Upskilling: what it is, benefits and challenges

Upskilling is the process of developing new skills or enhancing existing ones so that employees can perform better in their current roles and prepare for future responsibilities. This might include building technical expertise, strengthening soft skills such as communication or leadership, and gaining confidence with new tools and technologies. 

Understanding upskilling in a business context is about ensuring that learning is aligned to organisational goals, not just individual interests. This form of targeted learning helps people grow professionally within their existing career path and enhances overall workforce capability. 

Companies wanting to stay ahead and get the best from their teams are increasingly using learning as a key strategy. Upskilling helps businesses to make better use of existing talent while supporting internal career development and staff retention. 

People Management from the CIPD found that 29.3% of UK employers now consider upskilling and reskilling their workforce their primary concern, overtaking wellbeing as their main focus. This shift highlights how critical skills development has become in responding to changing business demands and preparing employees for future roles. 

While they share similarities, upskilling and reskilling are ultimately different in their purpose and results. Upskilling focuses on acquiring additional skills in an existing field, while reskilling involves learning new skills for a different job or industry. 

Upskilling focuses on helping employees to build additional skills within their existing role or profession. This might involve developing deeper technical knowledge, strengthening soft skills like problem-solving and communication, or combining both to improve overall performance and readiness for progression. Many organisations prioritise upskilling because it supports continuity while still driving growth. 

Reskilling, on the other hand, prepares employees for different roles or functions, often in response to organisational change. It may involve learning entirely new technical capabilities or transferable soft skills that enable a shift into another area of the business. Understanding the balance between the two allows organisations to maximise the benefits of upskilling and reskilling while addressing both immediate skills gaps and longer-term workforce planning. 

While employee outcomes are important, organisations ultimately invest in learning because of the value it delivers to the business. Let’s explore some of the key benefits of upskilling that can drive measurable impact. 

Supports employee retention 

A lack of development opportunities is one of the most common reasons employees leave. HR News reports that one in four office workers would consider leaving their role if offered better progression elsewhere. 

LinkedIn’s 2025 Workplace Learning Report highlights that 88% of organisations are concerned about employee retention, and survey respondents cited providing learning opportunities as their number one retention strategy. This shows that they understand the importance of offering targeted learning and upskilling initiatives to support development and encourage employees to build their future internally. 

Saves on recruitment costs 

Although the cost of recruitment has declined over recent years as employers invest in technology, replacing employees is still expensive. The CIPD’s Resourcing and Talent Planning report 2024 estimates that the median cost of recruiting senior managers is around £2,000 and for other employees around £1,500. 

Upskilling existing employees is often far more cost-effective than hiring new staff. As people progress into more senior roles, internal talent pipelines make it easier to fill gaps without competing in a crowded external market. Over time, this reduces reliance on recruitment and helps organisations to plan workforce capability more effectively. 

Cultivates new skills and knowledge within the workforce 

One of the most immediate benefits of upskilling employees is the expansion of capabilities across the organisation. This might include developing leadership skills, improving communication and collaboration, or building proficiency in specific tools and systems. 

For managers, this means greater confidence that teams have the skills required to meet changing demands. For the organisation, it creates a deeper, more flexible pool of talent that can respond quickly to new challenges. 

Increases employee productivity 

According to their Business Outlook Tracker, Grant Thornton found that 77% of mid-market business leaders believe that a lack of necessary skills is affecting productivity levels. When employees have the right skills at the right time, they’re more confident, efficient, and better able to meet business needs. 

This applies to both hard and soft skills. Whether it’s learning a new system or developing better problem-solving abilities, upskilling reduces friction and enables employees to deliver better outcomes with less supervision. In turn, this leads to higher overall productivity, improved employee performance, and a stronger impact on business results. 

Encourages a culture of learning 

Upskilling helps to embed a culture of learning into everyday work rather than treating it as a one-off activity. When leaders actively support development, it reinforces the idea that growth and improvement are valued. 

Creating an environment where learning is part of the daily routine ensures that organisations stay flexible and ready for change. It also signals to employees that continuous development is expected and rewarded, which motivates them to take ownership of their own growth. Over time, this mindset supports innovation, collaboration and resilience. 

Offers a competitive edge 

Organisations with adaptable, engaged workforces are better positioned to respond to industry change. Tailored learning journeys that align employee interests with business needs drive stronger engagement and performance. 

Gallup research shows that teams in the top quartile of employee engagement achieve 23% higher profitability than those in the bottom quartile. By investing in upskilling, businesses can keep employees motivated and strengthen their ability to compete. 

Despite the clear benefits of upskilling and reskilling, implementation isn’t always straightforward. Let’s explore three practical and cultural barriers commonly encountered when addressing upskilling the workforce. 

1. Upskilling not being considered a priority 

Short-term pressures often take precedence over long-term capability building. Competing priorities can make it difficult for decision-makers to focus on development, even when skills gaps are evident. The Employer Skills Survey 2024 (ESS 2024) reports that companies are investing just £1,700 per year per employee in training. This is a decrease from £1,960 in 2022, showing that other business initiatives are taking priority. 

2. Lack of time 

Time constraints remain one of the most significant obstacles to upskilling. Employees often struggle to balance learning with day-to-day responsibilities, leading to low engagement or incomplete training. Busy schedules and competing demands can make traditional training formats impractical, particularly when learning isn’t embedded into workflows. This is where eLearning and on-demand learning platforms can play an important role. 

3. Budget restraints 

Limited budgets can restrict access to learning resources and technology. While development is widely recognised as important, it often competes with other operational priorities. Failing to invest, however, can result in higher employee turnover, reduced productivity, and loss of competitive advantage, making budget decisions around learning increasingly critical.