Considering how tight the labor market has become, companies often have a tough time quickly replacing workers in businesses that are consistently evolving and require rapid turnarounds.
As a solution to this predicament, it would be optimal for companies to tap into their existing pool of talent. That is, the employees that already work for them. There is just one problem: the cost of reskilling that accompanies retraining and reorganizing employees already integrated into their respective corporate apparatus.
Due to the perceived high cost of reskilling, employers often opt to bear the cost of layoffs and hiring instead, bringing in new talent. However, this is only because companies have little knowledge of the existing malleability that persists among their current employees. This problem is exacerbated by the fact that large companies often have very vertical corporate structures, making workers at the bottom more 'dispensable' or supposedly obsolete.
Focusing on reskilling in the form of providing online courses, training academies and apprenticeship programs, Bullhorn, a customer relationship management company, sees reskilling as the future for recruitment companies that are struggling due to low unemployment.
"The recruitment industry loses half a billion dollars in annual turnover," said Art Papas, Bullhorn's CEO. "Imagine if we took employees from lower-wage jobs and reskilled those people. This could be a trillion dollar industry with a very different profile. This isn't a crisis; this is a huge opportunity for all of us," he continued.
Moreover, as a result of the Fourth Industrial Revolution, since so many jobs are becoming outdated or automated, the entire labor market will undergo a paradigm shift. That is, 75 million jobs are expected to be displaced by 2022 in 20 major economies, while technological advances will give rise to 133 million new roles also. Because of this, at least 54% of all employees will need reskilling and upskilling by 2022, according to the 2018 Future of Jobs Report.
Acting as bellwethers in this new-age trend of reskilling, companies like Amazon
In that vein, JP Morgan has started an initiative called "skills passport," which includes assessments for workers to measure their current skills and predict what further career options that have based on the results.
"It's one thing to invest in machine learning; it's another to reinvent an organization or a business model," says Erik Brynjolfsson, director of the Initiative on the Digital Economy at MIT. "Human capital is quantitatively a much bigger share of the capital in the economy than physical assets like plants, technology and equipment, and we understand it less well."