If there is anything that can be learned from the past five years in business, it’s that predicting the capability needs of a firm in 3, let alone 5 years’ time is challenging. Whether through geopolitical tensions, market volatility, ‘black swan’ events like the pandemic or simply just new technology continuing to advance so quickly, the world of work is rarely stable.
For HR, this raises an important question: how can businesses stay resilient and support their employees in such an evolving landscape? Here’s just one example: with the advent of AI and the ongoing digitisation, there is a surge in demand for digital analytics skills that no company can fill to hit capacity requirements in the open market – meaning firms must find ways to effectively upskill their workforce.
Upskilling is often seen as something that happens organically through an employee’s time in their role. However, proactive training and providing new opportunities to learn are essential to equip employees with the capabilities needed to adapt to new responsibilities, leverage new tools like AI, and respond to changing demands from clients. There isn’t a cohort of company veterans who can teach the new hire the AI ropes – new technology cannot be learned just through exposure to the role.
With businesses facing constant disruption, a skills-based workforce is essential to remaining resilient. Companies must take a deliberate, top-down approach to building capability programs, rather than relying solely on bottom-up initiatives. Effective upskilling requires leadership to drive development at the necessary pace and scale to meet strategic objectives.
Upskilling also helps businesses avoid costly skills shortages, reduces reliance on external hiring, and strengthens internal talent. With increasing regulatory pressures and technological advancements, a skilled workforce enables companies to stay competitive and ready to seize future opportunities in this increasingly changeable business landscape.
Upskilling is seven times more cost effective than hiring talent
When factoring in recruitment costs, onboarding, and the time it takes for new hires to fully integrate in the workforce, the financial burden can add up quickly. In contrast, upskilling current employees eliminates much of this expenditure. Not only does this reduce costs, but it also strengthens the capabilities of the existing workforce, enhancing their skillsets, boosting morale and retaining top talent. Given that 60% of workers will require reskilling by 2030, investing in upskilling programmes is both a cost saving measure and a future proofing strategy.
At the same time, businesses must also protect their foundations by anticipating and proactively managing risks. Whether that’s addressing skills shortages, workforce disruptions or compliance challenges, organisations need a resilient approach to workforce planning. For example, upskilling employees to develop new technological capabilities, such as proficiency in AI or data analytics, ensures the workforce is prepared for future challenges, reducing the risk of skills gaps down the line.
Beyond risk management, businesses also need to consider where and how they can unlock employee and organisational potential. This includes driving AI adoption with CHRO leadership to streamline and simplify processes, remove employee toil and strengthen productivity, while also enhancing the employee experience – upskilling is a part of a company’s Employee Value Proposition, and should be a force to attract and retain top talent.
Regulations and pressures will reshape the labour market
The landscape is shifting, and we can expect new regulations, political pressures, and geopolitical tensions to significantly impact the labour market. These factors will change how businesses operate, hire, and manage their teams.
Europe’s regulatory landscape is tightening around corporate accountability, particularly in areas like sustainability and responsible technology use. The EU AI Act places stricter obligations on higher-risk applications in HR and workforce management, pushing more companies toward ethical practices when deploying AI tools affecting employees. Equally, the growing influence of work councils, now representing over 50 million employees across roughly 1,250 active councils is likely to give employees more negotiating power in shaping workplace policies.
To keep pace, organisations must ensure that their teams can respond swiftly to evolving regulatory requirements. This will require updating internal policies and processes, fostering cross-functional collaboration and investing in training in new ways of working to stay ahead of compliance challenges. Initiatives like the Corporate Sustainability Reporting Directive (CSRD) and the Corporate Sustainability Due Diligence Directive (CSDDD) are already reshaping industries, and businesses that fail to adapt risk falling behind.
Companies should also seek partnerships with non-traditional partner organisations to upskill at scale, such as with universities and even traditional competitors. Skills like AI will not be a differentiator in time; they will be table stakes and traditionally competing companies have a mutual interest to find ways to upskills their employees in an effective way.
AI can shift teams towards more strategic roles
In 2023, Cisco reported that 84% of organisations believed AI would significantly impact their operations. Some employees will already be embracing AI to get ahead of the curve and gain the rewards that brings, while others will be fearful of it. However, rather than viewing AI as a job threat, employees should embrace it as a powerful tool that can improve day-to-day productivity at work. All employees will need to understand the implications of AI in the workplace, and companies have an important role to play in laying the foundations.
Far from replacing workers, AI acts as a tool that can enhance their roles, enabling workers to contribute more meaningfully to the organisation’s success. As AI becomes increasingly integrated into business processes, employees skilled in using these tools will be in a strong position to thrive. By automating routine tasks such as data entry and customer queries, AI frees up employees to focus on more creative problem-solving, strategic planning, and higher-level decision-making.
Equipping employees with the knowledge and skills to work alongside AI will also help businesses adapt to broader digital transformations, such as leveraging data analytics for smarter decision-making and evolving customer experiences through digital platforms. That said, companies still need a workforce that also has enhanced ‘soft’ skills and competencies. The ability to work collaboratively across organisational siloes, convert insights into the right actions and inspire and motivate colleagues are and will remain critical for success.
Upskilling as the key to future success
The future of work is being shaped by AI, evolving regulations and shifting employee expectations. Traditional recruitment methods are no longer sufficient and companies must rethink how they attract and retain talent. Businesses that prioritise upskilling now will be able to stay agile while reducing costs, and HR leaders who embrace AI will drive the next era of work, using technology to enhance rather than replace human capabilities.
Furthermore, adapting to new regulations is not just about compliance, it is an opportunity to shape the future of work. A culture of continuous learning is relevant in every company in every sector, so having a tailored employee value proposition is essential, recognising that different generations have different needs.
People learn in different ways, and any upskilling program needs to be multi-modal, enabling employees to easily learn on their desired time and in their own way. Employees who invest to improve should be recognised and rewarded, just as the businesses that build a more resilient, innovative and future ready workforce will be rewarded by improved productivity and performance.
With over 25 years of experience, Ira helps organisations adapt their operating models for long-term success by aligning capabilities, unifying leadership, and engaging the workforce for lasting impact.
He advises clients across sectors such as banking, consumer goods, and healthcare, guiding them from strategy through to workforce transition. His work spans Europe, the Middle East, East Asia, and the US.
Sarah Helm
As a Principal at Kearney, Sarah Helm partners with clients to navigate complex transformational change programmes and enable organizations to meet their strategic ambitions.
With over a decade in management consulting, she has developed expertise in organizational design, agile transformations, culture and change, operational excellence, and business development.
Sarah has worked with global clients across various industries—such as consumer, health, and financial services—throughout Europe, the Middle East, North America, and Asia.
