Recruitment vs Upskilling: Which Delivers the Best Return for Your Business?

The challenge of attracting, developing and retaining talent has become one of the most expensive and complex aspects of running a business. Hiring is harder, skills are evolving faster, and staff expectations are higher than ever.

At first glance, the solution seems simple. If you need new expertise, recruit it. Yet for many organisations, that approach is no longer sustainable. The cost of external recruitment continues to climb, and the pool of qualified candidates in key disciplines is shrinking. 

Upskilling existing employees is increasingly being viewed as the smarter, more financially sound option.

In this article we explore the real cost difference between recruitment vs upskilling, how to evaluate which delivers the best return for your business, and how tools such as DiSC® profiling can significantly increase the impact of internal development.

As the first and only UK accountancy firm to be a DiSC® authorised partner, we encourage clients to take a proactive approach to finding, empowering and keeping employees through truly understanding them and how they work. 

The Real Cost of Recruitment

Recruitment is often treated as a necessary cost of doing business, but it is rarely analysed with the same financial rigour applied to other forms of investment. The true price of bringing in new people extends far beyond the advertised salary.

Direct and hidden costs

The CIPD’s Resourcing and Talent Planning Report estimates that the average cost to recruit a mid-level employee in the UK now ranges between £3,000 and £6,000, depending on the role and industry. This figure includes advertising, agency fees and internal administrative time, but it does not capture the full picture.

In practice, recruitment costs can be grouped into four main areas:

1. Direct financial costs – advertising, recruiter commissions, background checks and onboarding materials.

2. Operational disruption – managers diverting time from revenue-generating activity to interviews and training.

3. Ramp-up period – the 3 to 9 months it can take a new hire to reach full productivity.

4. Attrition risk – if the hire does not work out, the process begins again, multiplying the expense.

When these factors are added together, the real cost of replacing a skilled employee can easily exceed 30% of their annual salary. For senior or technical roles, that percentage can be significantly higher.

Source: CIPD and Glassdoor for Employers.

The opportunity cost of constant hiring

Beyond the financial cost, there is also the issue of lost opportunity. Every unfilled role represents work that is delayed or abandoned. Teams under pressure can lose momentum, client service may slip, and managers become overstretched.

Even after recruitment, there is a time lag before a new employee becomes fully effective. According to research by the Oxford Review, most new hires take between six and nine months to reach optimum productivity. During that time, they still draw full salary while contributing less value than an experienced team member.

For businesses operating on tight margins, this lag can have a measurable impact on profitability.

The Business Case for Upskilling

Upskilling is the process of developing existing employees to fill higher-value roles or to adapt to new business demands. While it requires time, planning and investment, it usually costs far less than repeated recruitment.

Understanding the cost of upskilling

Training budgets vary widely across industries, but according to Statista, the average UK employer invests around £1,500 per employee per year in formal training. For small and medium-sized businesses, the figure is often lower.

Even allowing for course fees, mentoring time and temporary reductions in productivity during learning periods, the total expense rarely approaches the equivalent of one full recruitment cycle.

When training is targeted effectively, it delivers measurable financial benefits:

• Reduced turnover: employees who see clear career development are more likely to stay.
• Increased productivity: staff who understand your systems and clients improve faster than new hires.
• Lower error rates: experienced staff make fewer mistakes during transitions.
• Improved morale: professional development strengthens engagement and loyalty.

These outcomes all feed directly into reduced costs and greater business resilience.

Treating training as an investment, not an expense

Too often, businesses view training as a short-term cost that can be reduced when budgets tighten. In reality, it should be viewed as capital investment in human performance.

Upskilling increases organisational efficiency in the same way that upgrading machinery or software does. The key is to measure and manage that investment.

Our advice is to try to model the return on their training expenditure within management accounts, which in turn allows decision-makers to track how employee development impacts revenue, efficiency and retention over time.

When Recruitment Still Makes Sense

There are times when external recruitment is not only necessary but strategically essential. Hiring can be the right move if:

• Your business requires expertise that simply does not exist internally, such as a specialist in regulatory compliance, data science or engineering.
• You are entering a new market and need experienced leadership to guide expansion.
• Your company culture needs fresh ideas, diversity or innovation.
• Growth is time-sensitive and the skill gap cannot be filled quickly enough through training.

In these cases, the financial challenge is not avoiding recruitment but forecasting and controlling the cost.

At Ascentis, we work with clients to integrate recruitment projections into their management accounts, ensuring that hiring aligns with cash flow forecasts, profitability targets and long-term strategy.

Comparing the Numbers: Recruitment vs Upskilling

To make an informed decision about recruitment vs upskilling, businesses need to compare the full financial impact of both options.

Calculating Return on Investment

Both recruitment and upskilling are forms of investment. To evaluate recruitment vs upskilling properly, businesses should use a consistent ROI framework.

Recruitment ROI formula:
(Added output or profit from new hire – total cost of hire) ÷ total cost of hire

Upskilling ROI formula:
(Value of increased productivity + retention savings) ÷ training cost

For example, if an existing employee improves productivity by 15% after a £2,000 training programme and that improvement adds £10,000 in annual value to the business, the ROI is 400%.

Beyond the Numbers: Cultural and Strategic Value

The financial metrics are only part of the story. The decision to upskill or recruit also affects company culture, agility and long-term sustainability, especially in smaller teams.

Recruitment: new ideas and innovation

Bringing in external talent can inject new energy and perspective. It may help modernise outdated systems, introduce alternative ways of thinking, and prevent stagnation. However, it can also create friction if new hires struggle to adapt to existing culture or if they are replacing a previous employee. 

Upskilling: loyalty and continuity

Developing existing employees strengthens organisational culture. It communicates trust and stability, leading to stronger engagement and lower attrition. Upskilling also keeps your work processes and institutional knowledge intact.

Balancing both

In reality, successful companies do both. They hire externally for critical new capabilities but invest consistently in developing the people who already know and believe in the business.

The Role of DiSC® Profiling in Workforce Development

Ascentis is proud to be the first and only accountancy firm in the UK authorised to deliver DiSC® behavioural profiling. This partnership brings a unique advantage to clients who want to maximise the value of their upskilling investment.

What is DiSC®?

DiSC® is a globally recognised tool that helps organisations understand behavioural styles in the workplace. It categorises individuals into four main types:

Unlike personality tests, DiSC® focuses on behavioural tendencies, how people communicate, make decisions and respond to change.

How DiSC® improves training outcomes

Understanding behavioural preferences allows managers to tailor training and communication styles to individual needs. For instance:

• A “D” profile might prefer goal-oriented, challenge-based learning.

• An “S” profile might respond better to steady mentoring and gradual skill development.

• A “C” profile values structured learning paths and measurable progress.

By aligning training methods to behavioural profiles, businesses see faster skill acquisition, stronger engagement and greater return on learning investment.

Using DiSC® to identify leadership potential

Behavioural profiling also helps uncover untapped leadership capability within your existing workforce. Instead of defaulting to external recruitment, businesses can use DiSC® assessments to identify employees with the right temperament and motivation for management roles.

This approach not only saves recruitment costs but also strengthens succession planning and continuity.

Learn more about DiSC® at Ascentis and how it can enhance leadership development, communication and cultural performance.

A Practical Framework for Decision-Making

To simplify the choice between recruiting and upskilling, you can use the following framework as part of your next budgeting or planning cycle.

Integrating Both into Long-Term Strategy

The most resilient businesses take a blended approach. It shouldn’t be a case of recruitment vs upskilling but rather using Recruitment and upskilling complementing each other in a long term strategy.

• Recruit externally to fill genuine knowledge gaps or accelerate innovation.
• Invest in internal development to preserve culture, improve retention and future-proof capability.
• Use DiSC® profiling to align both processes with behavioural fit and learning style.

When both strategies are planned together within your financial framework, “people costs” become predictable and controlled, rather than reactive.

Recruitment vs Upskilling: Treat People Development as Financial Strategy

Recruitment and upskilling are both essential to growth, but they carry very different cost profiles. External hiring offers speed and expertise, but it is expensive and carries risk. Internal development takes time and discipline, yet it builds sustainable value that compounds over the long term and can improve company culture.

By analysing people investment with the same financial discipline you apply to capital expenditure, you can make confident, data-driven decisions that protect profitability and enhance performance.

If you need help with understanding your team, deciding on recruitment vs upskilling or financial planning for future recruitment or upskill costs, book a discovery call with Ascentis today.