The pressure is on businesses of all sizes. As the UK navigates the post-pandemic economy with rising inflation and prepares to endure a macro-economic downturn, many organisations are going into survival mode, highlights Mike Byrne, Vice President of Sales EMEA at Docebo.
Historically, during periods of economic uncertainty, L&D projects were once considered non-essential. But, as many businesses cut budgets and longer-term planning is shelved in favour of business-critical operations and short-term priorities, retaining existing employees has never been more crucial.
Upskilling, far from simply being a tick box exercise or something only to invest in when times are good, could hold the key to your businesses’ ability to weather the upcoming storm.
The great re-prioritisation
Every business leader knows an organisation is only as good as its people. Therefore, attracting and retaining the best talent possible is one of the most important aspects of running any business.
Yet as the cost of living rises, many employees are not only seeking pay raises to reflect the pressures they are facing, but many are continuing to reassess their priorities following the boom in hybrid working that the pandemic brought about. What was once deemed ‘the great resignation’ could be closer to a great re-prioritisation, as employees look for greater flexibility in their working lives and opportunities to grow both personally and professionally.
Indeed, a recent study found that 83 per cent of employees report that upskilling is one of their top priorities at work, as many look at developing their skills as a way to advance in their careers and achieve a better work-life balance.
When employees do not feel valued, they vote with their feet and find an employer willing to invest in them. This is exacerbating the existing talent shortages in many sectors and industries and leading to a perfect storm whereby businesses lose valuable employees during a time when they can least afford to replace them, let alone make additional hires.
The true cost of hiring vs upskilling
Retention and reducing employee churn rates are the number one way businesses can manage the pressures of a downturn. When employees are under added pressure to perform well, investing in a people-first approach always makes good business sense. Therefore, resisting the urge to cut training budgets is key to protecting your existing staffing levels.
Finding and hiring new talent is expensive. A recent report from the Financial Services Skills Commission (FSSC) found that upskilling existing employees are far more cost-effective than hiring talent from outside an organisation. The report shows savings of nearly £50,000 per employee in the financial services sector alone.
During stressful periods when it’s a case of “all hands on deck,” the skills gap has an even more significant impact. Investing in upskilling ensures that employees feel valued and fully equipped to work productively, contributing to the organisation’s ongoing growth. This, in turn, ensures they are equipped to spot new trends, and opportunities and adapt to new workplace pressures. This is particularly important as teams look for ways to be more efficient and do more with less, as business finances compete against rising inflation.
Upskilling promotes a strong culture
Implementing effective upskilling and reskilling programmes can aid internal mobility by promoting lateral and upward career opportunities, which can have a positive knock-on effect on company culture and is proven to vastly improve staff retention.
It is also important to note that the best upskilling programmes do not only concern technical skills but consider employees’ contributions from a holistic perspective. The most successful businesses recognise the value of a workforce with a broad range of skills, including interpersonal skills, that become the backbone of a strong management structure.
A positive culture can be created when resilience, curiosity, empathy, and communication skills work in tandem with the technical fields. The group dynamic is favourable, complex problems can be solved and productivity is high, but no team is overburdened. Large teams are managed strategically and employee retention improves because teams feel empowered and engaged.
Can you really afford to cut L&D?
Of course, investing in upskilling or reskilling your employees is always going to be a difficult sell when budgets are decreasing and programmes are being cut, but during times like these, developing employees from within can have a long-lasting impact on reducing employee churn rates, which can be one of the most significant expenses that businesses face.
With the cost and difficulty of hiring and onboarding new talent ever-increasing compared to developing talent from within, upskilling should be considered a necessary investment to ensure both the short and long-term health of your business.
Simply put, upskilling is now a business imperative, with many leadership teams listening to their staff and poised to assign it the importance it deserves in the broader business strategy. Tackling skills from within now will ensure your bottom line does not suffer from unexpected hiring costs, your culture is strong, and your teams can continue to use those development opportunities to flourish once economic pressures subside.
This article originally appeared in HRReview.