How to Conduct a Skills Gap Analysis

Table of Contents

Skills Gap Analysis

“Mind the gap!” As the shelf life of professional skills continues to shorten, count on skills gap analyses and continuous employee development to be a regular part of your routine. According to Gartner, the number of skills required for just a single position increases by 10% a year. And older skills become irrelevant just as quickly. Even keeping employees competitive requires constant upskilling and reskilling nowadays. A 2020 McKinsey survey found that nine out of 10 executives and managers either are already facing a skills gap crisis or will in the next five years. 

What Is a Skills Gap Analysis? 

The shortage of skills in an organization takes two basic forms:

The first is the total absence of a skill that is required for present and future activities. For example, if your organization is about to start using a new type of technology, but no employee has any experience with it. 

The second is a low level of proficiency in certain skills. Let’s say a strategic directive originated at your company’s headquarters, but no supervisor at your branch had sufficient change management skills to implement the new concept. 

A skills gap analysis identifies which skills are lacking and to what extent current skills are not up to the times. Once the gaps and the employees needing skill refreshers have been identified, HR or L&D can address and remedy the situation. 

Interestingly, as machines, AI, and automation take on more of the physical and basic tasks of an organization, soft skills are becoming more and more important. McKinsey found that the three top areas where employees are missing skills are problem-solving, critical thinking, innovation, and creativity (37%); the ability to deal with complexity and ambiguity (32%); and communication (31%). 

Skills Gap Analysis: Benefits for Companies, Teams, and Individuals

We won’t beat around the bush: Performing a skills gap analysis can be a daunting task. However, the rewards far outweigh the hassles. And when done correctly, the results end up benefiting the entire organization.

Companies

Some companies implement an emergency skills gap analysis when they run into a crisis. Perhaps they have just realized that employee capabilities aren’t sufficient to adapt to a threat or even to deal with normal operations. Sometimes, companies regain competitiveness just by taking care of the most urgent gaps. 

To move beyond survival mode, however, organizations need to go through the process more often, such as when a strategic change occurs, or an essential new technology is introduced. These companies will greatly reduce their risk levels. 

And then there are firms that implement a skills gap analysis twice a year or even quarterly. This always makes sense but is particularly important for industries where there are fast developments and lots of competition. Such frequency will minimize the lag between recognition of a skill deficiency and the “programs” phase (see below). It will even enable some organizations to move into a more competitive position. 

Teams

Whenever a skills gap analysis occurs, it’s an opportunity for teams to make sure they get the resources they require to fix problems and get ready for future challenges. This type of boost results in increased competencies and team confidence, leading to improved morale and retention rates

Individuals

Part of the skills gap analysis process goes through steps that are very similar to career pathing. This is a strong motivator because it demonstrates that the organization is committed to the employee’s particular development. In addition, the ultimate effect of the skills gap analysis is that the employee will be more prepared for the future – even if they end up using their skills outside the organization.

Skills Gap Analysis Use Cases 

The advantages of a skills gap analysis go beyond plugging holes in company capabilities, including:

Resource Optimization

The knowledge gained by a skills gap analysis offers significant insights into how well human resources are being utilized. It can identify top performers and, as a consequence, organizations can reorganize their staff for purposes such as talent development and leadership/mentorship roles.

Strategic Preparation

Getting ready for a new direction often requires upskilling, reskilling, and hiring. The effects of a skills gap analysis can result in an optimized workforce that is prepared for the next major step. 

Recruiting

A skills gap analysis might result in discovering the organization isn’t just missing skills – it’s either missing entire roles or includes some roles that need to be tuned, with new skills needed. The data from a skills gap analysis will help define the skills needed for new roles and which positions need to be re-defined. Those involved in hiring efforts will have a more accurate idea of the kinds of skills that will produce better results. 

The Three Main Steps of Skills Gap Analysis 

There are essentially three phases in a skills gap analysis: positions, processes, and programs. 

Positions

In this step, HR creates a map of all of the employee positions in the company, and then adds those that it will require until the analysis cycle is complete. For example, if the current skills gap analysis initiative will last a year, and there are new jobs to be created during that period, they should create full job descriptions and act like it’s a current position and include it in the analysis. 

What the HR department is doing in practical terms is filling out an organizational chart, which it might have already. However, part of the analysis is figuring out what roles and skills are missing. HR should ponder the following questions, together with stakeholders across the organization:

  • Are we meeting current goals with existing staff?
  • What positions will we need in light of the near-term strategy?
  • What do managers think about staffing requirements based on their industry and company knowledge?
  • How will expected turnover and succession affect the org chart?
  • Are any current jobs going to be automated?
  • What’s happening with hiring and skills in our industry?
  • Do we expect to start using any new technologies soon?

Processes

The goal of this phase is to create a “skills inventory”. Again, practically speaking, this takes the form of listing the skills that are associated with each position in the organizational chart. 

A major challenge here is forming a complete list. Let’s say you are filling in the skills of a production line manager. Obviously, they need proficiency in using the equipment which makes the product, and in the software used to organize the production line. But are communication, leadership, and other soft skills also relevant? 

Again, as automation and AI grow in use in every industry, the answer when it comes to needing strong soft skills is always ‘yes’. Soft skills should be codified like hard skills by defining the evaluation criteria and adding interview questions for new candidates that help draw out the candidates 

To create an optimal inventory, the following steps make a good starting point:

  • Examine job requirements and position descriptions, creating a list of skills needed for each position 
  • Review employee evaluations to determine if current skill levels are optimal
  • Conduct interviews with managers and get their input regarding missing/suboptimal capabilities – do they think the missing or undeveloped skills can be trained or learned on the job? 
  • Arrange meetings with employees to understand where the absence of skills is hindering their performance and of those who influence their tasks 

By the end of this phase, you should be able to categorize your skill gaps into four different types:

Absent – These skills represent positions in the org chart that are missing. Once identified, HR should begin the search to fill them immediately because the hiring process can take time.

Current – These are skills that meet the present requirements.

To develop / Urgent – These might be the missing skills that led to the skills gap analysis in the first place, and which are first in line for the “programs” phase.

To develop / Not Urgent – Particularly when it comes to soft skills, employees could always use some level of development; but areas that are not critical can be handled through continuous employee development.

*Two important items to note:

Technology can help here. It can be very difficult to create and edit huge charts, especially for large organizations. There are talent management systems that allow you to record and organize employee performance records, and even skills gap analysis software that guides you through the entire operation. 

Some companies are moving from listing employees in terms of roles to describing them in terms of skills. A skills gap analysis might be the ideal time to implement this concept. 

The 3 Best Ways to Solve Skills Gaps

To resolve missing and subpar skills, there are many approaches that can be taken:

Learning and development initiatives

There are endless options here, depending on the required skill. If you find an employee lacks a certain skill – proficiency in a programming language, for example, you have a few options. You can offer the employee a short course with an expert in that programming language, either someone at work or through an L&D platform like GrowthSpace, can get the employee up to date. 

Or you may find a manager who lacks several management-related skills can be put on a strategic continuous employee development journey or, in more serious cases, can be offered an MBA degree where he or she can take night courses at a local or online university.  

You may also find an employee you previously had on a track toward leadership is missing several skills needed for a management position. A mentorship, either internal or external, can be the perfect way to not only teach but show the employee how to be a good manager. Seeing a good manager in action can be just as enlightening as taking a course. 

Also, if you find large swaths of your employees are missing a certain skill, you can also bring in expert lecturers or design a workshop that will engage employees and teach the skill in group settings. 

Internal mobility

When it comes to filling roles currently filled by an employee lacking the needed skills, looking at your current employee base is usually the best starting point to filling the role. Certain employees may already have the experience and skills that are needed–which also comes with the many benefits of internal talent mobility. If they’re lacking full proficiency in a few of the skills, some light upskilling may be needed, but it’s certainly cheaper than hiring someone new

If you find the right person with the right skills already working for you, both you and the employee enjoy the added benefit of already knowing the company culture and colleagues, offering an easier transition. 

External recruiting

There are going to be situations when certain skills must be brought in from outside, particularly those that are both new and comprehensive. If you know what skills a certain position requires and don’t have an employee that fits the role, you’ll need to hire externally. 

The biggest benefit is that often, the exact skills a role requires aren’t 100% pinned down when they’re first created. After a comprehensive skills gap assessment, you’ll know exactly which skills you’re looking for. 

Fill Your GrowthSpace Gap 

An effective skills gap analysis is a complicated venture. One crucial aspect of skills optimization is making sure that employees receive the L&D programs that they specifically need. This challenge becomes more significant as the organization grows its employee base.   

GrowthSpace’s talent development solution is the key to soft skills training. The technology matches employees with experts specializing in precise skills. Based on its unique architecture, GrowthSpace programs scale to accommodate companies of any size.