Upskilling and Reskilling | Difference, Key Considerations

According to the McKinsey Global Institute survey, 87 % of companies report they already face skill gaps or expect them within a few years. Teams are being asked to take on new tools, new processes, and entirely new ways of working. But most companies are not prepared for it. They either rush to hire externally or hope their current staff will somehow figure it out on their own.

Yet, with upskilling and reskilling strategies, you can stay competitive without losing time or money. In this article, we will break down what upskilling and reskilling actually mean, how they are different, and how HR and learning teams can build effective programs that match company goals. You will also find practical examples and best practices to get started. 

What is upskilling, and why is it important?

Upskilling is when an employee builds new skills or deepens existing ones to perform better in their current role and prepare for evolving responsibilities. The upskilling programs train employees in both soft and hard skills. An example of upskilling is when you train a customer service representative in conflict resolution. 

Upskilling has already proved to be an effective practice in terms of productivity and cost-effectiveness.

• 53% of organizations report that upskilling leads to substantial improvements in employee retention. 
• 91% of employers reported increased productivity from upskilling training
• Upskilling is more cost-effective than external hiring: 70% of US hiring managers prefer upskilling current employees over hiring new talent

Other reports claim that employees who complete upskilling programs report higher job satisfaction and motivation. That means that, apart from having a positive impact on the company’s financial state, upskilling contributes to a strong company culture. 

Upskilling example: Amazon

Amazon had an initiative of a $1.2 billion investment aimed at providing their employees with training for future-ready roles, particularly in high-demand and high-growth sectors. Since 2019, they have had more than 350,000 employees participate in upskilling training. 

Amazon has lots of initiatives when it comes to upskilling its employees. One of them is the Amazon Technical Academy. It trains employees for software engineering roles, with over 95% of graduates moving into software development engineer positions within the company.

What is reskilling, and why is it important? 

Reskilling means training employees to take on new roles. This is mostly because of the changes in technology or your organization’s strategy. For example, accountants take data analytics training to transition into the new role of a data analyst. 

Up to this day, managing reskilling is one of the key priorities for HR. There are already statistics that make reskilling an urgent issue for almost any organization.  

• By 2025, 50% of all employees will need reskilling as technology adoption accelerates. For workers remaining in their roles until 2025, 40% of their core skills will change.
• 79% of Learning & Development (L&D) professionals agree that it is less expensive to reskill a current employee than to hire a new one. 
• Major companies like Amazon and JPMorgan Chase have invested hundreds of millions to billions of dollars into upskilling and reskilling their workforces, recognizing its strategic value. 

If you constantly implement reskilling programs and use data-driven recruiting, you make sure the company stays competitive and does not face hiring issues all the time.

Reskilling example: AT&T

A great example of a reskilling program is AT&T with its Workforce 2020 initiative (now called Future Ready). Faced with rapid technological change and a workforce skilled in legacy technologies, AT&T invested $1 billion to reskill employees from outdated roles such as hardware maintenance and landline operations into high-demand fields like cloud computing, data science, and cybersecurity. As a result, by 2018, over 50% of AT&T’s workforce had transitioned into new tech-focused roles. 

The difference between upskilling and reskilling 

The main difference between the two is that upskilling helps employees grow within their current roles, while reskilling prepares them to move into entirely new ones.

“Reskilling is training employees in new capabilities to equip them for a different position within the organization. It is different from upskilling, which is preparing your employees for major changes in their current position”. 

AIHR Academy

Here is an overview of the key distinctions between reskilling and upskilling programs. 

Key considerations when upskilling and reskilling your employees 

If you plan on upskilling and reskilling your employees, there are a few major steps to consider. Though each of the trainings requires a different approach, the system and foundation you need to build for both are the same. Here is how you achieve more efficient upskilling and reskilling practices. 

• Start with a skill gap analysis 

“Competency gap analysis is a process that ensures your workforce’s current competencies are broken down at a team, job role, and individual level”. 

 

Kevin Rutherford

Chief Human Resource Officer

To understand what gaps you need to fill, whether that is with reskilling or upskilling, create a table for each role in your organization and list the main competencies for that role that belong to the following categories: foundational, intermediate, advanced, and expert. 

You will need the chart when assessing the need for upskilling and reskilling in that role. 

Next, list the competencies in a separate table and break them down into more specific skills. For each skill, assess the degree of supply you have and the degree of demand (low, medium, high). 

For example, if you are short of a specific skill (you marked supply degree low in the table), and you know you would need it for the future (you marked the demand degree high in the table ), then there is clearly a shortage. 

You can update the skill list using the

• Data received from performance review analysis
• Interviews with the managers of the departments

After the skill gap analysis, you will be able to tell if there is a need for targeted L&D programs, job rotations, peer coaching, or the need for external experts. 

• Make sure the training is aligned with the business goals 

Reskilling or upskilling is not a standalone HR initiative. It should be a business-driven strategy, meaning you need to tie those initiatives to the company’s business goals. 

Suppose your company’s goal is to increase customer retention by 15% over the next year. One of the most effective levers to achieve that is improving the quality and consistency of customer support. Instead of hiring new specialists, you can upskill your existing customer service team to handle more complex inquiries, resolve issues faster, and create a more personalized experience.

• Make the learning personalized for the employees’ needs 

Not all employees need the same training, and not all of them learn the same way. So, how do you personalize learning in a practical way? 

Start with a skills assessment. Use a mix of manager feedback, self-assessments, and performance data to identify individual gaps and strengths. Then, offer learning paths based on those results. Some might need a beginner-level course, while others are ready for hands-on projects or certification programs. 

You can make the learning process diverse with pre-recorded video lessons, interactive simulations, or coaching sessions. 

The key is to have different learning paths for each employee. For example, in a sales team, one employee might need help with negotiating techniques, while another struggles with CRM usage. That is why you cannot just offer both a sales training. 

• Implement real-world practices 

Building learning programs that mirror actual job situations ensures employees do more than memorize. As David Novak, former CEO of Yum! Brands, told the Financial Times:

“When we learn by doing, we are discovering the insights that come from action”. 

For that, use real scripts, customer data, or case files. For example, in customer service training, role-plays should mimic actual customer demographics, scripts, and sentiment data so employees practice resolving real issues.

After each simulation or job-shadowing session, guide learners through reflection using questions like “What went well?”, “What surprised you?”, and “What will you do differently?” This mirrors Kolb’s experiential learning cycle: experience → reflect → conceptualize → apply.

• Implement a culture of continuous learning

To succeed with upskilling and reskilling practices, you need to create an environment where employees expect to grow, are supported in that growth, and see it as part of how they do their job, not an extra task they check off once a year. 

For fostering a continuous learning culture, you can

• Recognize employees who take the initiative to learn
• Create channels (like monthly peer-sharing sessions or internal newsletters) where employees share what they learned and how they applied it.
• Involve the managers. Managers should talk openly about their own learning goals, take part in sessions, and give their teams time to develop skills
• Integrate learning into workflows. You can use bite-sized learning tools, peer learning, and just-in-time resources. 

FAQ 

• What is the role of reskilling and upskilling in HRM? 

Reskilling and upskilling play a central role in how HR supports both people and business goals. As jobs change, and they do, fast, it is up to HR to make sure employees are not left behind. That means helping people grow into new roles when their current ones become outdated (reskilling) or helping them sharpen and expand their skills in the roles they already have (upskilling).

Upskilling and reskilling help organizations stay competitive, especially in industries where technology or customer needs change quickly. When companies train their existing employees instead of constantly hiring new ones, they move faster, keep institutional knowledge in-house, and avoid the high costs of external recruitment.

• What is the best way to upskill? 

The most effective upskilling happens when learning is practical, personalized, and easy to apply on the job. Instead of sending employees to a generic course, start by figuring out what skills they actually need. This could be done through skills assessments, performance reviews, or feedback from managers. 

Also, upskilling should be continuous, not a one-time event. People learn best when they do not feel overwhelmed and when they can see a clear connection between what they are learning and how it helps them succeed in their job. That is when upskilling becomes part of your company’s culture. 

• What is the power of upskilling? 

The real power of upskilling is that it turns your existing team into your biggest competitive advantage. Instead of relying on external hires to fill new gaps, you grow the talent you already have. This makes your business more agile, able to adapt quickly when roles shift, tools change, or new opportunities come up.

Upskilling also builds confidence and loyalty in your team. As we discussed above, when employees feel like the company is investing in their growth, they tend to stay longer, perform better, and care more about the company’s success.

• How to create a reskilling program? 

To create a reskilling program, follow the next steps.

• Start with a business goal. Identify what roles or skills your company will need in the next 6–18 months.
• Pinpoint at-risk roles. Find positions likely to change or become obsolete due to tech, automation, or strategy shifts.
• Conduct a skills gap analysis. Compare current employee skills with the skills needed for future roles.
• Select target employees. Choose motivated, adaptable team members with the potential to grow into the new roles.
• Design personalized learning paths․
• Set milestones and track progress․ Break the program into phases with clear learning outcomes and regular check-ins․
• Measure results․ Track role readiness, performance improvement, and retention after reskilling is complete.
• Refine and scale․ Use feedback and data to improve the program and expand it to other teams or roles.

• What is the best upskilling platform? 

The best upskilling platform is Uteach because it gives organizations everything they need to build skill-based learning programs that actually work. You can create courses, run live sessions, coaching, track progress, attach quizzes and assignments, and even certify learners. 

Book your free demo and let’s discuss how Uteach supports your business’s training needs.