The key to any organization's success is its people.
Each team member offers a unique solution to overcome challenges and drive a company toward its goals and objectives. But unlocking their potential isn't always easy.
While you strive to select candidates with varied skill sets and a competitive edge, it's not uncommon for day-to-day activities to stunt a new hire's full abilities. And sometimes, you might notice they’re missing skills you need from them.
A thoughtful skills gap analysis identifies your current workforce's hard and soft skills against the qualifications you need to reach larger business goals. It’s a complex process that requires careful goal-setting and all hands on board, but the results will pay off.
What’s a skills gap analysis?
A skills gap analysis is an assessment method that identifies the difference between employees’ current skills and the others you need to reach business objectives.
It’s a proactive tool that pinpoints how individuals, teams, or the whole organization can improve with professional training and upskilling. And as a manager, it gives you information about your team’s strengths and weaknesses so you can organize tasks and projects by individual abilities.
A skills gap assessment is like a compass that stimulates a learning pathway and guides long-term strategic planning. It can tie up loose ends or indicate that someone should build entirely new skills, depending on the depth of the analysis and its reason for performance.
You might find that a sales representative needs to work on their negotiation techniques or a medical professional should learn entirely new data collection and analysis technology. There’s no specific moment to conduct a competency gap analysis. Your team can always fine-tune their skills to deliver better outcomes.
Embracing a growth mindset that encourages continuous learning and improvement is always a good strategy to engage employees and future-proof your organization. And consistently conducting skills gap assessments will keep your organization moving with the curve — or even moving past it.
The benefits of skills gap analysis
A skills gap leaves holes in your workforce that could negatively impact your efficiency, growth potential, and bottom line. Here are five benefits of conducting a skills analysis:
1. Valuable insights
Imagine a workforce as a business toolbox. Each employee offers a unique skill set to complete specific tasks, solve problems, and help their department run smoothly. And they work together, enriching success with team collaboration.
But you have to know what you have in your toolbox to use it efficiently. A skills analysis provides a detailed understanding of your employees' capabilities and shows you exactly what they can and can’t do. Then you can bring out the best of each team member.
Maybe a marketing team excels at creating visual content, but their campaigns fall flat. A skills gap analysis might reveal that the team lacks expertise in the data management essential to navigating audience analytics. With that information, the marketing manager knows where to focus their energy to develop subsequent campaigns.
2. Learning and development
A skills gap analysis is also known as a training gap analysis because of its potential to shape effective workplace development plans. With the gaps you spot, you know where to center your team’s learning efforts.
Imagine your skills gap analysis indicates that your customer service team lacks effective negotiation skills, contributing to underperforming sales or lost contracts. HR may offer workshops with negotiation experts, mentoring programs with higher-ups, or 1:1 career coaching. And team leaders can structure performance reviews around new skill levels.
3. Employee retention
According to The American Upskilling Study: Empowering Workers for the Jobs of Tomorrow, a report from Gallup, 48% of American employees would switch to a new job if that job offered more training opportunities. The same report states that 65% believe upskilling opportunities are very important when deciding whether to take a new position.
Training programs show your employees you care about their professional development, and investing in them is worth it for long-term employee retention. Those who feel like they’re stagnating could see their position as a dead end and leave for one that offers more growth. And conducting a skills gap analysis is the catalyst for spotting those opportunities and taking action.
4. Strategic workforce planning
A skills assessment isn't only useful for understanding your existing workforce's competencies. It can also guide future hiring strategies, which is why it’s also known as a talent gap analysis. The data you collect from a skills analysis guides a more effective hiring process that fills your gaps. You’ll shape job descriptions, build screening criteria, and craft interview questions with more specific skills in mind.
The approach helps you find the right people to fit your team who bridge the skill gap from the start. Plus, understanding what skills are important to your organization can help you negotiate compensation and benefits packages that suit market value.
5. Competitive advantage
If your company is experiencing a skills gap, you're not alone. According to a 2021 McKinsey survey, 87% of global employers reported a serious skills shortage. And among the hardest skills to find are strong technology skills that meet industry trends.
Digital transformation and job automation are changing the future of work, and not just for positions that deal directly with machine learning or artificial intelligence like ChatGPT. Medical practitioners increasingly use new technologies for data collection and analysis, and teachers can use chatbots to help students learn languages and streamline repetitive conversations.
If your analysis uncovers holes in your team’s understanding of automation tools, invest in some training. It could help your whole organization stay ahead of trends.
How to conduct a skills gap analysis
If you’re ready to show your team where to upskill, here’s a step-by-step guide with a few gap analysis examples:
1. Define the focus
Determining your scope is the first step to conducting a skills gap analysis. Start by examining the organization's strategic goals, key performance indicators (KPIs), and the current challenges you're facing. This will help you decide if you want to analyze skills on an organizational, departmental, or individual level.
If your customer service ratings have been consistently dipping, this might indicate a need to focus on the team that handles those communications. But if customer satisfaction ratings, total sales, and client acquisition are all decreasing, it likely indicates a need for a wider departmental or organizational assessment.
Your focus can also be proactive. If you're adopting new software or planning to transition into a new market, concentrate on measuring preparedness. A more general organizational assessment of necessary new skills for a specific project or initiative can provide information about how ready your workforce is for the transformation.
2. Identify the skills you want to work toward
Once you've developed the scope of your analysis, determine the skill needs for each of the roles and responsibilities you’re analyzing. Create a list that's as detailed as possible, with both technical abilities and soft skills. Keeping this list in mind from the beginning of the process lets you pinpoint your analysis for a more specific outcome.
Start by analyzing your organization's job descriptions, long-term objectives, and company culture, consulting with higher-ups about the future skills your teams might need to remain competitive.
You could also ask team members or managers about what skills they think they’re currently lacking, which will provide insight and involve them in the development process. An employee feedback survey is a great way to do this.
For each skill, determine the importance (high, moderate, low) and skill level you want the team to achieve (excellent, good, basic). You could also opt for numerical rating scales to judge individual scores, like a three-point system that ranges from basic to excellent. A well-defined score system will help you build and prioritize skills training after completing your assessment.
A software development company may need programmers to be proficient in a new coding language for a future service offering. That means the language would be an “excellent” skill level of “high” importance, or a three on the scale.
3. Assess current skills
Using several different measurements will give you more detailed data sets. Consider the following options:
- Assessments and surveys with employees, teams, and managers
- Manager and employee interviews
- Team workshops
- Past performance reviews and reports
- Skills management software, like Trackstar
- Skills proficiency tests
4. Identify the gaps
Once you have your results, compare the current skill set against the skill set you’re looking for for each job role. Every discrepancy represents a skills gap. If your analysis shows that your coding team only has a basic command of a new programming language instead of an excellent one, you've found a gap.
5. Report the results
Create a comprehensive report to share with leadership and identify potential solutions together. Transparency boosts trust in leadership and employees alike, so include everyone in the professional development process. Consider holding team and individual meetings to share skill evaluations, discuss next steps, and set new expectations and objectives.
6. Create an action plan
You can approach the skills gap in two ways: training existing employees and developing new hiring criteria for future candidates. Here’s how:
For existing staff
A mixture of training, regular performance reviews, and incentives can help employees boost the skills they need to strengthen. This could include one or several of the following options:
For new hires
Use the information you've collected to adjust the future hiring process and support new employees from the start. This may include:
- Editing job descriptions to include the most important skills
- Training hiring managers to ask questions about required skill sets
- Creating skill assessment tests for potential candidates
- Reconsidering benefits and perks programs for high-value skills
- Updating applicant tracking systems (ATS) to screen for specific skills
Remember that a skills gap can result from a lack of experience, and it doesn’t mean someone isn’t a great candidate. Consider designing an abbreviated analysis as part of the onboarding process to help you personalize training and support new hires.
7. Repeat
A skills gap analysis isn't a one-time action. Repeating the exercise every few months or years will help you keep up with evolving industry trends, consumer demands, and training needs.
Consider creating a centralized archive of past analyses to better track progress as time goes on. Recording and sharing information avoids organizational information silos and encourages transparency for future professional development strategies.
Bridge the gap
A skills gap analysis provides more than a snapshot of your skill inventory. It's a tool with wide-reaching impacts on your organization's long-term growth and health. The data you develop is a foundation for enormous change, whether building better employee engagement initiatives or rearranging teams to leverage individual skill sets.
Start by defining your company's objectives and performance, build your scope, and begin assessing. By doing so, you'll be sure to mind the gap and stay ahead of the curve.
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