Close this search box.

Upskilling vs hiring? There’s a clear winner on cost

The big search for missing leaders in IT, Finance, Project Management and HR can be reduced by upskilling the existing workforce.

New research reveals how upskilling existing employees could save businesses up to £36,084 per employee when compared to replacing them with new hires.

With high costs for recruitment, the opportunity cost of replacing employees and the weeks or months it can take for new employee induction, upskilling could be the answer for businesses struggling to close skills gaps.

A recent study by Monster  revealed that 58% of organisations surveyed struggle to find candidates with the right skills, with 29% agreeing that the skills gap has increased since 2021. However, figures on the cost of replacing employees and training existing employees suggest that upskilling is the most cost-effective way to solve this problem.

“Research we conducted in 2022 with senior business, HR and L&D professionals revealed a few reasons why organisations value training employees through upskilling, reskilling and cross-skilling programmes. Including that it helps to retain good talent and valuable internal knowledge (52%); it demonstrates to employees there are multiple career paths within the company (52%) and it is more cost effective (46%)” explains ILX’s Manging Director Russel Kenrick.

“We’re not surprised by this trend. These certifications are instrumental in supporting organisations accelerate their digital transformation programmes; continually innovate; increase efficiencies; and optimise their operating models. As they’re aligned to project and programme management (PPM) and IT service management (ITSM) frameworks that provide best practice guidance – says Kenrick.

Research  this year revealed that these skills are in demand from different organisational functions. For example, within Product Development, research

found that 60% of Heads of Operations identified PPM. While, within IT Departments, 73% of Heads of IT and Digital Transformation said ITSM.

Research reveals: Savings from 70 – 92% when upskilling instead new hires

The table below, researched and compiled by ILX Group, demonstrates the potential savings that could be seen when organizations opt to invest in upskilling an existing employee rather than replacing them.

The statistics for ‘Average Cost of Replacing an Employee’ are based on the average recruitment fees (15%), costs of inducting/training new employees, and welcome bonuses.

The ‘Average Cost of Training an Existing Employee’ is the average price of relevant training courses based on those quoted by various providers. The findings indicate that if the salary stays the same for the upskilled employee or new hire, organizations choosing to upskill rather than replace could save between 70 and 92% on average.

 Sectors and Roles Average Cost of Replacing an Employee Average Cost of Training an Existing Employee Percentage Savings
IT Managers £15,773 £3,605 83%
Leaders £39,709 £11,975 70%
Finance Managers £16,002 £2,346 85%
Leaders £39,259 £3,175 92%
HR Managers £13,079 £3,107 76%
Leaders £35,565 £6,458 82%
Project Management Managers £12392 £1891 85%
Leaders £22987 £1877 92%

The pandemic led to The Great Resignation, and while it affected sectors across the board, those working in hospitality[1] and at the front-line[2] appear to have been most likely to seek out new employment. This will likely result in greater competition for employment in other sectors, meaning job security could become an issue for many. However, those employees who have the opportunity to complete relevant training could add value to organisations while maintaining a stable career in their chosen profession.

What remains unclear is if employers will invest in existing employees’ training and professional development or spend more on replacing them with new hires they feel already possess the correct skills.



*Research from ILX Group

    Read more

    Latest News

    Read More

    Will we meet Zero carbon emissions? It’s up to each and every business

    17 June 2024


    Receive the latest HR news and strategic content

    Please note, as per the GDPR Legislation, we need to ensure you are ‘Opted In’ to receive updates from ‘theHRDIRECTOR’. We will NEVER sell, rent, share or give away your data to third parties. We only use it to send information about our products and updates within the HR space To see our Privacy Policy – click here

    Latest HR Jobs

    The Compliance and HR Administrator position involves assisting with the implementation of compliance programs and HR procedures, maintaining accurate records,… £22,000 – £24,000 a yearFrom

    London School of Economics and Political Science – Human Resources DivisionSalary: £29,935 to £33,104 per annum inclusive with potential to progress to £35,441 pa inclusive

    Durham University – HR & ODSalary: £23,144 to £24,533 per annum

    University of Cambridge – Case Management Team HR DivisionSalary: £40,521 to £54,395

    Read the latest digital issue of theHRDIRECTOR for FREE

    Read the latest digital issue of theHRDIRECTOR for FREE