The last few years have seen a rapid acceleration of organizational change. Rising automation has created new roles that emphasize creativity and critical thinking over rote work, opening up skills gaps across industries and job verticals. According to McKinsey, 62% of companies will need to retrain or replace over a quarter of their employees by 2023. No positions will be spared — managers, too, will see job requirements shift as automation changes the nature of their work.

Many companies try to fill these skills gaps by hiring externally, pouring resources into recruitment and new employee onboarding. But reskilling employees to fill high-demand positions is much less expensive and often more effective. While the cost of turnover in a particular role runs up to 33% of its salary, reskilling an employee for another job may cost, on average, only $10,000. Unfortunately, many organizations struggle to build learning and development (L&D) programs that consistently deliver business results — in part because they don’t include those goals in their measures of L&D success.

4 Steps to Building an Effective Reskilling Program

The key to effective reskilling is to root your decision-making in data, not subjective hunches or self-evaluations. Dive deep into your human resources (HR) data to determine which skills are in demand across your organization and which employees have the most potential to learn them. Then, refocus your L&D programs on these valuable skills, and measure whether they move the needle on business goals. By effectively using data you likely already have in your HR information system (HRIS) and learning management system (LMS), you can develop results-based training that drives organizational change.

1. Identify High-value Skills Associated With High-demand Roles

Which positions at your organization are in highest demand and/or hardest to fill? Look at which skills are needed for those positions, including both hard skills like knowledge of particular programming languages and soft skills like critical thinking or leadership.

Also, work with line managers and senior business leaders to understand where your organization’s skills needs lie and how they might shift in the future. Skills needs change every five to 10 years — or even more frequently during disruptive events like a pandemic — so this process should be ongoing, and the list of in-demand skills should be constantly updated.

2. Understand Which Skills Employees Already Have and Which Skills They Lack

Skills analysis is a challenge for most organizations. Skill levels are subjective, and managers may only evaluate them once per year in preparation for the employee’s annual performance review — a pattern that invites recency bias, which makes it likely that managers will overemphasize events from the recent past. Lists of self-reported skills are also unreliable: Employees often don’t update them until they’re looking for a new job.

To ensure your records of employees’ skills are accurate, put systems in place that regularly nudge both managers and employees to make updates. You can also take steps to uncover hidden talent that may not show up in formal evaluations. For example, organizational network analysis (ONA) tools can help you identify connectors and influencers within your company — employees whom others gather around and look to for guidance. These individuals may have strong leadership potential that is untapped in their current roles.

3. Define Career Paths That Lead to High-demand Roles

To understand who you need to reskill to fill high-demand roles, examine the career paths of employees who currently hold those positions. How did they move from role to role within your organization to reach where they are today? Remember that employees with rare and in-demand skill sets may move laterally, not just vertically, within the organization.

Analyzing this data in aggregate, you may start to see patterns, such as a large number of employees who have moved internally from a particular low-demand position to a particular high-demand one. Use this information to develop career journeys that guide employees from across your organization into roles that are good for your business. Then, align L&D programming to support these journeys. Looking at how employees have progressed in the past should also help you create realistic timelines for reskilling and understand where you can invest to accelerate those timelines if needed.

4. Evaluate L&D Program Results Against Business Goals

Organizations measure L&D success in many ways, and not all of them are equally effective. Engagement scores, learning assessments, feedback forms, the HRIS and employee surveys are all sources of rich data on how L&D influences business goals — but they take a long time to pull from and analyze. Instead, organizations often rely on subjective “buzz” or evaluation forms for specific courses, which tend to measure participant enthusiasm rather than the value programs actually generate for your business.

You can’t build an effective L&D program if you cut corners on measurement. Gather all the data mentioned above, and use it to understand how learning impacts retention, engagement, productivity and other factors. For change management in particular, it’s important to find out which courses are correlated with migration from low-demand to high-demand roles.

Look at your average time to productivity, as well, to help gauge the amount of L&D investment you need to achieve your business goals on your desired timelines. If your programs aren’t delivering the results you need, tweak them until you find a combination that works. Keep in mind: Building an effective reskilling program is an ongoing process.

An Investment in the Future

While the initial setup can be challenging, building a data-driven, skills-focused L&D program is worth the effort. Organizations with effective reskilling processes not only fill skills gaps more easily, but they also boost employee engagement and retention. Employees who receive the support they need to grow and develop at work — and who understand the next steps in their career paths — have strong incentives to stay with their companies over the long term. As organizations prepare for ongoing change in the face of automation, reskilling is an important investment in the future.