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Conducting a Skills Gap Analysis: Step-by-Step (With Examples)

gap-analysis

What is a Skill Gap Analysis?

A skill gap analysis is measuring the skills you currently have in your organization against the skills that are needed for your organization. Organizations use a skill gap analysis to determine where they may need to grow existing talent, or recruit new talent to reach organizational goals.

Why you Should Use Skills Gap Analysis

Organizations should conduct a skills gap analysis for multiple reasons. The main takeaways a gap analysis may bring your company is:

Data and insights

Although you ultimately will want to think about the takeaways and actions from a skill gap analysis, at the very least, know that a gap analysis will give you valuable data and insights about your employees and company.

For example, let's imagine you want to assess the skills of a specific team such as your sales team. The gap analysis shows you've hired a sales team with strong interpersonal relations, high organizational skills, and the ability to quickly learn. However, with a new CRM tool (customer relations management) you realize you will need some data analytics and software skills. After a skills analysis, you find no one on the current team possesses these skills. However, after a follow-up, you learn some people are interested in learning these skills. Instead of hiring out, you decide to invest in some learning opportunities for specific team members.

As you can see, specific team analysis can be particularly helpful depending on that team's goals. It also can show you gaps in specific teams.

Employee engagement

Giving employees the chance to develop certain skills can help keep them engaged. Employees' current position, often isn't necessarily their end goal, thus giving them the chance to develop specific skills they are interested in, not only engages them overall but can set them up for an opportunity for internal promotion.

In a Korn Ferry survey conducted in 2018, 33% of employees changing jobs, cited boredom and the need for new challenges as the reason. A mutually beneficial way to combat boredom could be investing in the learning and development of skills and a skills gap analysis. In general, learning and development can be a critical tool for employees overall journey, development of top talent, and retention.

If you haven't already, consider your company learning and development options, and how you can use learning and development for greater company goals. You can quickly imagine how training and development and performing a skills gap analysis can aid one another.

For example, let's say you want to perform a skills gap analysis to help evaluate potential learning and development courses. Your gap analysis shows that overall your company is lacking time management skills and technology skills. Given this gap, you decide to invest in more technology training for the company, and also bring in an expert that can talk to the entire company about time management hacks for different types of personalities.

Recruiting 

Knowing what skills your company has and doesn't have, can be a roadmap for your hiring needs. Although investing in learning and development and training is one way to gain skills, the other main source of attaining the skills you need will be through recruitment. Just like any planning for recruiting, you should first evaluate your overall business objectives and business goals. Then based on your goals and a skills gap analysis you can determine what your company needs to accomplish those goals. This may mean recruiting for a specific skill set, or it may mean you have a gap in skill level.

For example, imagine your company has many individuals with software engineering titles and skills, however, they are relatively new (sometimes referred to as "green") and don't have leadership skills as well. Given this, you may decide to recruit a software engineering leader, that has a higher skill level, and additional skills you need.

Company growth 

Being strategic about what soft skills and hard skills are needed in your organization, performing skill gap analyses, and implementing training programs all can have a big pay-off in the end. In fact, in a Mckinsey Study on re-skilling, 70% of businesses saw an impact from their programs of greater or equal investment in them, and 48% saw the programs enhance their bottom-line growth.

Competitive advantage

The need for top talent is so prevalent, that some call the current environment a "talent war". Thus, investing in your current workforce, evaluating their skills, and determining how you will fulfill those skills will be important for your company's overall success. Having an engaged, productive and well-rounded skill set can help give you a competitive advantage.

How to Conduct a Skills Gap Analysis

Knowing that a skill gap analysis can aid multiple aspects of your organization, next you will want to determine how specifically you should go about performing a skills gap analysis:

Step 1: Assess and Plan

What are company goals? 

Determine what your overall company goals are, the skill sets required to accomplish those goals, the skill levels needed, and any other specific skills that come to mind.

What do you hope to learn?

Take a step back and ask yourself (and company leaders) what you hope to learn? By conducting this skill gap analysis what would be your ideal outcome? What would be a not ideal outcome? What do you want to learn about your workforce?

What do you hope to address? 

Similarly, ask yourself (and company leaders) what you hope to address? Do you believe there to be a specific skill gap you want to confirm? Are you looking to hire or develop skills? Do you want to build a learning and development track?

Step 2: Collect Data and Analyze

Analyze skill gaps 

After you'll want to take the data and analyze the overall skill gaps, and potentially break down those skill gaps team by team.

Evaluate performance and skills 

Having performance metrics and evaluations nearby can give you a clearer picture of each employee, team, and company overall. Evaluating both of these at the same time will help you see where gaps and performance align and where they don't.

Take a look at job descriptions 

You may also want to analyze your job descriptions. Evaluating what language you use, what the skills required portion says, and other information can be telling on what you may need to change, or add so you hire the right fit.

Step 3: Create a Strategy

How you decide to move forward from the gap analysis should be some combination of training and hiring.

Training 

Determine how you want to set up training. Asking questions like, what skills will you try and develop? Will this happen internally or externally? Is this a company-wide training, team, or individual? Do you need specific training or other elements of learning and development? What is desired outcome?

Hiring 

You'll also want to determine hiring plans and strategies. Asking questions like, what roles are we currently recruiting for, do we need to add any? How will we identify skills in candidates? Do our job descriptions accurately depict the skills needed?

Step 4: Execute Your Strategy

Finally, after you've planned, conducted, and planned for action, you'll want to assess your follow-through. Executing your training and hiring plans, and then taking the time to evaluate how they performed. Doing yearly performance reviews, and gap analyses will help set you up for the same process to be repeated.

Skill gap analysis example

Company-wide training & skills gap analysis

This supply chain company determined that given the shifts in their industry, more technical skills will be needed in the coming five years. Given larger company objectives and plans, they conduct skills gap analysis company-wide to determine skill gaps. After analyzing the data they found that as suspected they found a majority of their workforce lacked technical skills.

Given this knowledge, they decided to invest more in training for all employees. They built a learning and development program internally and invested in some external training as well. Wanting to analyze these efforts, the second year they held a skills gap analysis and found that not only had most employees skill set risen, but some specific teams were also rising at a faster rate. With this knowledge, they were able to create a career path off of the specific team, and continue company training.

Soft skills evaluation & training

After some feedback from both candidates and prospective clients, this medium-sized financial company decided to evaluate the soft skills of their employees. Specifically, they were interested in the sales and recruiting teams skills in communication, interpersonal relationships, and time management. After doing some research, they conducted a skills gap analysis and found a couple of employees on each team had some gaps in these specific skills. After determining this, the company decided to invest in external workshops and coaching for these individuals, given their other skills were strong.

Leadership evaluation & hiring

This early start-up in the tech space company was having a hard time deciding what leadership was the best to hire at this point in time. They decided to conduct company-wide skills set analysis to determine what skills employees had, and what was missing, it also allowed them to see specifically the leadership teams skills. After determining that there was a major gap in finance leadership and sales leadership, the team decided to invest in recruiting these two leadership positions. The next year, they used the same process to determine with a limited budget the next hires overall.

No matter your company size, industry, or budget, creating a skills gap analysis template can be incredibly helpful for resource allocation, and company growth. Every company must determine how it moves forward with training and hiring, and evaluating skill gaps can give your company direction on how to best do that.