How to conduct a skills gap analysis to scale your workforce

What is a skills gap analysis?

A skills gap analysis is a process that identifies the difference between the skills your organization needs and the skills your workforce currently possesses. It's a tool for understanding where your team's abilities fall short of business requirements.

A skills gap analysis is crucial for organizational success. By identifying discrepancies between current and required skillsets, companies can strategically invest in training and development, make smarter hiring decisions, and ensure their workforce remains competitive and adaptable.

This process aligns individual employee capabilities with organizational goals, enhancing productivity and innovation. A comprehensive analysis, drawing from multiple data sources such as HR analytics, manager assessments, and employee feedback, provides a holistic view of skill deficiencies, enabling targeted interventions that drive business growth and maintain market relevance.

A skills gap analysis is not...

A skills gap analysis is often misunderstood, leading to several misconceptions.

• First, it's not just a one-time event but an ongoing process that should be regularly updated.
• Many wrongly believe it's only for large corporations when, in fact, businesses of all sizes can benefit.
• Another myth is that it focuses solely on technical skills, ignoring soft skills crucial for workplace success.
• Some fear it's a precursor to layoffs when it's aimed at developing existing talent.
• Finally, it's not just HR's responsibility - effective analysis requires input from all levels of the organization.

Understanding these misconceptions ensures companies implement more effective and inclusive skills gap analyses.

The benefits of conducting a skills gap analysis

A survey by the Oxford Learning College in the UK reveals:

• 58% of workers experienced negative impacts due to insufficient digital skills
• 66% of employers struggled to find recruits with all the necessary skills

These figures highlight the critical need for a skills gap analysis. Here are 3 benefits:

Targeted workforce development

• Identifies specific skill shortages in your current workforce
• Enables the creation of tailored training programs to address these gaps
• Improves overall team capabilities and productivity

Enhanced recruitment and talent management

• Clarifies the exact skill requirements for each role
• Streamlines your hiring process by focusing on critical competencies
• Reduces hiring mistakes and improves new employee integration during onboarding

Strategic business alignment

• Aligns your workforce capabilities with long-term business goals
• Facilitates proactive planning for future skill needs
• Improves resource allocation for training and development initiatives

These benefits help organizations stay competitive, improve efficiency and company culture, and more effectively adapt to changing market demands.

Step-by-step guide to conducting a skills gap analysis

Ready to transform your workforce? This guide will walk you through the process of conducting a comprehensive skills gap analysis.

From identifying critical competencies to developing action plans, you'll learn how to pinpoint and address skill shortages, ensuring your team is well-placed for future growth.

1. Identify your organization's goals and required skills

To begin your skills gap analysis, start by defining your organization's goals and the skills needed to achieve them. Review each role within your company structure and create an "ideal candidate" profile.

This profile should include:

• Critical skills: Essential competencies required for immediate job performance
• Non-critical skills: Abilities that enhance performance and drive business goals but aren't crucial
• Hard skills: Technical knowledge and measurable abilities specific to the role
• Soft skills: Interpersonal and transferable skills that contribute to overall effectiveness

For instance, a Chief Technology Officer role might prioritize technical hardware knowledge as critical, while familiarity with large language models in AI could be a non-critical but forward-looking skill.

By creating these comprehensive profiles for targeted roles, you establish a benchmark against which to measure your current workforce, setting the stage for an effective skills gap analysis.

2. Assess current employee skill levels

To assess current employee skill levels accurately, collaborate across departments for a comprehensive view. Engage directly with the teams you're analyzing, as they offer invaluable insights into role-specific requirements and challenges.

This approach ensures transparency and promotes buy-in for the process. Extend your skills assessment beyond individual departments to uncover hidden talents and underutilized skills. For instance, a sales team member might possess in-depth knowledge of hosted VoIP systems, which could be useful for your telecom infrastructure expansion.

Fostering cross-departmental collaboration will offer a holistic understanding of your workforce's current skill sets at the individual level. This inclusive approach enriches your analysis with diverse perspectives, reveals unexpected skill synergies, and promotes a more interconnected workplace.

Remember, the goal is not just to identify gaps but to uncover hidden potential that drives innovation and efficiency across your organization.

3. Analyze the gaps between required and existing skills

With data from your skills inventory and ideal profiles, it's time to identify and analyze skill gaps. Compare the essential skills for each role against the actual skill sets of your employees. As you do this, consider:

• The severity of each gap
• Its impact on individual and team performance
• How it aligns with industry trends, departmental and organizational goals

Remember, every employee will have skill gaps, this is expected. Prioritize these gaps based on their relevance to current operations and future objectives.

Interestingly, this process may also reveal areas where employees exceed expected skill levels. These "positive gaps" can be leveraged for mentoring opportunities, cross-departmental projects, development opportunities, or to inform future role expansions.

By analyzing deficiencies and strengths, you'll understand your workforce's abilities and potential.

4. Prioritize skill gaps based on business impact

After identifying skill gaps, prioritize them based on their potential business impact. Consider:

• Immediate operational needs
• Long-term strategic goals
• Market trends and industry demands

Focus on gaps that, if addressed, would yield the highest return on investment in productivity, innovation, or competitive advantage. For instance, upskilling in emerging technologies might take precedence in a tech company, while improving customer service skills could be crucial for a retail business.

5. Develop action plans to bridge identified gaps

Once you've prioritized skill gaps, it's time to create actionable plans to bridge them. Start by setting clear, measurable objectives for each gap. Then, develop a talent strategy. This may include:

• Tailored internal training plans
• Formal training such as external courses, workshops, or certifications
• Mentorship initiatives or buddy systems
• E-learning platforms
• Additional training, such as on-the-job learning, job rotation, or cross-departmental projects

Ensure each plan has a timeline, budget, and assigned responsibilities. Consider short-term fixes and long-term development strategies. For example, a quick online course might address an immediate need, while a more comprehensive certification program builds deeper expertise over time.

Team leaders should remember to involve employees in this process. Employee input increases engagement and ensures any employee training program aligns with their career aspirations. Regularly review and adjust these training initiatives, keeping them flexible to accommodate changing business needs and individual progress.

Implement a robust monitoring system with key performance indicators to track progress. Regular assessments, feedback sessions, and performance reviews will ensure your skill development efforts stay on course.

By aligning training efforts with business priorities, you create a win-win situation: employees gain valuable career growth opportunities while your entire company builds a more capable and adaptable workforce.

Choosing appropriate skill evaluation methods

Choosing the right evaluation methods is crucial for an accurate skills gap analysis. Here are four approaches to consider:

1. Manager evaluations: Direct supervisors possess invaluable insights into their team members' capabilities and potential. These evaluations offer a nuanced understanding of individual skills, identify areas for growth, and play a key role in establishing future development goals aligned with employee aspirations and organizational needs.
2. Soft skill assessments: Evaluate interpersonal and transferable skills through methods such as Marlee's motivational analysis; this benchmarks your entire team against evidence-based XFactor success models. You can also conduct behavioral interviews and capture 360-degree feedback.
3. Skills tests and certifications: Provide objective benchmarks for evaluating employee competencies. These tools offer tangible evidence of skills, allowing for precise measurement in your gap analysis. They address organizational needs by identifying specific skill levels and benefit employees by providing valuable credentials that boost their professional development and career prospects.
4. Performance reviews: A platform for open discussions about skill levels and workplace attitudes. These conversations identify improvement and skill growth areas, ensuring that skill development remains a priority in employee-manager interactions. Regular performance reviews contribute to a dynamic skills gap analysis by providing ongoing feedback and tracking progress.

Combining these methods offers a comprehensive view of workforce skills, enabling a more accurate and actionable gap analysis. This multi-faceted approach ensures you capture subjective insights and objective measurements, leading to a more robust skills development strategy.

Skills gap analysis templates

Templates can streamline your skills gap analysis process, making it more efficient and effective.

• For individual assessments, SHRM (Society for Human Resource Management) offers an Individual Skills Inventory Form that helps identify strengths and areas for improvement.
• ClickUp offers a range of Skills Matrix templates, allowing you to visualize skill levels across teams.
• For a broader perspective, Lucidchart's Organization-level Skills Gap Analysis template offers a clear visual representation of your company's overall skill landscape.
• When it comes to taking action, Mind Tools' Action Priority Matrix template for closing skill gaps helps you structure and track your skill development initiatives.

Remember, while these templates offer valuable insights, customization is key. Tailor each template to reflect company level needs, industry-specific skills, and strategic goals.

This might involve adding or removing skill categories, plugging knowledge gaps, adjusting rating scales, or incorporating company-specific competencies. Adapting these tools will create a more relevant and impactful skills gap analysis for your organization.

Revolutionize your workforce: start your skills gap analysis today

Don't leave your team's potential untapped. A skills gap analysis isn't just a tool—it's your roadmap to sustainable growth and success.

By understanding your employees' abilities and your company's needs, you're not just filling roles but strategically building a high-performance team.