Reskilling staff can create cost savings of nearly £50,000 per employee compared to bringing in new talent, research has found.
A report from the Financial Services Skills Commission (FSSC) and PwC UK has found that financial services firms could save up to £49,100 per employee when they reskill an employee, compared to hiring someone new with the relevant skills.
Reskilling a financial services employee costs on average £31,800, while the ‘redundancy and rehire’ approach carries an average cost of £80,875, the data revealed.
- Talent mobility will be a big problem for HR in 2022
- Will there really be a ‘Great Resignation’?
- What caused the talent crisis – and how can HR solve it?
However, the report found only 14 per cent of financial services CEOs made significant progress establishing an upskilling programme to tackle this issue despite a “clear business case” in favour of reskilling and strategic workforce planning.
For firms with 30,000 employees, the report estimated that onboarding and day-to-day inefficiencies from employee turnover cost £57.3m a year.
Over a four-year period, the report projected that a company of this size could save between £75m and £115m by upskilling current employees into the roles they need filled.
Get more HR and employment law news like this delivered straight to your inbox every day – sign up to People Management’s PM Daily newsletter
The FSSC is calling for firms to prioritise reskilling so it becomes an essential component of an organisation’s workforce and planning strategy.
“Reskilling can generate a real return on investment, boosting productivity and competitiveness, mitigating operational and reputational risk, and positively impacting the wider economy and society,” said Claire Tunley, CEO of the FSSC.
Commenting on the report, Astrid Beekhuis, director of human resources at Momentive, warned that employers often overlook potential within their company when trying to fill a job.
Employers can identify the areas where there may be more of a need to reskill and upskill by “focusing on how challenged and motivated their employees are with regular feedback sessions” Beekhuis explained. Not only would this allow firms to retain talent and increase employee wellbeing, but it would help motivate, increase productivity and boost loyalty, she said.
Gemma Bullivant, HR coach and consultant, warned that retraining or career changes are “rarely successful” when they are reactive, highly emotive, or surrounded by urgency, as is the case in a redundancy situation. But, she said: “The concept is sound, and the report helpfully points to the need for long-term planning,” which she added was “woefully undervalued”.
This dilemma strengthens the case for HR to have a seat at the top table, she said, explaining that by having a chief people officer involved in long term strategic planning, firms could connect the workforce talent to the business plans.
Bullivant also suggested that, through strategic workforce planning, “upskilling can then form part of the cultural fabric of the organisation” by introducing career pathways, secondments, interim step-up roles, and an integrated L&D framework.