Upskilling Employees: A Complete Guide

As companies increasingly go online for essential tasks like sales, customer support, and communication, HR teams need employees with the skills to thrive in a digital world. 

New information processing technologies like artificial intelligence (AI) are accelerating this evolution, changing how we work, and creating a growing skills shortage. As businesses struggle to fill talent gaps, many HR teams turn to upskilling or retraining their workforce.

This guide provides a detailed overview of the global skills shortage and explains how upskilling helps businesses fill key roles while improving employee productivity. Plus, discover an alternative hiring method for quickly securing top talent in a tightening labor market.

What is the meaning of upskilling employees?

Upskilling is a workforce development strategy that provides training and education opportunities to existing employees, allowing them to broaden their skill sets, take on new responsibilities, and find new roles and opportunities within their company.

With the competition for top talent being more intense than ever, companies fill positions from within by upskilling or reskilling current talent. While the terms upskilling and reskilling are similar, they are not interchangeable:

• Upskilling. If an employee upskills, they develop new skills, take on new responsibilities, and move upwards within their field in the same or a similar role. 
• Reskilling. Reskilling involves an employee learning a new skill set that prepares them to transition into an entirely new role.

Read also: What Is Upskilling vs. Reskilling?

Examples of upskilling

Upskilling involves virtual and in-person training models based on external and internal expertise. These models include online courses, internal mentorship programs, and stipends for accredited university courses.

Below, we list the most common examples of upskilling:

• Online training. Online training involves virtual education modules that offer storytelling, branching scenarios, reflective learning, step-by-step process breakdowns, webinars, podcasts, and quizzes. This method facilitates an immersive learning ecosystem that allows employees to learn when, where, and how they want.
• In-person training. In-person training involves on-the-job training, seminars, workshops, and lectures from in-house or external experts. You can easily record lectures and seminars and upload them to your online training platform for employees to access at their convenience.
• Blended learning. Blended learning combines online and offline learning modules, giving employees the freedom to create a personalized learning journey by choosing how and where they want to learn.
• External training. Upskilling your employees sometimes requires education from external organizations, such as universities or private coaching programs. While external training may involve a hefty investment, such as offering tuition coverage for university classes, it gives talent access to higher-quality accredited training when needed.
• Internal mentorship. You already have the in-house expertise—all you need to do is match a mentor with a mentee. Internal mentorships allow talent to develop leadership, communication, and critical thinking skills in a one-on-one, hands-on environment with a senior colleague. 
• Community upskilling. Two employees can learn from each other regardless of where they stand in the team hierarchy. Community upskilling involves peer-led training platforms that allow employees to create courses and run mentorships for other employees to learn new skills inside and outside of their field.  
• Education stipends. Instead of offering employees specific courses and training programs, this approach involves creating a stipend for employees to use on the training of their choice, such as university courses and certification programs.
• Hands-on training. No training is complete without hands-on experience. This step allows your employees to put what they’ve learned into practice and gain practical feedback by taking the lead on a new project or presenting a marketing plan to key stakeholders.

Why do employees need to upskill today?

Through upskilling, companies build an agile workforce that can adapt to changing market dynamics and fill evolving skills shortages from within, ensuring long-term growth and resilience.

The world of work is becoming increasingly digital, and HR teams need to fill new roles. In the next five years, 23% of jobs worldwide will change due to industry transformations, including AI and other text, video, and voice processing technologies. These changes have increased the demand for new skill sets and exacerbated the skills shortage.

Source: World Economic Forum

Uncertain times call for an agile workforce. By investing in upskilling programs and allowing talent to set aside more time in their workday to focus on professional development, businesses can set themselves up for accelerated growth in the coming years.

Plus, the potential for upward mobility gives employees a sense of job security and makes them feel valued at work, boosting motivation and productivity in the long run.

Benefits of employee upskilling

Employee upskilling is a win-win for employees and employers. The benefits of employee upskilling range from insuring your company against evolving labor market dynamics and talent shortages to creating a more motivated and productive team.

Below, we discuss the benefits of upskilling in detail:

• Equip employees with needed skills. No one understands a company’s needs better than itself. When employers upskill their employees, they give them the exact skills required to drive future organizational success.
• Promote operational continuity. Forward-thinking HR teams anticipate how their workforce composition changes over time. By upskilling talent before changes occur, companies ensure skills gaps don’t arise when employees retire, change positions, or change employers.
• Optimize the talent acquisition process. In today’s fiercely competitive hiring landscape, HR teams spend months sourcing, screening, and onboarding the right talent for their needs. Upskilling employees allows companies to promote from within to bypass the lengthy and costly talent acquisition process. 
• Increase employee attraction and retention. A 2023 LinkedIn survey found that opportunity for internal upward mobility was one of the top five factors for job selection. Upskilling programs make companies more appealing to top candidates and increase talent retention.

Drawbacks of employee upskilling

Despite its numerous benefits, upskilling is not a cure-all solution for companies fighting the skills shortage. Some challenges businesses face when upskilling their workforce include time constraints, budget limitations, talent retention, and employees’ resistance to change.

We discuss each of these challenges in detail below:

• Time constraints. HR leaders at major corporations, such as Google, Genentech, and 3M, believe in the 20% time rule, or spending 20% of each workweek experimenting and skill building. That’s about one day per week, which reduces your employees’ workweek to four days.
• Budget limitations. For example, Amazon recently pledged $1.2 billion to an employee upskilling initiative that will last through 2025. While Amazon expects to see a strong return on its investment, not every company can afford such expenses.
• Talent retention. Once you equip your team with the latest skills in their field, your competitors’ HR teams may try to lure talent away from your company. Keep your team happy and reduce churn by offering competitive supplemental benefits and a healthy work-life balance.
• Resistance to change. Upskilling involves breaking old habits and adopting new processes. People who have been doing things one way for a long time may resist change.

How to upskill employees

Developing an employee upskilling program involves careful planning and preparation. HR teams must identify skills gaps, consider changing market dynamics, and draw on employee feedback to establish an educational framework that facilitates learning and provides ongoing employee support.

Below, we list key steps HR teams should take when creating an upskilling program for their employees:

1. Identify current skills gaps. Identify current skills gaps and anticipate your company’s long-term needs to determine where upskilling would be most beneficial.
2. Assess changing market dynamics. Identify opportunities that new technology like AI has created in your industry and identify the skills your team needs to take advantage of these opportunities. 
3. Survey your team. Survey your team to understand their goals and expectations for personal and professional development within your organization.
4. Choose your training programs. Establish a training framework where employees can access online and offline resources and participate in ongoing training for long-term growth.
5. Encourage continued learning. Keep your employees motivated as they learn new skills by helping them track their progress. Offer rewards and promotions for achieving goals and completing programs.
6. Get employee feedback. Regularly consult with employees participating in your upskilling program to identify areas for improvement. 

How to handle a labor shortage without upskilling employees

While upskilling is the most efficient way to develop an agile workforce, some companies lack the time and financial resources needed to create internal learning and development programs. If you need a faster and more budget-friendly solution for sourcing qualified talent, consider sourcing employees internationally.

Today, HR teams worldwide are adept at managing employees virtually—businesses no longer need teams to work from one centralized location. Many companies go beyond their home market to source top talent worldwide and quickly find employees that meet their specific budget and needs.

For example, a British fintech company looking for an alternative to London’s highly competitive hiring landscape can turn to an emerging market like Lithuania. Meanwhile, companies seeking web developers can look beyond saturated markets like Silicon Valley and focus on up-and-coming markets like Ukraine.

Businesses have two options to engage global talent: establish a local entity in their target market or partner with an EOR. We discuss these approaches in detail below, outlining the pros and cons of each.

Entity establishment

Entity establishment is the traditional approach to hiring talent internationally and building a long-term local presence in a foreign market. This approach involves several benefits: with a legal entity in your target market, you can engage talent directly while simplifying the hiring process and reducing risk exposure.

Still, entity establishment doesn’t offer the time and cost savings that upskilling programs do. Companies that use entity establishment to legally hire foreign talent face a months-long setup process that can cost up to $20,000 in initial investments and require $200,000 in annual maintenance.

Entity establishment only makes sense if you plan to hire a large team overseas and anticipate a long-term presence in your target market. HR teams seeking a faster, more cost-effective upskilling alternative can turn to an employer of record (EOR) instead.

Partnering with an employer of record (EOR)

An EOR allows global companies to quickly and compliantly hire talent in new markets, saving them time and money when bringing in professionals with hard-to-find skills.

The main advantage of partnering with an EOR is the ability to quickly source talent worldwide without setting up legal entities or worrying about violating local employment regulations.

As the legal employer of your global workforce, an EOR handles hiring, onboarding, compliance, immigration, and global payroll while offering ongoing HR support to your team on your behalf. With this approach, you can build a global workforce without delaying day-to-day business operations.

Plus, an EOR helps you craft market-specific supplemental benefits packages featuring perks like global equity awards and flexible workspaces to help your company attract and retain top talent anywhere.

Learn more: What Is an Employer of Record (EOR)?

Hire and retain top talent in 185+ countries with Velocity Global

Hiring talent with the right skills for your needs is no small feat, and Velocity Global has the expertise to make it happen. We help companies overcome the global skills shortage by making it easy to quickly and compliantly hire talent in more than 185 markets without establishing local entities.

Our EOR solution handles the heavy lifting of engaging international talent, from hiring, onboarding, immigration, and risk mitigation to running compliant global payroll and administering global benefits.

Our workforce management platform integrates with top HRIS and ATS systems, consolidating distributed HR into one platform and making it easy to manage teams across markets. Plus, we offer local HR support in your team’s native language no matter where they reside, ensuring a top-tier employee experience and improved talent retention.  

Turn your hiring pool into an ocean and overcome the global skills shortage with ease by partnering with Velocity Global—contact us today to get started.