Plan A Chairman Aron Ezra recently spoke to Forbes about the importance of upskilling current team members and weighing the benefits of upskilling vs. hiring new talent. What follows is a condensed version of the Forbes article.

As anyone in the recruiting business can tell you, talent is in historically short supply across every sector. Nearly eight out of 10 employers say they’re having difficulty filling key roles — the highest number in 17 years.

That’s why 71 percent of global organizations are relying more heavily on upskilling and reskilling, per surveys conducted by the ManpowerGroup.According to Training Magazine’s annual industry report, US companies spent more than $100 billion on learning & development in 2022, the highest amount ever.

And yet, it still may not be enough.

In a complex economy, with finite resources, HR and training leaders hoping to increase their training budgets will need to clearly demonstrate how they plan to reap a return on that investment. Yet the connection between increased L&D and bottom line benefits is not always obvious.

According to the Society for Human Resource Management, the average cost of hiring a new employee was around $4,700 for line-of-business workers and just over $28,000 for executives. But when you factor in softer costs like the time HR personnel devote to new hires and disruptions to productivity, the actual cost can be much higher, notes Aron Ezra, chairman of Plan A Technologies, a software development and consultancy company.

“With the expenses associated with recruitment, onboarding, office space, equipment, benefits, and so on, every person you’re hiring is actually costing you about 1.5 times their on-paper salary,” he says. “Paying for an existing staff member’s education in work-related skills not only costs way less than that, it’s money you’re investing in someone who’s proven themselves loyal and is already a good fit for your corporate culture.”

Offering career and skills development also aids in recruiting. LinkedIn’s 2023 Workplace Learning Report shows that the opportunity to learn and develop new skills is the most important factor for three out of ten employees considering a new job. Yet only one in four said their current employers have challenged them to learn a new skill.

Ezra looks at whether the new skills are relevant to Plan A’s current and future projects, if they’re likely to result in projects getting completed more quickly, and whether the cost of upskilling and lost productivity due to time spent in training is cheaper than hiring a new person to do the same thing.

Ultimately, business leaders need to stop thinking of L&D as a cost center and start treating it as an investment in the future success of the company, says Garber.

“Learning is really the only future-proof skill able to keep pace with the speed of technological change,” he adds. “Upskilling and reskilling programs are really about future proofing and building a resilient workforce that’s trained to adapt, change, and grow.”

Read the full article at Forbes.com.