These are the 2 job trends pushing companies like Amazon to spend billions updating workers like you'd update technology
- Companies like Amazon and Accenture are spending billions on employee retraining programs.
- The goal is to equip their staff with the skills necessary in the workplace of the future.
- What's more, the the US economy is at full employment, meaning it's hard for employers to find new people to hire.
- Retraining is an overall positive development for the workforce. Employers maintain their competitive edge and employees stay relevant.
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US employers want smart, quick-learning workers to help them navigate the digital workplace.
Unfortunately for them, no one's available for hire.
Many economists say that the national economy is at full employment (former Federal Reserve chair Janet Yellen said the US was "in the vicinity" in December 2017), meaning almost everyone who wants a job already has one.
Faced with this dearth of job candidates, companies are instead investing in the employees they've got. Organizations from Amazon to Accenture are funneling billions into programs that outfit their staff with the skills that will be necessary in the workplace of the future.
The timing is increasingly urgent: 2019 KMPG research has found that 68% of US CEOs think their companies will go bankrupt if they move too slowly. In 2018, just 14% said the same.
Read more: Experts say 'learnability' is the most important skill you'll need to stay relevant at your job. Here's what it is, and how to tell if you have it
Companies are spending money on retraining upfront to boost their long-term bottom line
Retraining doesn't look the same at every company. But the common overarching goal - at least from the company's perspective - is to prepare workers for digital transformations, thereby making sure the organization doesn't fade into obsolescence. KPMG chief culture officer Claudia Saran previously told Business Insider about how reskilling employees amounts to "updating" people the same way you'd update technology.
Amazon, for example, recently announced that it would spend $700 million over roughly six years to retrain one-third of its US workforce. According to The Wall Street Journal's Chip Cutter, retraining will help employees transition into more advanced roles at Amazon or elsewhere. Employees are neither obligated to participate nor to stay at Amazon afterward.
As part of Amazon's retraining program, Cutter reports, nontechnical corporate workers can become software engineers, while some current software engineers can take graduate-level machine-learning classes.
Meanwhile, Accenture has said it spends nearly $1 billion annually in training and has "reskilled" nearly 300,000 employees. The company also introduced a tool called "Job Buddy" that advises employees on which skills to pick up if they don't want to lose their role to automation.
Other companies are following suit. Earlier this year, LinkedIn surveyed more than 1,200 learning and development experts across the globe and found 43% expect to increase their current budget for employee learning and development in 2019. Last year, 35% said the same.
Full employment isn't the only factor behind retraining trends
This trend is likely a result of a confluence of factors, including but not limited to full employment.
Some important ones are listed below:
1. It's hard to find new talent.
Economists use the term "full employment" to indicate when unemployment has reached the lowest possible level that won't cause inflation. In June 2019, the unemployment rate was 3.7%, which is a near-record low. (Still, some economists disagree that the US has reached full employment because even people who have jobs might not have good ones.)
Guy Berger, principal economist at LinkedIn, told Business Insider that employers have historically invested heavily in their employees' professional development. But in the last few years, unemployment rates have been higher, and companies have had their pick of new hires. In other words, companies haven't felt the same kind of pressure to make sure their current workforce is up to snuff.
Read more: An HR exec says she gets excited every time a job candidate asks her a simple question about learning on the job
2. Retraining can be more practical than the alternatives.
Retraining can be cheaper than firing and hiring, said Erica Keswin, a workplace strategist and the author of "Bring Your Human to Work." Indeed, according to Glassdoor, the average US employer spends roughly $4,000 to hire a new employee. (That number covers internal and external recruiting costs.)
Constant turnover can also negatively affect morale, said Jaime Klein, CEO of the HR consultancy Inspire Human Resources. Research described in the Harvard Business Review found that downsizing a workforce by 1% leads to a 31% increase in voluntary turnover the next year. And after a layoff, remaining employees experience a 20% decrease in job performance.
Klein shared an example of how retraining for technological skills can be more feasible than overhauling your workforce. HR leaders who earned advanced degrees a decade ago probably didn't learn about digital coaching. Why not simply put them through a class on that topic instead of cutting their positions and losing their expertise?
3. Workers are retiring later.
According to a 2018 Gallup poll, Americans say they will retire at age 66, on average, compared to age 60 in the 1990s.
When she works with companies whose employees are sticking around longer than expected, Klein often recommends "upskilling." These experienced employees are often bastions of institutional knowledge, and organizations shouldn't be so quick to get rid of them.
"If they're a good human being and they're a great culture fit," Klein said, "retain them!" Through retraining programs, you can give them "the same skills that you would get from someone who was right out of undergrad."
Read more: There's a chance that automation won't mean fewer jobs across the board - in fact, it could mean more
Employees know retraining programs can work to their benefit
From the employees' perspective, retraining programs are a plus. Instead of having to pay for a new data-science degree or spend evenings learning to code, their employers are paying for them to learn these skills during the workday. Klein said she's seen companies create their own tech "boot camps" by bringing instructors into the office.
And preliminary evidence suggests employees are on board. A survey by the research firm Clutch found that 70% of employees say they're likely to participate in an employer-provided job retraining program. That makes sense, since millennials say they place a high value on professional development.
Even if employers have their own bottom line in mind, retraining will give their employees a career boost as well.
"The fact is the labor market being tight is forcing their hand," Berger, the LinkedIn economist, said of US employers. "It's a shame that we waited so long, but it's good that it's happening."
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