month.

Employers with developed programs also tend to provide clear achievement milestones and pathways for promotion, adding clearer purpose to these initiatives. These might be certifications or acquiring certain competencies that indicate they may be ready for a higher job level.

A Boston Consulting Group survey found that nearly 7 in 10 (68%) respondents globally were willing to retrain for a different job role under any circumstances. In the U.S., about half of workers said they would do so. Willingness to retrain was higher among people in roles at risk of replacement by technology, including jobs in sales, customer service, and within the service sector.

When designed with clear objectives, regular measurement, and an eye on the needs of both individual workers and the company at large, upskilling is a powerful development tool that can fill gaps in the workforce while empowering all workers to advance in their careers.