Upskilling vs. Recruiting: Which One is Right for Your Business?

The true cost of replacing an employee

Recruiting costs can stack up quickly, and sometimes they’re difficult to quantify. Beyond spending on job boards and the amount of time recruiters invest into filling a role, there are other factors that make recruiting costlier than you might expect:

• Productivity suffers until the role is filled.
• The ramp-up period before a new hire is fully effective can be long.
• Management must assist with onboarding, cutting into their time and productivity.
• There’s a real chance with any new hire they may not stay with the company long-term.

Work Institute's 2025 Retention Report estimates that replacing an employee costs, on average, about a third of that person's annual salary, amplified by higher wages driven by labor shortages and indirect costs such as lost productivity, knowledge gaps, and other recruitment expenses.

Hiring also resets the clock in other ways that might not show up in the budget. A new employee must learn about your systems and customers before reaching the productivity of the person who left. During that stretch, colleagues absorb the overflow and managers spend time coaching instead of building. Even a successful hire can be a months-long investment before it pays back.

It helps to separate the costs of recruiting into three buckets:

• The vacancy itself. Work that does not get done, or gets done more slowly, while the role is open and during the onboarding and ramp-up that follows.
• The acquisition cost. Advertising, screening, interviewing, and onboarding.
• The risk. Some new external hires may leave within the first year, which introduces a potential risk for repeated recruiting (and the costs associated) in a short timeframe.

Compare that to upskilling, which starts from a very different place. The employee is already a known entity: they’re productive, already familiar with the organization, and only require the specific new skill. You’re adding capability on top of a known, working foundation. You’re not rebuilding from zero.

What upskilling costs and returns

Training a current employee is usually a fraction of the cost of replacing one, and the return compounds. In LinkedIn Learning's 2025 Workplace Learning Report, learning opportunities ranked as the single most effective retention strategy, and career progress was the top reason employees said they want to learn.

That’s the part managers can overlook. The same investment that closes a skills gap also reduces the turnover that drives recruiting costs in the first place. Development is not just a way to fill one role, it’s a way to stop the next vacancy from opening.

There is also a competitive angle. The same report found that only about a third of organizations have fully embraced career-driven learning, which means a serious development program is still a differentiator for employers. Building clear growth paths attract people who want to grow. Those tend to be exactly the employees worth keeping.

A simple way to run the comparison

Before defaulting to a job posting, put the two options side by side for the specific gap.

On the recruiting side, add up the vacancy cost while the role is open and ramping, the acquisition cost to source and onboard, and a risk allowance for first-year attrition.

On the upskilling side, add the cost of the course or program, the time the employee spends learning, and a temporary dip in their output while they train.

Then weigh what each path leaves you with: a known performer with a new skill, or an unknown hire who still must learn the organization from scratch. The numbers might not always favor training, but running the comparison, even roughly, gives you a well-informed, thoughtful decision.

Cost aside, upskilling mitigates your risk associated with the decision. You already know the employee's work ethic, reliability, judgment, and fit with the team. Hiring, by contrast, is a bet placed on a resume and a few hours of interviews, with the real answer arriving only after the offer is signed.

When the stakes are high (a licensed role, a safety-sensitive position, a job with deep institutional knowledge) that certainty is worth a great deal, and it is something no external hire can offer on day one.

When recruiting is still the right call

None of this means you shouldn’t explore bringing new people into your organization. Recruiting is the right call when you need a skill no one on the team can realistically build in the time available. If you’re growing headcount rather than backfilling, or if you genuinely need outside perspective and experience the organization lacks, then recruiting can be the right move.

The strongest workforce strategies blend both: develop from within wherever you can and hire deliberately for the gaps that training can’t close fast enough. The costly mistake is defaulting to recruiting out of habit when developing an existing employee is less expensive, quicker, and overall better for the organization.

Making upskilling practical

For situations where upskilling is the right move, the barrier is usually logistics, not willingness. People cannot stop working to go back to school. But using the right education and training partner can help overcome this barrier.

U.S. Career Institute partners with employers to deliver flexible, online, career-focused programs that let employees build new skills around their schedules. As a DEAC-accredited school, U.S. Career Institute can help you convert your current team into the talent pipeline you need without having to look outside your company.

To explore an upskilling plan for your organization, request information on how we can help.

Sources

Work Institute: 2025 Retention Report (2025)

LinkedIn Learning: 2025 Workplace Learning Report (2025)