How Upskilling Can Reduce Your Recruitment Costs in the Long Run
In the competitive landscape of manufacturing and engineering, businesses are constantly looking for ways to reduce operational costs while improving productivity. One often overlooked yet powerful solution is investing in upskilling programs for your current workforce. These programs not only enhance employee capabilities but also significantly cut recruitment costs and increase retention. Here's how—and why—your business should consider making upskilling a priority.
The Cost of Recruitment in Manufacturing and Engineering
Recruitment is expensive. According to industry data, the average cost of hiring a new employee in the UK can range from £3,000 to £5,000, depending on the level of the role. For highly skilled positions in engineering or manufacturing, that cost can be even higher due to the limited talent pool and the need for specialised recruitment strategies.
Add to this the indirect costs of recruitment:
• Loss of productivity: It can take weeks or months for a new hire to reach full productivity.
• Training and onboarding: Even experienced hires require time to familiarise themselves with company-specific processes.
• Attrition: If the hire doesn’t work out, the cycle—and the costs—start again.
Investing in upskilling your current employees can eliminate much of this financial burden.
Upskilling as a Solution
Upskilling involves providing employees with training and development opportunities to expand their current skill sets. For manufacturing and engineering businesses, this might include:
• Technical training on new machinery or software.
• Leadership development for team leads and supervisors.
• Cross-training employees to handle multiple roles.
Benefits of Upskilling for Recruitment and Retention
1. Reduced Hiring Needs: Upskilling allows you to fill skill gaps within your team rather than hiring externally. For example, instead of recruiting a new CNC programmer, you can train a capable operator who already understands your company's machinery and processes.
2. Increased Employee Retention: Employees who feel valued and see opportunities for growth are less likely to leave. The Manufacturing Institute reports that 94% of employees say they would stay longer at a company that invests in their learning and development.
3. Improved Employer Branding: Companies that invest in upskilling are seen as forward-thinking and employee-focused. This attracts top talent and reduces the cost of recruitment marketing.
Case Study: Upskilling in Action
Case Study: Siemens
Siemens, a global leader in manufacturing and engineering, faced a shortage of skilled technicians in their UK operations. Rather than recruiting externally, Siemens launched an internal training program to reskill assembly line workers into technical roles. The program included:
- On-the-job training.
- Formal courses in electronics and automation.
- Mentorship opportunities.
The result? Siemens reduced its recruitment costs by 30% and improved retention rates by 40%, as employees were more engaged and committed to the company.
How to Get Started with Upskilling
1. Identify Skills Gaps: Conduct a skills audit to understand where your team needs support or where upcoming technologies will require new expertise.
2. Create Tailored Training Programs: Partner with local colleges, online platforms, or in-house trainers to create programs aligned with your business needs.
3. Incentivise Participation: Offer rewards for employees who complete training, such as pay increases, promotions, or certifications.
4. Measure ROI: Track metrics such as reduced recruitment costs, improved productivity, and retention rates to demonstrate the value of your investment.
Addressing the National Insurance Increase in April 2025 Through Upskilling
The upcoming National Insurance (NI) increase in April 2025 poses a significant challenge for businesses, particularly in manufacturing and engineering, where labour costs are already substantial. However, strategic Learning and Development (L&D) initiatives can help mitigate these additional expenses while strengthening your workforce.
By investing in upskilling, businesses can improve efficiency and reduce the need for external hires, helping to offset rising payroll costs associated with the NI increase. For example:
1. Enhanced Productivity: Upskilling current employees reduces the likelihood of errors and downtime, leading to more efficient operations and higher output.
2. Retention Over Recruitment: The NI increase will amplify the costs associated with hiring and onboarding new staff. Retaining skilled employees through L&D programs eliminates the need to absorb these additional expenses.
3. Morale and Engagement: Employees who are offered career development opportunities are more likely to remain engaged, even when faced with external financial pressures like higher NI contributions. This leads to improved retention and fewer disruptions to operations.
By aligning L&D strategies with the looming NI increase, companies can not only soften its financial impact but also position themselves for long-term stability and growth. Upskilling is no longer just a way to cut recruitment costs—it’s a proactive approach to managing broader economic challenges.
Conclusion
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