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Investing In Skills: How Can Businesses Make Training Pay Off?
Investing In Skills: How Can Businesses Make Training Pay Off?
Description
Challenges in upskilling and reskilling have eclipsed longstanding worries about foreign manpower as the most prevalent manpower concern after manpower costs, indicated the National Business Survey 2025 – Manpower and Wages Edition published by the Singapore Business Federation (SBF).
Nearly half of all companies – up from just a quarter the year before – cited skills development as a major pain point.
Last year, Singapore’s training participation rate fell to a nine-year low of 40.7 per cent. This begs the question: Why do so many companies hold back from training workers despite recognising the pressing need for upskilling?
The SBF survey, released in August, highlights the three most common obstacles: cost of training, difficulty of freeing staff to attend courses, and the perennial challenge of proving a return on investment.
These concerns are particularly acute for small and medium-sized enterprises (SMEs). It is not easy for a small company to send employees off the floor for a week-long course, or to risk expenditure on training that may not pay off.
But the alternative – neglecting training altogether – is riskier still, as companies that fail to keep pace with new technology and market practices can all too quickly fade into irrelevance. That more businesses now cite upskilling as a pressing challenge is, in fact, good news: it shows they recognise what is at stake.
While the familiar obstacles of cost and scheduling are significant, they often obscure a more fundamental bottleneck that derails training effectiveness: the gap between training and application. This is because without a close alignment with business strategy and work processes, training will have little impact on a firm’s productivity and performance.
Integrating reskilling with work
Training or reskilling is most relevant when closely integrated with business priorities and operations. Human resource and business units must work together to align workforce planning with business strategy.
Instead of treating training as a detour from actual work, employers can embed it in the workplace.
This could mean redesigning jobs to allow space for experimentation, or encouraging teams to tackle real business problems as learning projects.
A study by the Institute for Adult Learning found that jobs designed for generative learning – encouraging new ways of thinking and doing – are linked to higher training participation, stronger work engagement and overall better performance.
The SBF survey revealed a preference by both multinational corporations and SMEs for informal or unstructured training over formal programmes. This points to the growing role of workplace learning as a complement to classroom training.
Firms can benefit from a systematic approach to workplace learning by tapping on the expertise of the National Centre of Excellence for Workplace Learning, which helps enterprises bridge the gap between skills acquisition and utilisation at the workplace.
Industry associations and large companies have an important role in providing sector-specific training for SMEs that lack the scale to run their own programmes. For instance, SkillsFuture Singapore has appointed “Queen Bee” companies in various sectors to support SMEs by providing training resources, skills advice and best practices.
Skills with broad-based applicability, such as the use of generative AI, may be delivered by training providers for efficiency and scale. SMEs may appreciate the flexibility afforded by modular, bite-sized training delivered digitally or through blended formats.
Here, too, training providers should prioritise problem-based approaches, using real business issues for learning. The challenge is to ensure training is of high quality.
This in turn depends on whether adult educators are well-trained and keeping abreast of the latest developments in andragogy – the method and practice of teaching adult learners – and technology-enabled learning.
Whatever the form of training, workplaces must provide the opportunity to use newly acquired skills. It is good practice to define concrete deliverables after a course, such as building a dashboard after training in data analytics.
Without opportunities to transfer skills to the workplace, the value of training quickly dissipates.
The value of a skills-first approach
Beyond training, there is scope for firms to better identify and deploy skills through a “skills-first” approach, where skills and competencies – rather than academic qualifications or years of experience – are seen as the primary currency of work.
Yet a mere 18 per cent of companies surveyed by SBF have fully embraced skills-first hiring. Among the holdouts, many worry that candidates with “adjacent skills” may not be job-ready, or that they will require extra training. Such fears are not unfounded, but they overlook the evidence.
Hiring for skills is five times more predictive of job performance than hiring for education, and more than twice as predictive as hiring for experience, according to research cited by management consultancy McKinsey. Indeed, skills-first recruitment can help firms access a wider talent pool and improve hiring accuracy.
Skills-first thinking should not stop at recruitment. Employers can apply it to their existing workforce by rewarding and deploying the skills employees possess, as well as helping them develop new skills useful to the organisation.
A recent working paper by the Office for Skills-First Practices at the Institute for Adult Education highlights two examples.
Manufacturing firm Cragar is piloting a compensation system that ties 20 to 40 per cent of pay to demonstrated skills proficiency within operations, while also incorporating learning milestones into performance evaluation.
Employees of Grab Singapore may apply to participate in company project teams even if the work is unrelated to their main role. This allows the firm to tap on the latent skill sets in their workforce. At the same time, employees have the opportunity to build new skills through project involvement, and can seek mentors from other departments if they are interested in learning about or contributing to a different area of work.
Strengthening ecosystem enablers
A well-developed ecosystem of support for firms to embark on this journey already exists. SkillsFuture Singapore (SSG) provides course fee subsidies, absentee payroll support, and an Enterprise Credit to defray training costs. NTUC’s Company Training Committees support firms with workforce development and business transformation. Firms can also draw on tools such as TalentTrack and the SkillsFuture Jobs-Skills Portal for insights on skills in demand, and access training recommendations.
Mobilising more intermediaries and partners can further strengthen the ecosystem. For instance, companies could leverage employment agencies to secure temporary cover for workers away on training. As SSG’s Skills Development Partners, trade associations and professional bodies can help firms identify emerging skills, redesign jobs and promote skills-based career pathways.
In a climate of uncertainty, the instinct for businesses to tighten belts is understandable. Yet this is precisely the time when investment in people matters most. Reskilling is not a dispensable exercise, but a business imperative to navigate change.
As President Tharman Shanmugaratnam said in his address to Parliament on Sep 5, “We cannot hold back this tide of change”, but we can and must “empower workers with the skills they need to adapt and seize new opportunities”.
By integrating learning with work, adopting skills-first practices and leveraging ecosystem support, training can become an organisational priority that powers business strategy and performance.
As technology reshapes the nature of work and business, leaders must ask: Is my organisation learning faster than the market is changing? The answer may well make the difference between success and failure.