In the face of changing business conditions, it’s crucial for your workforce to be adaptable and ready for new challenges and technologies. 62 percent of executives believe advances in automation and digitization will lead them to retrain or replace more than a quarter of their employees by 2023. But how do you decide whether it’s better to retrain your existing staff, or to recruit new employees with the skills you need?
If you look at leading companies like Amazon and Cigna, it’s clear they have chosen retraining. Amazon announced a $700 million investment in employee retraining, and Cigna’s employee education program delivered a 129% return on investment. Let’s examine three reasons why reskilling and retraining will be essential to your business success in 2020.
To take the lead over your competition, you need a highly skilled staff. But is reskilling your existing employees really more cost-effective than hiring new experts who already have the skills you need? This in mind, let’s look at how Cigna saw such a big return on their employee education investment.
First, participants in the Cigna education program were eight percent more likely to be retained at the company and ten percent more likely to be promoted. At the same time, Cigna estimated the average cost of recruitment and replacement would be 150 percent of an employee’s salary. In short, the biggest savings Cigna saw from their education program came by avoiding talent acquisition costs and retaining its skilled employees. This gave Cigna a significant competitive advantage over companies who primarily relied on expensive recruiting efforts.
Recognizing the need for additional education and training isn’t limited to employers. 73 percent of millennial workers expect to need training to advance their careers, and 42 percent say that learning and development opportunities are the most important benefit they consider when deciding where to work. Finally, a Wall Street Journal report shows 34 percent of executives believe learning and development will benefit employee productivity and creativity.
This suggests not only that your employees want to learn new skills, but also that providing reskilling opportunities brings out the best in your workforce. As you look for ways to motivate your employees to think creatively and drive innovation, prioritize reskilling programs. Your organization will see better work performance and new ideas, and your employees will feel like you value them enough to invest in their education.
Your employees know that the changing nature of their work requires retraining. According to the MIT Technology Review, 80 percent of employees say they currently lack the skills they need for their current roles and for their future careers. As new technologies and business opportunities arise, you want your workforce to have the digital dexterity they need to quickly adapt to change.
This doesn’t mean you should spend your retraining budget on every new technology that arises. Instead, train your workforce in soft skills like communication, problem-solving, and time management. When MIT Sloan researched the effects of soft skills education, they saw employees communicate more effectively, perform complex tasks more quickly, and express greater confidence in their abilities—as well as a 250 percent return on the company’s educational investment in eight months.
These research findings present a clear case for why retraining and reskilling your employees is the right financial investment for your organization. But the benefits to your company go beyond cost savings. When employees see their leadership investing in their education and skills, those employees are not only more likely to stay at their jobs, but also thrive in them. This in mind, if you want to create an adaptable workforce ready for the changing conditions of business today, there is no better investment than employee reskilling and retraining.
For more insight into how retraining and reskilling help fill the skills gap in today’s organizations, read this report from the MIT Technology Review.
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