Should you hire new talent or reskill/ upskill the existing one?

The choice between reskilling existing employees and hiring new talent is critical. Research indicates that companies can save up to $45,000 per employee by investing in upskilling instead of recruiting externally.

Employers estimate the total cost of a new hire is nearly 3- 4x the position's salary. 

Beyond financial considerations, this decision influences productivity, workplace culture, and long-term business growth. Companies must weigh the benefits and challenges of each approach to create a sustainable human resources strategy.

Reskilling current employees offers significant advantages, particularly in fostering loyalty, preserving institutional knowledge, and ensuring operational continuity.

Existing employees are already familiar with company policies, workflows, and culture, enabling them to integrate newly acquired skills with minimal disruption.

Financially, reskilling is a cost-effective alternative to external hiring. Recruitment processes involve significant expenses, from job postings and interview processes to onboarding and training programs.

Even after hiring, new employees may take months or even years to reach full productivity, while reskilled employees can immediately apply their enhanced skills.

In addition to the hiring costs that can be avoided by investing in training your staff, there are other advantages to taking this option.

A recent survey by TalentLMS highlights the key motivations that drive employees to upskill and retrain, revealing that personal growth, job security, and career advancement are top priorities. Many employees see continuous learning as a path to greater professional fulfillment and development, enabling them to stay competitive in an evolving job market.

Furthermore, 69% of employees reported that upskilling and reskilling programs have directly improved their job performance, demonstrating the tangible benefits of workforce development initiatives.

Offering continuous training not only reduces turnover rates but also ensures that companies remain competitive. By equipping employees with the latest skills, organisations build a culture of continuous learning.

However, reskilling is not without challenges. Training initiatives require investment in time, resources, and education platforms. Not all employees may be willing or able to adapt to new skill sets, which means businesses must carefully assess their workforce's capacity for growth. To be effective, reskilling strategies must align with future business needs and industry trends, ensuring employees develop skills that provide long-term value.

Hiring new employees? Here are the costs and considerations

While reskilling has clear benefits, there are situations where hiring new employees is necessary. Bringing in external talent can introduce fresh perspectives, specialised expertise, and innovative problem-solving approaches.

For businesses in rapidly evolving industries, hiring professionals with cutting-edge skills can be essential for maintaining competitiveness.

New hires can fill critical skill gaps that internal reskilling efforts may not address. For instance, highly specialised roles in artificial intelligence, cybersecurity, or data science often require expertise that existing employees may lack. Additionally, external candidates might bring diverse experiences that enhance creativity and adaptability, contributing to business innovation.

Despite these advantages, hiring externally comes with substantial costs and risks. The recruitment process can be expensive, including advertising, interviewing, relocation, and training expenses. Once hired, new employees need time to familiarise themselves with company culture and operations, leading to potential delays in achieving peak performance. Moreover, external hires may struggle to integrate into existing teams, increasing turnover risks if they fail to align with company values and expectations.

Given these factors, businesses must carefully evaluate whether hiring new talent is the best solution for their needs.

If the goal is to inject fresh ideas and specialised knowledge, recruitment may be the right choice. However, if stability, cost efficiency, and employee retention are priorities, reskilling might be the more effective strategy.

Finding the right balance between training and hiring

For most companies, the best approach lies in striking a balance between reskilling and hiring. A hybrid strategy allows businesses to maximise internal talent while supplementing it with external expertise where necessary. Organisations that prioritise internal mobility tend to retain employees longer, benefiting from both cost savings and enhanced workforce engagement.

Major corporations have already embraced this approach. Amazon has pledged $1.2 billion to upskill 300,000 employees by 2025, focusing on areas such as cloud computing and machine learning. PwC has invested $3 billion in a digital upskilling initiative, equipping employees with knowledge in automation, data analytics, and artificial intelligence. These initiatives demonstrate the long-term value of fostering internal talent development.

Factors such as industry trends, budget constraints, and company culture play crucial roles in deciding whether to invest in current employees or seek fresh talent externally. 

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What's better - Reskilling or Hiring?

If you are option for reskilling your existing employees to escalate their performances, here are some key benefits for your organisation:

• It directly enhances talent retention and job satisfaction
• Helps in preserving institutional knowledge and company culture
• It is more cost-effective than hiring externally
• Helps employees reach productivity faster with minimal disruption
• But a key consideration is - it requires time, resources, and willingness to learn

If you are planning to simply hire new employees than reskilling/ upskilling the existing ones, then the key benefits and considerations are:

• The new talent introduces fresh perspectives and process innovation
• It fills skill gaps with specialised expertise
• It can adapt to evolving business needs faster with exposure 
• But, two critical considerations are - the hiring costs are higher due to recruitment and onboarding, and there's a risk of cultural misalignment and longer adjustment periods

So, what is the best approach?

If an organisation wants to reap the benefits of both existing talent and fresh talent, then the bets approach would be to adopt a hybrid strategy. For this, the employers have to:

• Invest in reskilling for long-term workforce stability
• Hire externally for critical roles requiring specialised skills
• Leverage mentorship and internal mobility to enhance learning
• Align workforce strategies with future business goals