Qualified job candidates are harder to find, and skilled workers are harder to keep. One solution: Using on-the-job skills training — also known as upskilling — to enhance employee satisfaction and help workers move up the corporate ladder. This shift is driven by a workforce willing to drop out of the working world completely amid a tight labor market. industries struggling to hire.
More than eight out of 10 executives say they’re seeing higher turnover than normal in 2022, and 54% are finding that retaining a qualified workforce has become “extremely or very challenging.” Nearly half of American companies also say they are short on skilled workers.
Learning and development programs are familiar tools for attracting and retaining top talent, but today companies are looking to build a little differently. Spurred in part by the pandemic, companies are now investing in frontline workers helping them further their career, rather than only investing in those at the managerial level and above.
Take Walmart and its upskilling program, Walmart Academy. In dedicated locations near Walmart Supercenter stores, Walmart’s front-line hourly supervisors, department managers, and assistant managers can receive two to six weeks of training in advanced retail skills. Walmart, Amazon, Disney, Chipotle, and AT&T have also launched initiatives to give employees access to career-driven training and development opportunities and, in some cases, pay for the cost of tuition at vocational schools and universities. In all cases, these are businesses trying to both enhance employee satisfaction and encourage their workforce to move up the corporate ladder while staying within the fold.
“Previously you would have heard the kind of argument, ‘Why invest in this person? They’re going to leave, and then I lose my investment,’” says Maria Flynn, president and CEO at Jobs for the Future (JFF). “I think that really started to shift with an understanding that regardless if an individual leaves or not, it’s still worth it to the company’s bottom line to make that investment in their employees and to be able to create internal advancement pathways. It’s a way for companies to [increase] retention and decrease their recruiting and onboarding costs.”
Employees are apparently eager for this new approach.
According to a Gallup survey, 66% of millennial workers ranked learning new skills as the third-most important perk when evaluating job opportunities, behind health insurance and disability benefits. To put it bluntly: Employees want education — and a chance at rising into leadership roles. According to the Society for Human Resource Management (SHRM), 21% of employees cite a lack of career advancement opportunities as a reason to leave their current positions.
“It helps in the recruitment rate,” Flynn says. “Particularly during a time where there is such a demand for talent, [especially] in occupations like transportation, distribution, and logistics. I think it’s a great hiring incentive.”
Offering educational opportunities helps attract new talent, and serves as a cost savings. Flynn mentions it costs less to retain and retrain a current employee rather than hiring from outside the organization. Research shows it costs 18% to 20% more to hire externally than to promote from within, and external hires have significantly lower performance over the first two years.
Learning has also been linked to greater job satisfaction, one reason why Target, Kaiser Permanente, and Ford have chosen this route.
Since the fall of 2021, part-time and full-time team members at Target have been eligible for up to $10,000 per year in tuition assistance. As part of the Target Forward program, employees can also take classes at more than 40 schools without incurring any out-of-pocket costs.
Ford has taken a different approach with its initiative, engaging the upskilling platform company Degreed on an internal education program to teach existing employees the skills needed to fill open positions.
Kaiser Permanente, one of the country’s largest healthcare providers, launched Mental Health Scholars Academy earlier this year to support employees wanting to start or progress in mental health careers. Monica Morris, senior director for national workforce planning and development at Kaiser, said her company is using career coaches to help employees identify their academic and career goals and also hosting training sessions to address priority needs.
“People are very motivated to learn if they know that what they’re learning is critical to a higher position,” Morris explained. “Our aim is to provide ‘precision’ learning, so employees learn what they need to succeed in the new position and continue to build a foundation in critical thinking, problem-solving, and patient-centered care delivery.”
But is upskilling just old-fashioned on-the-job training? Absolutely not, says Flynn.
Modern upskilling programs are more likely to focus on helping workers move ahead in a company — or even into a new career — rather than training them for current roles. Walmart has pledged to invest $1 billion over five years, paying 100 percent of the cost of a college degree or trade school training through its Live Better U program. To date, 77,000 people have enrolled, and 11,000 have earned their college degree, said CEO Doug McMillon at Signal 2022.
“I think that’s a good investment,” he said. “You could argue, should business be taking on that role? Maybe the educational system or government should play that role. But there’s a gap there, there’s a void, there’s a need. So we are filling it, I’m proud to fill it, and I hope more associates will take advantage of it.”
While companies like Starbucks and Disney still offer tuition reimbursement, younger startups like Bonobos are developing in-house training programs to help associate-level employees rise through the leadership ranks.
At JPMorgan Chase, the company dropped a requirement that employees get a manager’s approval to participate in its tuition reimbursement program, says Flynn. That made the program more accessible to employees who want to change fields or earn degrees in majors unrelated to their current roles.
Sam’s Club developed another intriguing strategy. The retail warehouse chain owned by Walmart created Sam’s Field U, where associates, armed with a smartphone and mobile app, can take “microlearning modules” and learn how to apply the company’s leadership expectations to decisions they make on the sales floor. The web-based platform is also the entry point for Manager Quality — or MQ — a training program that provides opportunities for growth and development for all frontline associates.
Flynn believes that more companies will create similar internal solutions or continue to pick up the cost of educating their workforce. They want to ensure that employees stay fluent in the skills companies need and have a path that gives workers room to grow.
“I’m hopeful that even as we head into a recession, these trends will continue,” Flynn says. “I think it’s going to be an expectation on the part of employees, and employers are seeing that it is an investment that’s worth making.”