)
With recruitment a continuing challenge and the UK workforce having larger and more chronic skills gaps than in most peer countries, it’s clear that SMEs need to take a more strategic view of people development - and upskilling needs to be a core component of that strategy.
In this guide we explain:
The key differences between upskilling, reskilling, training and development
Why upskilling matters more than ever
How upskilling equips employees for the future
The areas where skills are in high demand
15 ways you can upskill your people, including several free options
Best practice implementation tips
Common barriers to people development and how to overcome them
How to measure success and return on investment
Transform your SME through strategic employee development
Let’s look at the evidence of skills gaps and shortages in the UK.
The CIPD’s Learning at Work 2023 report highlights that for 21% of organisations, addressing skills gaps is an urgent priority (up from 15% in 2021).
The UK Government is targeting training 7.5 million workers in essential AI skills by 2030 (roughly 20% of the workforce), while 8.5 million UK adults lack basic digital skills.
The Coursera Global Skills Report 2024 shows UK AI upskilling grew 961% over 12 months, though this lags behind the global average of 1,060%.
For SMEs in Manchester, Altrincham, and Cheshire, these statistics present both a challenge and a huge opportunity for continuous learning.
Talk to an HR professional about your upskilling, learning and development challenges. Book your free, no-obligation call today.
What are the differences between upskilling, reskilling, and training and development?
Before we get into the practicalities of upskilling, let’s consider what differentiates it from reskilling and more traditional training and development:
Training focuses on specific job roles with short-term goals and immediate needs. Examples include learning new software or understanding product updates.
Development centres on the individual with long-term, sometimes open-ended goals. It concentrates on building skills and knowledge for future challenges.
Reskilling involves learning completely new skills in different areas, either responding to demand for specialist skills or exploring a new career direction within your business.
Upskilling improves employees' skills and abilities by identifying skills gaps and enabling career advancement within the organisation. It includes both task-based skills (IT, AI, public speaking) and soft people skills such as emotional intelligence, resilience, and leadership development.
Why upskilling matters more than ever
Current market pressures
By 2030, 39% of workers' core skills are expected to change according to the World Economic Forum's January 2025 Future of Jobs Report, whilst 59% of workers globally will require training by 2030. Meanwhile, 52% of employers with hard-to-fill vacancies are choosing to upskill their existing employees over recruiting externally.
ROI of employee development
Investing in training creates motivated, engaged, more efficient and productive employees. Access to professional development and training opportunities is a strong pull factor for job hunters when identifying prospective employers, particularly among younger employees (ages 16 to 24).
A company that nurtures its workforce gains:
Motivated and engaged employees with enhanced job satisfaction
Improved performance and productivity levels
Competitive advantage in the marketplace
Better risk management capabilities
Innovation, creativity and new ideas
Higher retention rates as employees feel valued and invested in
Strong brand reputation attracting top talent
Superior customer service
Increased profitability.
The cost of not investing in your people
If neglected, employees begin to feel undervalued and demotivated. They may be more likely to explore the job market, leaving businesses vulnerable to losing top talent. This presents an even bigger cost than upskilling.
Preparing your workforce for future challenges
Key skills development areas for 2025
Three areas are creating the strongest demand for skills:
AI technology integration: Demand for specialist skills in AI is increasing. Upskilling existing employees could be more efficient and cost-effective than external recruitment. AI skills are essential for SMEs to remain competitive.
Flexible and hybrid working models: Colleagues may need upskilling to adapt to new ways of working. Teams need to develop soft skills to build resilience and collaborate effectively when working remotely.
Mental, physical, emotional, and financial wellbeing: Colleagues and leaders may need upskilling to feel confident discussing these topics, and be able to bring their best selves to work.
15 proven ways to upskill your team
Small and medium enterprises face distinct challenges in developing people. Only 16% of SMEs use blended learning compared to 37% of large organisations. They rely heavily on self-directed learning and external conferences due to their limited resources. The AI Upskilling Fund pilot in 2024 offered up to £10,000 (50% match-funded) for SMEs in the Professional Business Services sector.
Premium upskilling options
1. Industry recognised qualifications: The most expensive and credible option. Many industries offer professional accreditations to study towards. Businesses often subsidise these courses as an employee benefit.
2. Traineeships and apprenticeships: These are formal training approaches to nurture young talent. Many employers find trainees and apprentices become long-term employees aligned to their values and ways of working. Government subsidies and incentives are available to help with costs.
Cost-effective solutions
3. Short online courses: Accessible webinars and short online courses save time and are more affordable for SMEs. Many free options are available.
4. Workplace mentoring: A free and effective way of creating a positive learning culture. Buddy systems see experienced colleagues to share their skills and knowledge with colleagues who are keen to develop.
5. Work shadowing: Employees work alongside senior colleagues to expand their skill sets and prepare for future roles. Effective for aspiring managers.
6. Weekly spotlights: Dedicated time for colleagues to share their knowledge and experiences with the team. An easy, effective way to pass on personal stories and career advice in a relaxed, informal setting.
7. Online resources: Read business books and journals, listen to podcasts, and watch TED talks. Subscribe to trade journals, and dedicate time to discuss the latest industry research and developments. Create suggested reading lists and encourage your team to share their own recommendations.
8. Public lectures: Many colleges and universities offer lunchtime public lectures on innovation, technology, economics, and finance. Allow employees time off to attend and gain inspiration and motivation.
9. Enhance basic skills: Training providers offer Maths and English GCSEs combining online and office-based training.
10. Networking opportunities: Business and community groups are a great way to build networks and share best practice, with business benefits too.
Advanced development strategies
11. Coaching and mentoring programmes: Coaching can be task or performance-related, while mentoring aims to build individual capabilities. Both are effective ways to enhance employee performance and development.
Choose external experts or experienced team members who are flexible, good listeners, and able to build rapport. Coaching and mentoring can:
Prepare individuals for promotion or change
Develop strong interpersonal skills
Enhance leadership skills, e.g. problem-solving and decision-making
Identify employee needs, motivations, and skills
Allow people to identify and design solutions on their own
Encourage employees to set appropriate, achievable goals and measure progress against them
Identify where additional support would be beneficial, e.g. one-to-one training, counselling, and networking
Support personal and work-related goals.
12. Cross-training initiatives: Beneficial in both upskilling and reskilling, cross-training provides insight into different business areas and develops versatility.
13. Internal career moves: CIPD data from 2024 shows 56% of organisations developed more talent in-house over the past 12 months, with 31% creating clearer career paths (up from 24% in 2022).
14. AI-powered learning: AI is becoming more common as a coach, adviser and problem-solving assistant. It has the potential to provide personalised career development at scale.
15. Flexible learning: Formats such as podcasts, online workshops, webinars, and in-person sessions allow for different learning styles and needs, including visual or auditory impairments and neurodiversity.
Ready to plan and implement upskilling in your organisation? Book a free, no-obligation call with an experienced HR professional.
Best practice implementation tips
Implementing a new approach to learning and development takes careful planning, cultural development, and overcoming certain barriers.
Planning phase
Business alignment: Start by reviewing your business plan and assess whether you have met your people targets. Regular planning and performance reviews help identify skills gaps and development opportunities.
Budget: Set a realistic learning and development budget and commit to it. Remember that upskilling is possible on a small budget via free webinars, online learning, coaching, and work shadowing.
Skills gap analysis: HR teams have a crucial role to play in bridging skills gaps by:
Aligning skills development plans with business goals
Understanding the skills managers and employees are lacking
Identifying hard and soft skills development
Observing and supporting personal development plans
Creating realistic, accurate learning and development budgets
Cultural development
Prepare your managers: Equip managers to feel confident leading career conversations. This could present an upskilling opportunity itself! Regular, open training and development discussions are more effective than one-off annual conversations.
Upskilling is positive: Training needs often arise from challenges or employee performance issues. Whether your response is reactive or proactive, a positive attitude to upskilling focuses attention on its long-term benefits.
Continuous learning culture: Managers need to be proactive in encouraging their team to seek out learning and develop new skills. The whole team is responsible for this, not just HR. The secret is to embed learning in your culture. HR can promote internal job roles, secondments and training courses. Managers can support this by having consistent career conversations with their team.
Overcoming common barriers to learning and development
Budget constraints
The average UK training expenditure has declined to £53.0bn in 2024 from £59.0bn in 2022. Average spend per employee dropped to £1,700 - a 29.5% decrease since 2011.
Budgets may be tight, but with careful planning and creativity, training and development doesn't have to mean massive investment. Taking advantage of free development options and inviting employees to become coaches and mentors can reduce costs significantly.
Time limitations
With smaller teams, SMEs face particular time constraints when it comes to workforce development.
Address these by:
Offering flexible working arrangements
Assisting with transport and related costs
Integrating learning into daily workflows
Using bite-sized learning modules
Choosing online learning with flexible access.
Manager resistance
Some managers fear they risk losing talent if they invest in their people. In reality, the opposite is true. Employees who access development are more likely to stay, retaining talent and reducing recruitment costs.
Need help building a business case for upskilling your workforce? Ask an HR expert for advice - book a free, no-obligation call.
How to measure upskilling ROI
To demonstrate the return on investment of upskilling, set key measures of success at the outset and monitor these consistently.
Key Performance Indicators (KPIs)
Track upskilling effectiveness through:
Employee retention rates
Internal promotion statistics
Skills assessment improvements
Productivity metrics
Employee engagement scores
Customer satisfaction levels.
Long-term benefits of upskilling
Current CIPD research shows just 29% of line managers were involved in assessing the impact of learning and development and only 36% of line managers support their teams to transfer new skills back in the workplace. Organisations that prioritise embedding learning and development see benefits, which may include:
Reduced recruitment costs
Improved succession planning
Enhanced company reputation
Better customer service delivery
Increased innovation
Higher employee satisfaction.
Future-proofing your business
According to the World Economic Forum's Future of Jobs Report 2025, 85% of employers now plan to prioritise upskilling their workforce by 2030, with 77% planning upskilling as a core workforce strategy in response to AI. Forward-thinking businesses must embrace the possibilities of upskilling and invest time and resources to reap the benefits.
In an unstable economy and faced with rapidly evolving technology, employees face the possibility of certain jobs becoming obsolete. Younger generations fear AI's potential impact on their roles, whilst older generations worry their skills may no longer be relevant.
Upskilling presents valuable opportunities for SMEs to gain an advantage. Our advice is to embrace it and invest to future-proof your business and support your people. Professional and personal development is a huge selling point for businesses looking to recruit the best candidates and retain existing talent.
How P3 People Management supports upskilling
Learning, development, training and upskilling harness the untapped potential of your employees. We support people to build on their existing skills and capabilities, advance their careers and enhance employee engagement and satisfaction. We're passionate about this subject—and it shows in our results.
Our learning and development framework
Our seven-segment learning and development framework is designed to equip employees with essential skills, behaviours, tools, mindset and techniques to unlock their full potential.
We offer:
Free consultation calls to assess your specific needs
Pay-as-you-go or retainer-based services for maximum flexibility
Over 20 years’ experience in people development
CIPD qualified expertise ensuring professional standards
Specialised HR knowledge tailored to Manchester, Altrincham, and Cheshire SMEs.
Take action today
Don't let your competitors leave you behind. The UK Employer Skills Survey 2024 shows 12% of employers have at least one skill gap in their business. The time to act is now.
)