Training employees to be HR managers is 76 per cent cheaper than hiring a senior people professional, study finds

Experts say upskilling will become an organisational imperative, hailing it a ‘critical investment’

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Businesses could save up to 76 per cent on the cost of hiring a new HR manager if they upskill an incumbent employee, a survey has found.

The 2022 study of business, HR and IT leaders by ILX found that, with the average cost of replacing an HR manager standing at £13,079, upskilling comes in much cheaper, with an average cost of £3,107.

For HR leaders, the average cost of a replacement is £35,565 – for the study, average replacement costs included recruitment fees, spending on induction and training and any welcome bonuses – compared to £6,458 for training an existing employee: a saving of 82 per cent.

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Becky Schnauffer, head of global clients for EMEA LATAM at LinkedIn, said upskilling could become an organisational imperative. “Businesses must recognise that upskilling is key to responding quickly to changing market conditions. This is why upskilling programmes are a critical investment,” she said.

However, if employers decide to go down the upskilling route, Lauren Wakeling, UK country manager at CoursesOnline, explained that HR must work hand in hand with staff to understand how to do this successfully. “To get the best out of upskilling, HR departments need to work in tandem with the employees scheduled for training,” she said, adding that HR needed to highlight skills they believed employees would need to succeed and collaborate with other departments. 

Wakeling added that there has to be “constant dialogue” between organisations and their personnel, and that the approaches to learning will need to be “tweaked constantly” based on feedback.

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The survey also highlighted that HR isn’t the only function that can save money by turning to upskilling. According to the research, IT could save up to 83 per cent on the cost of hiring a manager if it chooses to develop internally, while finance could save 92 per cent on leadership recruitment if it turns to internal training.

Russell Kenrick, managing director at ILX, said it was clear why some employers were choosing upskilling and looking to training courses to boost employee capabilities. He said: “We're not surprised by this trend. Research we conducted in 2022 with senior business, HR and L&D professionals revealed multiple reasons that organisations value training employees through upskilling, reskilling and cross-skilling programmes.” 

Kenrick said the reasons found by the research included retaining talent and valuable knowledge (52 per cent), that it demonstrates multiple career paths to employees (52 per cent) and is more cost effective (46 per cent). 

Meanwhile, a recent report by the CIPD found that a third (34 per cent) of people professionals have had to upskill in response to immediate business needs following the pandemic.

The People Profession 2022 report – which surveyed 1,496 people professionals – found that approximately two-thirds (61 per cent) had to either upskill or reskill in the last year as a result of their organisation’s response to the pandemic.  

The CIPD found that the vast majority (89 per cent) of HR professionals engaged in some form of L&D in the last year. One in five (22 per cent) said their development was focused on gaining longer-term skills.