Reskilling staff can save UK firms £49,000 per employee, study finds
Reskilling staff members can create cost savings of up to £49,100 ($65,804) per employee, new research has found.
According to data from the Financial Services Skills Commission (FSSC) and PwC UK, reskilling provides financial services firms with a large benefit compared to recruiting someone new with relevant skills, or making a role redundant.
Reskilling a financial services employee costs on average £31,800 compared to the redundancy and rehire approach, which carries an average cost of £80,900.
The research showed that over a four-year period a company with 30,000 employees could potentially save between £75m and £115m by upskilling current employees into the roles they need filled.
“The need for reskilling across financial services has never been greater as the industry faces a significant shift in the skills requirements for its workforce, increasing skills gaps across the UK and a greater demand for talent,” the report said.
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Research by The World Economic Forum (WEF) estimates that by 2025, 85 million existing roles globally, will be displaced due to factors such as technology and automation. This has also been exacerbated since the onset of the COVID pandemic.
Some 20.8% of the UK workforce in the financial services sector, or 229,000 workers, are at risk of displacement.
However, the new report on Thursday showed there is a clear business case in favour of reskilling and strategic workforce planning.
Given demographic trends, including an increase in life expectancy and retirement age, the scale of the change needed in the sector and digitisation elsewhere in the economy mean that the skills gaps in financial services cannot be met through recruitment alone.
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Skills are already high up on the board agenda for many organisations. In PwC’s recent CEO survey, 71% of financial services bosses said they are concerned about the availability of key skills.
But only 14% of them have made significant progress establishing an upskilling programme to tackle this issue.
“Recruitment alone will not address the existing skills challenges across our industry. That is why the FSSC is today calling for firms to prioritise reskilling, so it becomes an essential component of an organisation’s workforce and planning strategy,” Claire Tunley, chief executive at the financial services skills commission, said.
“Our business case clearly demonstrates that reskilling can generate a real return on investment, boosting productivity and competitiveness, mitigating operational and reputational risk, and positively impacting the wider economy and society.”