Reskilling and upskilling your current workforce is an effective way to address the current skills shortage, but is it a cost-effective option? In this briefing, Pam Loch, Managing Director of Loch Associates Group and Amy White, Head of Loch Training and Wellbeing, consider how the benefits of L&D outweigh the costs.

The UK’s talent shortage is rumbling on, showing little sign of letting up and making recruitment (and retention) extremely difficult for employers and their HR teams. And while some of the shortage comes down to an increase in the number of economically inactive within our population and the reduction in EU migration post-Brexit, much of it can be blamed on an ever-growing skills shortage.

Last year, the UK technology sector warned that the increasing skills deficiency threatens to stifle industry growth, asserting that nearly 12 million workers in the UK lack essential digital skills. It’s not just the tech industry that’s suffering – professional services, healthcare, manufacturing, engineering and hospitality have all encountered difficulties recruiting over recent years a result of a lack of available and appropriately qualified, experienced and trained talent. According to the LinkedIn Workplace Learning Report 2019, 99% of L&D professionals at that point believed that if skills gaps weren’t closed, their organisations would be negatively impacted in the coming years. This would appear to remain truer than ever.

So, what to do? Well one of the most effective approaches is to build new skills amongst your existing employees. We all know that recruitment costs can quickly become prohibitive and that the process of recruiting replacement staff can be stressful and time-consuming assuming you can even find replacement recruits. So why not instead purposefully reskill and upskill your existing workforce through a carefully crafted L&D programme?

The benefits of designing and implementing a focused L&D programme are many. Not only can doing so assist strategically, ensuring your business is future-proofed and has the internal talent resources it needs to overcome challenges presented, by increasing digitisation and technological advancement, it can also enhance the employee experience which, in turn, produces substantial positive knock-ons.

According to a recent study by Forbes, over 90% of employees are more inclined to stay with an organisation that is willing to invest in their career development than one that is not. This boost to retention rates has many benefits. Not only does it help an organisation stay out of the recruitment weeds, it also ensures that the money you’re pumping into staff training doesn’t go to waste. Instead, people grow with your organisation, developing an ever-deeper knowledge of your business and its services and products. In addition, we all know how damaging high rates of employee turnover can be on morale, so making sure your people stay put, whilst still growing and developing, can definitely give you a competitive advantage.

In that same vein, having a solid training programme in place can go a long way to keeping your staff motivated, engaged and committed. According to Glint, a strong L&D programme has a direct impact on employee motivation, engagement and commitment, with employees who are provided with learning opportunities being three and a half times more likely to report they believe their company can help them meet their career goals. Further, Glint has found that employees generally rank opportunities to learn and grow as the top factor of a good work culture, showing how seriously staff take L&D and the message it conveys to them as regards their worth and value to their employer. And given we know engaged, motivated and committed staff are generally happier and, in turn, more productive, it seems to be a win-win.

But building an L&D programme that does all these things isn’t cost-free.

The first major issue to contend with is a lack of time. Developing and rolling out an effective L&D programme takes an awful lot of time, something many HR teams definitely don’t have in abundance. According to research by Udemy, for example, the top obstacle for L&D in 2020 was a lack of time, with 61% of respondents reporting this issue. The time-poor position extends beyond those rolling out L&D programmes, to those expected to participate in them. While the goal is of course to ensure employees are able to earmark time each day, week and month to learning and feel empowered to do so, the reality is that the day-job often gets in the way, as delivering key customer requirements appears a more pressing and urgent use of time. We run the risk that, if we pressurise employees to engage with and complete training activities while they’re overwhelmed with excessive workloads, they’ll actually come to resent your L&D efforts instead of lauding them.

In that regard, there are also costs associated with getting L&D wrong. If staff don’t find a particular training intervention engaging or useful, they might well be put off engaging with future development opportunities. Likewise, if staff feel the training on offer doesn’t cater for them or isn’t pitched to their level, it might contribute to a feeling of being undervalued. If training offered is too focused on management and leadership, for example, it can lead employees at different levels to feel overlooked and ignored. This, in turn, can lead to resentment, disengagement, exits and, at worst, negative commentary about the employer organisation within the wider marketplace.

Finally, of course, there’s the cost of the training itself. Whether that comes from the implementation of an LMS, the hiring of training space, the cost of coaches and facilitators or the fee for online training platform membership. In 2020, US companies spent an estimated $82.4 billion on training, which is a stark reminder that L&D brings with it an upfront hit to an employer’s bottom-line.

The question, of course, is whether that upfront cost is outweighed by improvements in performance and productivity and reductions in turnover and recruitment costs. Let’s face it, we’re all deeply conscious of the need for a return on investment. While giving our people the best workplace experience and enhancing their personal growth and development is a noble goal, if the numbers don’t stack up, something might well need to give.

Well, you’ll be glad to know, the research suggests investment in L&D initiatives is returned, and in spades. By way of example, recent research carried out by Bain & Company found that raising customer retention by just 5% can boost the bottom line by 25-29% and that learning and development focused on customer experience plays a significant role in achieving that increased retention figure. Similarly, a study conducted by IBM found that trained teams experience an increased productivity rate of 10% as a result of greater skills and knowledge of best practice. So yes, there’s a cost, but you’ll get it back, and then some.

As with anything, the picture’s not black and white. There are pros and cons where investing in L&D is concerned. However, the emerging picture indicates that the benefits definitely outweigh the costs, particularly if you want to outrun the skills shortage and prepare your business and its people for the challenges on the horizon.