Say the word “reskilling” and it conjures up a worker in midcareer, or even one nearing retirement, who needs to learn how to use new technology.
But what the World Economic Forum has dubbed the “reskilling revolution” goes far beyond graying employees. It’s a fundamental shift in the way that businesses — and employees — should function to keep on top of rapidly evolving technology.
What’s at stake? Not only individual jobs but also the health of the economy as a whole. Traditional retraining efforts, particularly in the public sector, have focused on workers who have already been laid off after their skills became obsolete. That system requires government services, such as unemployment benefits or welfare assistance, to support workers while they gain new skills and education.
Experts suggest that the private sector can take a leading role in disrupting this cycle by planning ahead, and that it makes good business sense to do so.
Companies often must pay a significant premium for new employees with high-demand skills, particularly in a tight labor market.
Ravin Jesuthasan, co-author of the World Economic Forum’s 2019 report “Skills as the Currency of the Labor Market,” said the old model of “learn, do, retire” suited a job market in which the basic functions of a job changed little over time.
As some old job functions become automated — and technology continues to change — the business world should adopt a new model of continuous learning and relearning, said Jesuthasan, U.S. managing director of talent and rewards at Willis Towers Watson.
“The promise going forward is not jobs for life; it’s the promise that as a company, I will ensure that you stay relevant,” Jesuthasan said. “The talent experience will increasingly emphasize the need for companies to give workers access to acquiring new skills and rewarding them when they do — that the company is going to give you the ability, access and opportunities to continue to develop yourself.”
A New Cost-Benefit Analysis
Unfortunately, outdated views about everything from how companies perceive costs to how to deliver continuing education stand in the way of widespread adoption.
For example, traditional accounting practices tend to reward the cost savings of laying off employees with obsolete skills and hiring ones with more updated portfolios, without considering the costs of recruitment or time to productivity, Jesuthasan said. In addition, companies often must pay a significant premium for new employees with high-demand skills, particularly in a tight labor market.
“You’ve got these perverse incentives that get in the way of CEOs doing the right thing,” Jesuthasan said. “So it’s important that there’s a clear sense of mission and purpose that enables leaders to transcend the behaviors that might be rewarded by accounting treatment and near-term economics.”
In “Towards a Reskilling Revolution,” a report published in January by the World Economic Forum, the authors suggest that the private sector could reskill 25% of U.S. workers in disrupted jobs with an overall investment of $4.7 billion — and still reap a positive cost-benefit balance.
The report also urges planning ahead. Based on the authors’ analysis, 95% of the 1.4 million U.S. workers whose jobs will be disrupted by technology by 2026 could make a desirable job transition. However, the report’s authors caution, a successful job transition takes an average of up to two years in additional education and work experience.
UpSkill America, an employer-led group that promotes training and education, has released a calculator to help employers better pinpoint the costs of turnover, from recruiting a new hire to integrating that new person into the workforce. The calculator was developed in partnership with the Aspen Institute Workforce Strategies Initiative to achieve a new cost-benefit analysis that companies could use to justify spending their money in retraining their employees, rather than replacing them, said Jaime Fall, UpSkill America’s director.
Fall said companies need to reframe the issue as a long-term investment rather than as an employee benefit. And companies need to build in time for employees to update their skills.
“This is not something businesses should be doing for corporate social responsibility; the long-term success of their company depends on this,” Fall said. “We want to help companies say, ‘We’ve got millions of dollars just flying out the door, and if we can use a percentage of that money to put good training programs in place, that will help turn that from a loss to a benefit.’ It’s not just understanding the cost of turnover — it’s helping them identify the funds that they can reinvest in training.”
Chief learning officers also need to redefine their role in providing education opportunities, said George Westerman, the faculty director of workplace learning at MIT’s Jameel World Education Lab. Such leaders have a chance to be “transformers” for their employers, Westerman said.
Human resources is well-situated to work with various departments to identify skills gaps, determine best practices for reskilling, and track what training creates an impact or falls short, Westerman said.
“It’s completely changing your mindset to be much more strategic,” Westerman said. “Your role is to change the culture, not to deliver courses. It’s to be part of the conversation about where the company is going and to help drive that conversation, not just sit back and say, ‘What courses do you want?’”
Several reports, such as “Humans Wanted: Robots Need You” by workforce consultant ManpowerGroup, suggest that even as technical skills become more important, the most successful workers will be those who possess “human skills,” such as communication and creativity, which robots can’t reproduce.
If a company already has employees who demonstrate those soft skills and who fit well in the company culture, then it makes sense to invest money in reskilling rather than replacement, said Marion McGovern, an entrepreneur and the author of Thriving in the Gig Economy. '
“To the extent that people talk about the need for resilience and critical thinking and adaptability and flexibility, these are not necessarily job skills, these are competencies,” McGovern said. “And if that’s what you really want in the worker of the future, if you have those competencies, then you can train people for a new job.”
There is some evidence to suggest that the tide is turning in favor of reskilling.
HR is well-situated to work with various departments to identify skills gaps, determine best practices for reskilling, and track what training creates an impact or falls short.
Last year, large corporations announced more than $600 million in new reskilling programs, according to UpSkill America.
A ManpowerGroup survey of 19,000 employers worldwide found that 84% of responding companies plan to invest in upskilling efforts by 2020, quadrupling the percentage of businesses that had such initiatives in 2011.
The Center for Education and Workforce at the U.S. Chamber of Commerce Foundation is rolling out an academy to help teach companies “the lost art of workforce planning” in order to identify and introduce learning initiatives for their employees, said Jason Tyszko, the center’s vice president.
The upskilling academy, an expansion of the TPM Academy™ launched in 2014, will teach companies how to plan for and develop reskilling initiatives, as well as how to determine the return on investment (ROI) for such projects. Tyszko said businesses should track likely career paths for employees and what skills are needed to help employees progress along those paths.
“We assume that one job is a stepping stone to another, but for a lot of employees, that’s painfully unclear,” Tyszko said. “And many companies don’t even know, for people who do promote from within, whether there are any patterns. Part of reskilling is mapping those internal pathways and understanding the relationship between an entry-level job and a mid-level or upper-tier job.”
AT&T is among the early adopters of reskilling efforts. The company launched its “Workforce2020” program in 2013 to create educational opportunities for its employees. The company later renamed the program “Future Ready” to reflect the open-ended nature of learning. It currently invests about $200 million a year in internal training programs for employees and $23 million more on tuition assistance, said Dahna Hull, senior vice president of AT&T University and Talent Acquisition.
AT&T measures its ROI in part by following the number of employees who take part in training, then move into critical roles, Hull said. The company reports that it fills 75% of its management roles with internal candidates and that those who have taken part in “Future Ready” are more likely than their colleagues to advance.
Two years ago, AT&T added an online tool called the Personal Learning Experience that allows employees to plan and track their learning. In addition, the feature allows employees to search for other jobs in the company based on their current skills, find out what jobs they are at least 50% qualified for and figure out what training they need to bridge the gap.
“It’s really about transparency and empowerment — creating tools and processes that can help empower employees to take control of their own development and their own careers,” Hull said. “It’s about creating a culture of continuous learning and inspiring employees to continue thinking about learning and development throughout their careers.”
Trisha L. Howard is a contributing writer for WorldatWork.