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Talent Development

5 Steps to Conduct an Effective Skills Gap Analysis

October 19, 2022
8 min
Emily Vo

Kaisa Savola

October 19, 2022
Talent Development

5 Steps to Conduct an Effective Skills Gap Analysis

8 min
Kaisa Savola

What is a skills gap analysis?

A skills gap analysis is an evaluation of current skill sets and abilities, compared to the required skill sets and abilities for a particular job or for the company. In other words, skills gap analysis determines the gaps that exist between employees’ current skills and the skills required by your organization to reach its goals. 

These types of analyses can be used to identify, prioritize, and close gaps in both individual and organizational skills. A successful skills gap analysis process helps your company plan for the future and response better to any unexpected change. 

Why should you conduct a skills gap analysis

● Gain insight to entire workforce: A skills gap analysis is a valuable tool for your company because it provides you with an understanding of the current and future skills, required to achieve your goals. It also always you to dig up hidden potential. 

Identify the gap and quickly tackle it: When these competencies are not met, skill gaps impact business outcomes such as productivity, employee performance, employee satisfaction and retention.

Help with strategic workforce planning: if you follow with the current trends, then workforce planning is not a new topic for you. HR managers and executives need to access relevant data to understand what kind skills and competence your organization currently has, to identify who should you hire, promote and train. This will help you achieve your company's objective easier

Step 1: Identify your organization's focus and objectives.

STEP 1: Identify your organization's focus and objectives.

Understand what your company wants to accomplish by conducting a skills gap analysis, including why the analysis is being done and how the results will be used.

Identify, describe and define the organization's values, mission, goals and priorities.

Understand the company's business model. A business model describes how an organization generates revenue to sustain itself.

Understand your company's industry. Key factors about a company's industry include market growth rate, the size of the total addressable market, competitiveness, regulatory environment, and technological change.

Step 2: Determine employee needs and job requirements.

● Determine employee needs and job requirements.

To compare employees’ skills with what’s required for their jobs, you need to know two things:

What are the skills and knowledge required for the job? In other words, what does an ideal candidate for a particular role look like? These might be skills and abilities included in a job description that have been negotiated with senior management, or they might be skills derived from an analysis of the work itself (more on this later). These are called “job requirements.”

What do current employees know and can do? After all, your goal is to identify gaps between your current employees' skill sets and the knowledge they need to do their jobs well. To assess these “employee needs," you will gather data about each individual employee's knowledge and abilities.

Step 3: Assess individual skill sets and potential.

Next, assess individual employees' skills, knowledge, and experience. You can do this by interviewing each employee, asking them to provide input on their own skill sets, using ready-made role templates or even by having other team members rate their colleagues. 

Now that you know the skills your organization is lacking as a whole and have assessed individuals' skill needs, you can begin to determine the most effective training path for your organization.

Step 4: Assign training areas.

● Assign training areas.

You've gathered your data for each position, now it's time to focus on the skill areas that will have the most impact on your business performance. This is where you need to identify which are the most important skill areas by prioritizing them based on how they relate to your business goals and objectives. We recommend a spreadsheet to help organize this information or if possible, a modern-day tool that will visualize it for you, based on the data you have gathered.

Assign a value to each skill area that reflects its importance in helping you meet your goals and then rank all your skills in order of their value. The higher they are ranked, the greater exposure an employee needs with that skill to be successful in his or her job functions.

Step 5: Create a long-term skills development plan.

● Based on your findings, create a long-term training and development plan.

● Calculate the ROI for the skills gap analysis process. How much did you invest in this whole process? What were the benefits? This will help you determine whether or not to do it again.

Conducting an effective skills gap analysis can help your company maximize its investment in employee learning and development.

Conducting an effective skills gap analysis can help your company maximize its investment in employee learning and development. A skills gap analysis gives you a clear picture of the gaps in knowledge, abilities, and leadership that currently exist within your workforce.

Another great result is finding and visualizing hidden potential. At its best, the skill gap analysis will result in using your workforce more effectively and having to recruit less. As Lizzie Crowley, CIPD skills adviser says; “Individuals who report using their skills fully in the workplace have higher levels of job satisfaction, earn more, and are more resilient to change, while businesses benefit from a more productive workforce and increased profitability”.

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