Upskilling and reskilling are becoming the most important ingredients for the future of work. They ensure the development and innovation of your company. In this article, we will explain these two concepts and how they can help your business.
We will cover the following thematic focal points:
- What does upskilling and reskilling mean?
- How is the world of work developing?
- Which skills are coming into focus?
- What are the benefits of upskilling and reskilling?
What does upskilling and reskilling mean?
Upskilling and reskilling are usually mentioned together. They may sound like fancy terms, but they are by no means new. They are unfortunately simply underestimated and neglected in many companies.
Let’s quickly explain the definition of these two magic words:
Upskilling is about imparting new skills or qualifications to team members of your company which will enable them, for example, to take on more demanding tasks or even a leadership role. This is mainly done by building on existing skills. This is often just called further education and training.
Reskilling aims for team members to acquire entirely new competencies, so they can perform a strongly changed or newly created job in your company. This is also called retraining, which becomes relevant (and necessary) when an occupation is in danger of being lost due to changes in the labour market or when the job requirements have changed particularly dramatically.
How is the world of work developing?
Before we get to the benefits of continuing education and retraining, let’s take a quick look at the four core areas in which the labour market will change in the future.
For a long time, the predictions for the working world of tomorrow looked very bleak. It seemed as if digitisation and automation would completely turn the labour market upside down.
Now, research in this area has advanced by several years and can make relatively clear forecasts up to 2035. These clearly show that aside from automation and digitalisation also demographic change and the shortage of skilled workers are likely to cause major changes in the long term.
But how exactly will these four aspects influence the world of work? Let’s have a quick look at what to expect:
The fear of being completely replaced by automation was and is great. Although it’s not entirely unfounded, it’s also not as bad as expected, as a German Deloitte study on the future of the world of work until 2035 shows.
According to this study, “only” 35% of today’s jobs can be automated (and thus partially replaced). In fact, many job profiles will be expanded or supplemented through the use of modern technologies such as data analytics, robotic process automation, machine learning and natural language processing.
However, human control and regulation will still be necessary. Consider these two examples:
Reading out data can be done automatically without any problems. But which data should be analysed according to which criteria must still be specified by humans.
Natural Language Processing (NLP):
To understand and process human language (spoken and written) as a command, machines must first be programmed by humans to be able to do so. The correct processing of the commands must be constantly monitored and improved.
Thus, for the majority of employees affected by automation, technical and analytical skills will become increasingly necessary in the future. Further education and training—upskilling and reskilling—are essential to acquire these skills.
Managing one’s affairs via an app, making payments online, and managing documents exclusively in the cloud have long become the norm, especially among younger age groups. But in a PwC study on fears, expectations, and needs of digitalisation in Germany, for example, only 44% of respondents were in favour of digitalisation in all areas of life.
The reason for this is, on the one hand, the lack of digital competence among the older population. On the other hand, fears circulate in all age groups. With regard to the labour market, for example, it was initially said that some commercial and administrative professions could be completely lost. But here, too, it is now clear that it is the way in which these professions are practised that will change, rather than the jobs disappearing altogether.
Remote collaboration, which had to be learned virtually overnight due to the Coronavirus pandemic and the shortage of skilled workers, have increasingly globalised work. Interaction and collaboration within the now increasingly international and diverse teams require entirely new soft skills and leadership competencies.
For all these reasons, companies and their staff will not only be dependent on employees who have a deep understanding of electronic data processing and data security in the working world of tomorrow. Diversity-savvy colleagues with a great deal of sensitivity for interpersonal issues will also become increasingly important.
3. Demographic change
The ageing society is also a widely known problem, as there is a massive shortage of young talent. According to statistics from the European Union’s Eurostat, the population is rapidly ageing, which means the “proportion of people of working age in the EU is shrinking”, with the median age to increase by 4.5 years by 2050.
Inevitably, methods will have to be found to overcome this deficit in the best possible way. For the time being, companies probably have no choice but to look within their own ranks and upskill or reskill younger employees.
4. Needs and expectations of skilled workers
Parallel to the demands of the labour market, the need for personal and professional development is growing steadily among employees of all ages and occupational groups.
Watching colleagues pass you by and not being able to keep up is one of the most frustrating experiences that today’s skilled workers fear. In some cases, employees prefer to change employers if necessary rather than remain on a sinking ship.
So, in order to secure the growth and competitiveness of a company (AND its employees), employers should provide attractive training and promotion opportunities. This should be an integral part of their employer branding and personnel planning.
Which skills are coming into focus?
Due to the change in the labour market, the work of all professionals will steadily increase in complexity. All team members should be able to work interdisciplinary and jointly develop innovative solutions to problems that arise.
For this reason, the following competencies are becoming increasingly important for the successful cooperation of your team. These should therefore be developed on a regular basis:
- Analytical skills, critical and logical thinking
- Ability to learn, creativity and initiative
- Project and change management skills
- Problem-solving skills
- Digital skills (programming, data processing, data protection)
- Technical competencies (robotics, AI, process automation)
- Social competencies (communication and cooperation skills)
- Leadership skills (empathy and active listening)
To get an idea of how these skills fit into new types of professions, check out our blog article on the most-desired job roles in 2022.
What are the benefits of upskilling and reskilling?
The future of work demands enormous agility. Not only from your company, but also from your employees. If you think that your company might be less affected, we have to disappoint you at this point:
According to a report by McKinsey, the effects will be felt throughout the labour market. Let’s take Germany as an example again.
The report explains how around 10.5 million employees in Germany alone are facing massive changes in their jobs by 2030. A staggering 6.5 million employees will have to undergo massive training and further education (upskilling).
For at least 4 million people, however, further training alone will not be enough. They will have to reskill because their current jobs have no future.
According to the Deloitte study, many new jobs will be created parallel to the elimination of old ones. For example, up to 1.3 million new jobs are expected to be created by 2035, especially in socially interactive occupational fields such as management, education, and healthcare.
The advantages of upskilling and reskilling
The studies above show quite clearly why you should invest in upskilling and reskilling your employees. But that’s not all.
Here are the top 8 benefits of upskilling and reskilling for your business:
- Proactive skilled labour retention
Management positions in particular, but also vacancies in the field of mathematics, information technology, natural sciences and technology (MINT) are considered difficult to fill.
However, the necessary basic knowledge and skills for the new fields and job profiles are most likely already present in your team and only need to be promoted and developed.
Also, the skills and knowledge of the “freshly qualified” employees are up-to-date, and they already know the company, which makes further induction/onboarding almost completely unnecessary.
- Filling positions internally
By investing in the further training or in-house retraining of fundamentally qualified team members instead of external replacement, you also enable yourself to fill new types of positions internally. In addition, the positions thus freed up may be easier to fill while you already have your new manager on hand—just as an example.
- You save resources
While training employees also costs money, in the long run this cannot be compared to the cost of an unfilled position: In addition to the cost of hiring new employees, companies pay on average 1.5 to 2 times the annual salary of that position.
No wonder hiring managers are always looking for ways to save on recruitment costs (for example, by considering hiring boomerang employees or offering money for referrals). Training existing employees can be another powerful strategy to save on recruitment costs.
- Agile, adaptable, and future-proof team
Those who master tomorrow’s skills today have less to worry about in the future. By upskilling and reskilling early on, you enable your employees to react more flexibly to changing requirements. This motivates and inspires them to use their know-how for more agile solutions.
- Higher engagement of your employees
When you encourage your employees to develop professionally, support them, and actively enable them to take on complex areas of responsibility, they feel valued. As a result, they will be more motivated, engaged, and passionate about supporting your business.
- Stronger employee retention
Employees who are not left alone with the challenges of everyday work, but are actively supported and encouraged, are also significantly less likely to change employers.
Instead, they are more likely to stay with their company for a longer period of time—provided that the company culture also invites and promotes employee retention and loyalty. Stronger employee loyalty also means lower employee turnover.
- Attractive employer branding
As mentioned above, development opportunities are expected by highly competitive professionals anyway. If you not only advertise these as part of your employer branding, but actually practice this actively, you can attract talent more easily and secure the next generation of workers for your business.
- Positive employer image
An inclusive and appreciative corporate culture is more important than ever. If this also includes a good learning and development culture that supports the professional and personal development of the team, this has a positive effect on your employee experience and ultimately on your image.
Prepare your team for the working world of tomorrow
Due to digitalisation, automation, demographic change, and a shortage of skilled workers, enormous changes will develop in the world of work by 2035 (and of course beyond).
If these are not met with suitable measures at an early stage, the prosperity, growth, and innovative capacity of many companies will be seriously jeopardised.
To prepare your team for the working world of tomorrow, further education and retraining will be the most important enablers. This is also reflected in the expectations skilled workers have of their employers.
We hope that this article has made the topic a little more tangible for you. If you want to learn more, we recommend the articles linked further below, where you will find more tips and incentives on upskilling and reskilling—or further education and retraining.