Upskilling vs Hiring: Which Has Better ROI?

February 18, 2026

Should companies hire new talent, or invest in skill development for current employees? This is a question employers ask themselves often. With rising costs and skill needs always changing, choosing the wrong path is expensive.

When comparing upskilling vs hiring, the answer often comes down to return on investment. Here’s a clear look at the real costs, benefits, and situations where each option makes sense.

The Cost of Hiring New Employees

Hiring a new employee is more expensive than most employers expect.

The average cost to hire a new employee is about $4,000 CAD. For executive or senior leadership roles, that number jumps to roughly $28,000 CAD per hire. These figures don’t include salary or benefits, just the cost of getting someone into the role.

Additionally, the amount of time a position stays unfilled matters. On average, it takes 42 days to fill a position.

During that time, work doesn’t stop. Since teams have to work to cover the gap, projects will slow down and overall productivity takes a hit. Moreover, team members are more likely to feel overwhelmed and stressed when under-capacity, which can affect satisfaction, retention, and performance. Missed deadlines and lost revenue are also a risk.

When calculating your hiring costs, you must include expenses like:

Job postings fees and paid ads
External recruiters or agencies
Background checks and reference screening
Signing bonuses or incentives
Training and onboarding time

Even after all that, there’s no guarantee the new hire will stay. It’s a sad reality, but many employees leave within their first year if expectations don’t match reality. It costs even more when you end up choosing the wrong hire, leading to re-hiring and less of a return on your investment.

The Cost of Upskilling Existing Employees

Upskilling costs far less than hiring — and the difference is significant.

Across Canada, hiring a new employee typically costs four to six times more than training an existing one. That gap alone makes upskilling worth the cost.

Employees also see training as essential, not optional:

A national survey found that 73% of Canadians earning over $120,000 per year say upskilling is critical to long-term career success.

Many people believe a high-performing employee's top concern is salary, but that’s not always the case. High performers expect learning opportunities, and they often leave when those opportunities don’t exist.

When you decide to upskill instead of hire, you save your company from:

Recruitment costs
Onboarding costs
Learning curves
Bad culture fits
The risk of a bad hire

Upskilling vs Hiring: A Side-by-Side ROI Comparison

According to workforce forecasts:

Retention data is just as telling:

Hiring fills a gap temporarily. Upskilling reduces turnover, improves engagement, and prepares your workforce for what’s coming next.

…So Which Is Better for ROI, Upskilling or Hiring?

For most organizations, upskilling delivers better ROI than hiring.

Upskilling costs less, reduces turnover, improves retention, and builds stronger teams over time.

Hiring still has its place, but relying on it as the primary growth strategy is expensive and risky in the modern workforce, where working Canadians are eager to grow professionally, and quick to move onto better opportunities.

The strongest approach often combines both: hiring when necessary, and upskilling wherever possible.

For employers in Kitchener-Waterloo and Guelph, Pathways helps make upskilling practical, measurable, and aligned with real workforce needs. When employees grow, businesses do too.

Let’s talk about how a targeted upskilling plan can help your team thrive!

Book a free, no-obligation consultation today

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