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Instead of laying off current employees, companies can save money and stay competitive by retraining them for new jobs.
- Employers can spend billions of dollars restructuring their workforce to keep competitive with newer technology - but many executives do not even know how much this investment pays off, a new Wall Street Journal report finds.
- Reskilling current workers can save money and lead to more seamless technological integration, consultancy firm Accenture finds. Current government and business investment into retraining workers is still low.
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Employers often complain of a skills gap among American job seekers, and end up firing current employees to make room for new "skilled" workers. General Motors, for instance, announced last year it would cut thousands of current jobs to expand its electric and autonomous vehicle division.
Yet while firms spend billions of dollars investing in new technology each year, executives do not know exactly how much this investment pays off, according to a recent report in The Wall Street Journal. Employers can lose billions of dollars in layoffs and restructuring, but 35% of firms think hiring new talent is the only way to stay competitive, the report finds.
Retraining workers - or teaching current employees the advanced skills companies need - is not only cost effective, but can speed up how quickly companies adapt to new technology, Ellyn Shook, executive at consulting firm Accenture, told Business Insider earlier this year. Accenture recently invested in a "Job Buddy" software that retrained 300,000 employees at risk of losing their jobs to automation. After the program, these employees kept up excellent performance.
Shook, along with labor leaders such as KPMG global chairman Bill Thomas and Wharton professor Adam Grant, argue that retraining current employees will help companies stay competitive.
"I have an incredible team that knows our organization, they know our values, they know what we stand for, they know what we care about, and the investment that we can make in reskilling them ... pales in comparison to starting from scratch on the culture that you lose," Thomas said at a Business Insider panel.
Retraining workers also offers a solution to the limits a four-year education has on keeping the workforce competitive - a trend business leaders like Tim Cook have already noticed. Nearly all government subsidies to workforce training goes to people 24 and under - and the US ranked at the bottom of developed countries in taxpayer-funded retraining, according to The Journal.
Retraining a workforce on a large scale requires government investment, says Business Insider contributor Pedro Nicolaci de Costa. Failing to retrain a workforce can even hurt US competitiveness and slow economic growth, which is why countries like Germany subsidizes dual training programs for workers.
"You need to inspire this work-learn, work-learn mindset," Shook told Business Insider. "You're not going to go to school and practice what you learned in school for the rest of your career. That day is over."