Reskilling vs upskilling: key differences and when organisations need each

Reskilling vs upskilling: key differences and when organisations need each

Skills conversations are everywhere right now, and for good reason. The World Economic Forum’s Future of Jobs Report 2025, drawing on responses from more than 1,000 employers across 55 economies, found that 59 out of every 100 workers will need reskilling or upskilling by 2030 (World Economic Forum, 2025). More striking still, the same research identified skills gaps as the single biggest barrier to business transformation, ranked above organisational culture, outdated regulation, and shortage of capital (World Economic Forum, 2025).

That is a significant finding. It tells us that the question for most organisations is no longer whether to invest in workforce development. It is which type of development, for whom, and when.

Two terms dominate this conversation: reskilling and upskilling. They are often used interchangeably, which creates real confusion at the planning stage. They are distinct strategies with different aims, different timelines, and different implications for how learning is designed and delivered. Getting clear on that distinction is not just a matter of vocabulary, it shapes how effectively organisations deploy their learning budgets and how well people are supported through change.

What do we mean by each term? 

Upskilling

Upskilling is the process of building on a person’s existing capabilities so that they can perform their current role more effectively, or grow naturally along the same professional path (Storey and Wright, 2023).

Think of:

• A finance business partner deepening their commercial acumen to engage more fluently with operational stakeholders
• A team leader developing coaching capability to support a hybrid workforce

The role is essentially the same; the person’s capacity within it expands.

Reskilling

Reskilling is a more substantive shift. It involves equipping someone with an entirely new set of capabilities so that they can move into a different role, often because their existing position is changing significantly or becoming obsolete (Li, 2022).

Examples include:

• An administrator learning financial modelling to move into a commercial analyst role
• A retail team member transitioning into a customer insight function

The learning journey is longer, the departure from prior knowledge is greater, and the organisational investment tends to be higher.

A simple way to remember the difference:

Why both matter more than ever 

The pace at which skills become outdated has accelerated considerably. Research suggests the useful life of a professional skill has dropped from 10–15 years to fewer than five (World Economic Forum, 2020, cited in Li, 2024).

The CIPD’s 2025 Lifelong Learning in the Reskilling Era report notes that the UK has seen a 27% fall in workforce training investment over the past decade from £4,095 per trainee in 2011 to £2,971 in 2022 at precisely the moment when investment is most urgently needed (Crowley and Zemanik, 2025).

This is not simply a traditional skills gap. It is a structural shift in what work requires.

McKinsey research found that while hiring remains the most common response to talent shortages, the second most common approach cited by 56% of organisations is building skills internally through reskilling and related efforts (McKinsey and Company, 2019).

There is growing recognition that hiring alone is neither sufficient nor sustainable.

The CIPD has put this plainly: the vast majority of the future workforce is already in work. Employers cannot rely on the talent market to deliver the capabilities they will need in three or five years’ time. The imperative is to develop from within (CIPD, 2022).

When does upskilling make sense? 

Upskilling tends to be the right response when the role itself is not changing fundamentally, but the expectations within it are rising.

1. Growing complexity in an existing function

When work becomes more sophisticated, greater data literacy in commercial roles, stronger communication skills in technical functions, and more nuanced risk judgement in operational teams, upskilling is typically the answer.

The person’s foundation is sound; the gap is at the leading edge of what the role demands.

2. Preparing people for the next level

Upskilling is central to leadership pipelines and succession planning.

Examples include:

• Early careers professionals developing commercial acumen
• Managers building strategic thinking capability
• Senior leaders strengthening ESG and sustainability understanding

The direction of travel is forward and upward along a known path.

3. Retaining high performers

LinkedIn’s 2025 Work Change Report suggests that roughly a third of global employees say they would remain with an organisation because of its professional development and training opportunities (LinkedIn, 2025).

Upskilling, when purposeful and well designed, signals to capable people that their development matters.

4. Responding to incremental change

When new processes, tools, or practices are introduced without fundamentally changing the nature of the role, upskilling is the proportionate response.

It is:

• Nimble
• Relatively lower-cost
• Easier to deliver alongside existing responsibilities

When does reskilling make sense? 

Reskilling becomes necessary when the organisation faces more fundamental change in its business model, technology, market context, or workforce structure.

1. Roles being substantially reshaped or reduced

When work that was previously done one way will be done differently or not at all employees face a genuine transition point.

Reskilling offers a route to:

• Retain experienced employees
• Preserve institutional knowledge
• Reduce the human cost of change
• Avoid unnecessary redundancy and replacement costs

(McKinsey and Company, 2019)

2. Strategic Pivots Requiring New Capabilities at Scale

Examples include:

• A financial services firm building ESG advisory capability
• A manufacturer developing data-led operations
• A professional services business expanding its risk practice

In these cases, the required capability may not exist internally in sufficient depth.

3. Addressing Demographic and Generational Transitions

The CIPD’s 2025 research highlights a striking disparity:

• 47% of workers aged 55+ feel their role offers good skills development
• Compared with 73% of workers aged 18–24

(Crowley and Zemanik, 2025)

As older workers make up a growing proportion of the workforce, supporting meaningful career transitions through reskilling becomes both a commercial and ethical priority.

4. Reducing external hiring dependency

Reskilling internal talent for critical roles is often more cost-effective than recruiting externally, while also strengthening loyalty and retention.

Companies in the top quartile of workforce reskilling investment have been found to report 16% higher revenue growth compared to peers (Korn Ferry).

The common pitfall: confusing the two

One of the most consistent challenges organisations face is conflating upskilling and reskilling during workforce planning.

Problems arise when:

• Organisations apply light-touch upskilling where full reskilling is actually needed
• Organisations over-engineer development programmes for employees who only require targeted capability enhancement

Both scenarios waste investment and can negatively affect employee confidence and engagement.

BCG research found that only 24% of companies surveyed had clearly connected corporate strategy with reskilling efforts (Boston Consulting Group, cited in Iventiv, 2025).

A useful diagnostic question is:

Is the person’s role changing within its essential nature, or is the role itself changing?

• If the role is evolving → Upskilling
• If the role is fundamentally changing → Reskilling

The leadership dimension

Neither strategy works without leadership commitment.

This goes beyond approving budgets or sponsoring programmes. Employees are more likely to engage with development when they understand:

• Why the programme exists
• What organisational changes are happening
• How the learning supports their future

Research also shows that one of the biggest barriers to participation is simply lack of time.

The CIPD’s Learning at Work 2023 survey found:

• 51% of L&D practitioners believed managers encouraged learning
• But only 39% believed employees were actually given time away from day-to-day responsibilities to participate

(CIPD, 2023)

Leadership modelling matters too.

When senior leaders visibly invest in their own development, whether in ESG, financial literacy, coaching, or strategic capability, it signals that learning is professional growth, not remediation.

A note on experiential learning

Both reskilling and upskilling are most effective when grounded in experience rather than purely classroom-based learning.

The strongest programmes combine:

• Structured learning
• Real-world application
• Reflection and feedback

Examples include:

• Finance for non-finance programmes using live business challenges
• Leadership development journeys embedding peer coaching into daily practice

Learning disconnected from real work rarely transfers effectively. Learning embedded within real organisational pressures and decisions tends to stick.

Measuring what matters

The metrics for evaluating these two strategies differ in important ways. For upskilling, returns tend to be more immediate and measurable: performance improvements, application of new skills in role, changes in confidence and engagement. For reskilling, early indicators of success are better sought in the quality of transition , time to competence in a new role, retention through the transition period, internal fill rates for critical positions , rather than in immediate productivity measures, which take longer to materialise (HR Morning, 2025). 

Research from TalentLMS found that overall satisfaction with upskilling and reskilling training, while still relatively high at 71%, has declined from 78% in 2020 (TalentLMS, 2024). That downward trend is worth noting. It suggests that more training is being delivered but that the experience and relevance of that training is not keeping pace with expectation. The design and quality of the learning experience matters as much as whether it is labelled upskilling or reskilling. 

How MDA Training can help

At MDA Training, we work with organisations at exactly this junction. Whether you are building commercial acumen across a graduate cohort, developing leadership capability in a shifting market, helping senior teams navigate sustainability and ESG commitments, or supporting a workforce through a more fundamental transition, we design learning that is purposeful, experiential, and grounded in your specific context. 

If you are thinking about what your workforce needs next, we would welcome the conversation. 

Get in touch with the MDA Training team to explore how we can support your people strategy.