The leading way of closing those skill gaps according to HR is to reward skill acquisitions.

Organizations seeking to up their game when it comes to attracting and retaining talent need to be investing in their people to ensure that they have, or can acquire, the skills needed to meet the demands of a quickly changing world.

According to Mercer’s 2024 Global Talent Trends report, 75% of executives believe that most of their workforce cannot adapt to the new world of work, up from 61% in 2020. For Compensation and HR teams, this means that while competitive pay is a necessary tool to attract and retain talent, more is needed.

The good news is that according to the same report, half of surveyed organizations say that they have a clear understanding of talent development needs and that there are ways to address the employability concerns. Supporting upskilling and reskilling of your employees helps ensure your workforce has the skills necessary to support future growth.

What is upskilling and reskilling?

Upskilling is the process of obtaining new skills, or honing existing skills, to improve your employees' performance and capabilities in their current job. Reskilling involves learning an entirely different set of skills to change jobs or switch into a new industry all together.

Here’s an examples:

Upskilling: Let’s say Ryan works in marketing and there is a growing need for digital marketing efforts. Ryan, unfamiliar with digital marketing but willing to learn, could enroll in an online workshop or certification course to learn more about social media, SEO, SEM and e-commerce. Learning these new skills will help him improve upon his current marketing role and support the organizations shift to a more digital focus.

Reskilling: Now let’s say Ryan works as a retail manager for a clothing store. The store has decided that e-commerce is now the focus and they need to hire a digital marketing team member to help push the efforts. Ryan is interested in the position but does not currently have the skill set to be in marketing. Through reskilling, Ryan can take classes and trainings to learn an entirely different set of skills before being able to successfully transition from a retail/sales role to a marketing role.

In 2024, companies are faced with increasing expectations of productivity, meaning they expect more of current employees rather than relying on outside hires. To achieve this, everyone will need a greater focus on skill development, which can look different depending on career stage.

As with any type of skills development, it’s important that employees have a reason to want to learn the new skill and that they are rewarded for doing so.

Companies rewarding skills acquisition

Despite experimenting with these practices as well as working to identify “sunset” and “sunrise” roles, the report notes that 1 in 5 organizations are having trouble scaling and sustaining their reskilling and upskilling efforts. For an example of sunset and sunrise jobs and how Standard Chartered approached workforce planning, see this video of Tanuj Kapilashrami, Chief Strategy & Talent Officer at Standard Chartered.

Here are some house hold names paying differently to bridge the skills gap with upskilling and reskilling:

Amazon

Amazon uses a leveling structure for its software engineers that is clear and prescribes the skills necessary to advance. Because the level factors are transparent, the engineers can request assignments or be offered opportunities (within their team or on other teams) to gather and demonstrate the hard and soft skills necessary to be considered for the next level. Amazon has skills programs not just for engineers, but for all employees. They are investing $700 million to train their US employees with new skills to maximize internal mobility, improve retention, and provide career pathways.

PepsiCo

PepsiCo has been working to allow project-based experiences through its talent marketplace. Among other things, the focus has been to democratize opportunity and allow development for the many rather than the few. Compensation professionals should work closely with their colleagues in Talent Development to tie rewards to skills development and acquisition for employees and managers. Individuals who carve out time to take on additional work over and above their “day jobs” should be acknowledged and compensated, by, for example, being considered for promotional opportunities.

Schneider Electric

Schneider Electric has established Global Flexibility Principles to allow the employee’s unique work and life to be managed in a manner that works best for them. Reskilling comes into play when someone returning to work needs to refresh skills and is partnered with a current employee or when a university hire is paired up with a tenured person looking to retire. For instance, one program allows employees to work reduced hours while ramping up (or down). While primarily geared towards employees returning from leave, the program can be tailored to meet employees where they are. Someone who is near retirement may want to ramp down or another individual may want to ramp up. The flexibility of a reduced schedule while intentionally pairing the individual with skilled colleagues allows applied learning to take place. For someone returning to work, going from nothing to part-time to eventually a full-time schedule, the flexibility eases the transition back and provides the opportunity to learn skills that may have become more valuable while the individual was out of the workforce. For a future retiree, working a reduced schedule while coaching college hires allows time to plan for the next chapter. In either case, skills transfer is taking place, allowing increased employability for the returner and for the junior colleagues learning from the future leaver

Making upskilling and reskilling work for you

Mercer's 2024 Global Talent Trends report highlights the growing concern among executives regarding their workforce's ability to adapt to the new world of work. While competitive pay remains important, organizations must also invest in workforce employability to bridge skill gaps. By broadening the concept of compensation to include skill development and the opportunities that flow from it, organizations can remain competitive and productive.

Ready to expand your definition of rewards and implement a pay-for-skills program that clearly provides value to your employees? We’re ready to help! Give Mercer a call at 1-855-286-5302.

About the Authors

Vlad Gogish

Vlad is a Senior Principal in Mercer’s Connecticut office. He advises clients across industries on human capital issues, including rewards, talent strategy, and HR transformation.

Lyn Harper

Lyn is a Partner in Mercer’s Career practice, providing comprehensive and strategic guidance in the human resources function, focused on total rewards, compensation, and job architecture, executing solutions that are in line with the mission, vision, and values of each organization with which she works.