Upskilling: The (Future) Solution for Companies & Employees

Stefan Schulze

Upskilling in action: two employees undergo further training on their laptops
VIDEO With english subtitles

Digital transformation, shortage of skilled workers, fierce competition – three examples of the many challenges that every company currently has to master. But how should they do that? With upskilling, of course! In this article, you will learn what that is, why it is necessary, and how you can implement it in your company.

What Is Upskilling?

First things first: Upskilling is nothing new for many L&D and HR managers. Nevertheless, the term is used in different ways and often mistaken for something else.

So let's first take a brief look at what upskilling means, what it is not, and what challenges are hidden behind it.

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What Is the Difference Compared to Reskilling & Cross-Skilling?

The terms upskilling, reskilling and cross-skilling are closely related to each other, but not interchangeable! And all three methods basically have the same goal: to utilize and promote the existing potential of the employees.

What differentiates them is the individual prior knowledge and the professional relevance of the learning content.

  • Upskilling focuses on the expansion of existing competences or the acquisition of new skills in a similar area. In everyday life, we usually speak of professional development and mean further or higher qualification. The aim is to build up deeper expert knowledge for a subject area and to stay up to date with relevant developments and trends.
  • Reskilling, also known as retraining, refers to the acquisition of completely new skills in order to move into a different field of activity. Basically, it is about learning the necessary knowledge for a new job. More and more companies are now reskilling within their organisation, filling vacancies and giving cross-skillers a new opportunity in the ever-changing labour market.
  • Cross-skilling refers to learning skills from additional disciplines in order to be versatile. This means that you are still an expert in one subject, but you broaden your horizons and develop into some kind of all-rounder for several subject areas. Ideally, the contents of these individual areas are linked or compatible with each other.

Table: Upskilling vs. Reskilling vs. Cross-Skilling

What Are the Challenges of Upskilling?

Those who want to promote their own or their employees' professional qualifications are first faced with one important question: How?

Whatever the way, the measures should be effective, benefit everyone involved and accelerate existing processes, not slow them down.

Basically, these are the three major challenges:

1. Find the Right Solution & Offer Relevant Learning Content

One of the main issues is that companies often struggle to provide the right training programs that meet both the needs of the employees and the strategic goals of the company.

Moreover, if it is to contribute to positive, long-term development, upskilling cannot be a one-off event or a phase lasting a few weeks. Learning content must be: (1) relevant to the diverse roles of the learners, and (2) continuously updated to cover new trends.

2. Motivate Employees & Integrate Learning into Everyday Work

Staff and leadership development initiatives can be meticulously planned, but they will be unsuccessful if they do not include learners. And by that we mean all learners – from management to apprentices.

Workdays are structured differently, learning curves are steeper or flatter. Through individualised learning opportunities, employees are more involved and, as a result, more motivated. The provision of learning materials that are independent of time and place simplifies integration into everyday learning. But for all this, the right mindset must first be created among all those involved.

3. Provide Resources & Make Learning Effects Measurable

The (supposedly) biggest challenge, especially at the beginning, is the resources of time and money. Companies pay for training, employees use their working time for it. That leaves less for regular tasks. Sounds daunting at first, but it’s actually not.

Professional development is an investment, not an expense. In the long run, the measures have a positive effect on the productivity of the employees and the success of the company (more on this below in the section on upskilling benefits). But, the first step must be taken!

Moreover, learning successes are measurable. But even for this, responsible persons have to spend the necessary time to adapt processes, to analyze the collected learning data and to translate it into new measures.

How Important Is Upskilling in Business?

In short: Upskilling is important and it is becoming more and more so. 

Whether technological developments, automation or AI - employees need to regularly update their knowledge and skills in order to keep up. Companies should provide the opportunities for this as quickly as possible.

According to the results of a McKinsey survey, 87% of the companies surveyed expect skill gaps within their organization in the next five years, and 43% are already experiencing knowledge gaps.

Figures from the World Economic Forum's Future of Jobs Report 2023 confirm this: 81% of the organizations surveyed plan to invest more in learning and on-the-job training in the future. 46% even explicitly stated that they wanted to further develop existing staff.

Figure: 81% of organizations plan to invest in learning in the next few years
Based on World Economic Forum

However, upskilling practice will (still) look somewhat different in 2024. The results of the Masterplan study "Upskilling for the Future" show that the training budget is stagnating in most of the 250 DACH companies surveyed (59%). It is only being increased in just under one in four companies (23%) and even cut in a quarter of large companies with more than 2,000 employees (26%).

What Are the Benefits of Upskilling?

In terms of future viability and potential competitive advantages, upskilling is already a win-win situation today and even more so in the future.

For both organisations and staff, it is the ideal opportunity to stand out from the competition and be more adaptable to future developments in the world of work.

For Companies: Upskilling is Paying Off (already)

93% of CEOs who have invested in upskilling programmes see increased productivity, better talent acquisition, and a more resilient workforce.

So, besides the introduction of a continuous learning culture, there are other benefits.

Companies close skill gaps or prevent them from arising in the first place. They position themselves future- and innovation-ready for coming changes in the market and the world of work. Especially in times of crisis, this can become a decisive benefit in order to remain competitive or even gain an advantage.

In addition, technological trends and the application of what is learned make work processes more effective in the long run.

94% of workers also say they would stay longer with a company if it invested in their training and development. So upskilling increases employee retention.

This subsequently lowers recruiting costs; it is usually cheaper to train an existing employee than to search for new talent. The ROI on learning also proves that internal training saves on the budget.

On the other hand, employers who actively promote the training of their employees are more attractive for new talents.

For Employees: Increasing One's own Market Value

Lifelong learning also pays off for employees.

Filling personal skill gaps improves one's career opportunities. Both internally and externally, new opportunities arise to move up to the next level or position oneself in a new role.

Professional and personal development helps to adapt to the dynamic changes in the world of work. Just like the company, you position yourself for the future, work more agilely and can react more flexibly to changes.

Upskilling Benefits at a Glance

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Which Skills Should Companies Promote in their Employees?

According to the Future of Jobs Report 2023, creative and analytical thinking are at the top of the ranking of future-relevant core skills. More than 70% of the companies surveyed rate these skills as important.

They are closely followed by technical competence (68%), lifelong learning (67%) and flexibility and agility (66%).

Figure: Relevant skills for the future
Based on World Economic Forum

Power Skills for a Successful Future

The really important skills for the future are therefore less subject-specific and more role-independent.

Masterplan has transferred the P21 framework (The Battelle for Kids P21 Framework for 21st Century Skills) to the business world and derived seven universal skills that employees need today and in the future in every position and every profession in order to master new challenges and acquire the necessary hard skills independently: Power Skills.

  • Digital Literacy
    Digitally fit employees work productively with data, are confident in dealing with new technologies and protect information in the cyber world.
  • Comunication
    With these skills, employees appear more confident, communicate more clearly and always find the right words – both online and offline.
  • Collaboration & Leadership
    Sharing ideas, coaching others and adapting are skills we all need for successful collaboration.
  • Emotional Intelligence
    Emotionally intelligent people suffer fewer conflicts, have a higher level of resilience and promote cooperation through their satisfaction.
  • Thinking & Deciding Clearly
    Those who can think and decide clearly keep a cool head in a complex working environment and know which facts are reliable.
  • Creativity
    Creative employees look for new ways, find unconventional solutions and thus open up unexpected fields of innovation for companies.
  • Global Citizenship
    In the 21st century, a global awareness of social issues and sustainability is needed in order to meet challenges competently.

Want to know more about Power Skills and how employees can improve them? Get all the info here! →

How Can Upskilling Be Realised in the Company?

Let's get back to the big question of "how". How do you start upskilling in your company? And how do you ensure that it becomes established in everyday work and pays off in the long term?

By choosing the right learning platform, of course!

Basically, training formats can be divided into these two groups:

On-Site Formats

In post-pandemic times of remote work and home office, these formats seemed almost extinct. But they still exist:

  • Courses,
  • Seminars and
  • Training on-site.

What these formats have in common is obvious: they take place offline and have a fixed date.

The advantages lie in the personal learning atmosphere. Following the model of social learning, you meet with several people, exchange ideas, ask questions and discuss.

In many cases, however, the individualisation of the content is lacking. The learning groups consist of diverse characters with different learning needs, knowledge levels and often professional roles.

The size of the learning units (usually several hours or days at a time) can also lead to a short retention period of what is learned. Adequate content may be taught, but the capacity of the participants to absorb it fully, is always limited.

Ideally, face-to-face formats are part of a blended learning approach that combines offline and online methods.

Digital Formats

The trend in further education is clearly moving in the direction of online. Common formats for digital training are now:

  • Online courses,
  • Video tutorials and
  • E-learning platforms.

These upskilling formats have three key advantages: they are independent of the workplace, can be accessed at any time and can cover relevant learning content individually.

Employees are more involved because what they learn relates directly to their work and they can incorporate it directly into their daily lives.

Learners do not have to leave their workplace to continue their education. Participation takes place via laptop, tablet, or smartphone.

It is up to the learner to decide when to learn. Through microlearning formats, content is divided into small learning units that can also be viewed in between.

By regularly offering new and updated courses, a culture of continuous learning can be established which can be integrated into the daily work of all employees.

Conclusion: There’s no Way around Upskilling!

Upskilling is not a solution for the future, upskilling is already a path to long-term success.

Those who upskill their employees

  • Fill and prevent skill gaps,
  • Ensure greater flexibility in times of crisis,
  • Position themselves for the future,
  • Improve productivity and
  • Increase employee satisfaction.

Many companies, especially large ones, are already very committed to developing the talent of their employees. The positive experiences confirm the added value of their upskilling initiatives.

In the future, employees' soft and core skills in particular will determine how agile companies can react to new technologies, shifts in the labour market and the digital transformation.

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FAQs

What Is Upskilling?

Upskilling is the process of enhancing existing skills, knowledge or competences in order to improve professional qualifications and personal career opportunities.

Why Is Upskilling Important?

Upskilling is important for companies and employees to keep up with current developments in the world of work and to meet continuously changing requirements.

How Do I Implement Upskilling?

Upskilling can be done through formal education such as courses, training or professional development. In order to serve the needs and learning curves of all employees individually, there should be learning content available for the respective role that can be accessed regardless of time and place.

What Distinguishes Upskilling from Reskilling and Cross-Skilling?

Upskilling focuses on enhancing existing skills or acquiring new skills in a similar area. Reskilling, on the other hand, refers to the acquisition of completely new skills in order to move into a different field of activity. Cross-skilling refers to learning skills from different disciplines in order to be versatile.

Stefan Schulze

Stefan Schulze is Content Marketing Manager at Masterplan. In the blog, he explains important terms from the L&D and HR world and writes about methods, concepts and developments in corporate learning.
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