Using a skills gap analysis in the workplace

July 22, 2024 | University of Phoenix

A skills gap analysis measures the difference between current employee abilities and the skills required to perform specific tasks necessary for business operations.  

According to the World Economic Forum, “By 2025, 44% of the skills that employees will need to perform their roles effectively will change.” The extent to which employees do not possess the skills they will need represents a skills gap. In most cases, the job of finding these gaps falls to a company’s human resources specialists. They can use the results of their surveys to identify training opportunities for existing staff and skills to target when hiring new employees.  

A skill gap analysis can also assist with professional development (PD) planning. While larger skills gaps may necessitate hiring new workers, smaller ones may be able to be filled with professional development courses. These non-degree training programs and classes can help current employees upskill or reskill to develop the abilities the company needs.  

In today’s rapidly changing business world, skills gap analysis is an ongoing task as companies seek to adopt new technology and processes to increase efficiency and profits. 

When to conduct a skills gap analysis

Skills gap analysis frequency depends on the pace of company growth. Usually, such a project coincides with a change to operations or strategy because the company needs to know if they have the staff to carry out their plans.  

There are also other reasons to carry out an assessment.  

• Failures: A business fails to meet its goals due to plans or employee performance.  
• Lack of improvement: Training programs are not producing the expected results.  
• New technology: Often, businesses need employees to operate new technology, such as software or other digital tools meant to improve operations or automate processes.  
• Missed deadlines: Missing important deadlines or benchmarks can be a sign of a need for new hires or a sustained upskilling effort. 
• High turnover: If employees are leaving the company in large numbers it could be a sign that they lack the skills or training to do the jobs for which they were hired.  

Reasons to conduct a skills gap analysis

Skills gap analysis can define areas of weakness. It can also help companies gain insights into their current human resources situation and make the steps for improvement clear.  

1. Get a better understanding of the workforce: A skills gap analysis can help companies find employees who possess the most valuable skills and those with basic knowledge that needs to be enhanced through additional training or experience.  
2. Identify training needs: A skills gap analysis allows organizations to identify types of training and professional development that could potentially provide the most benefits. This education typically requires additional investment, so it is vital to create a plan to get the best return on investment.     
3. Inform strategic workforce planning: Companies can use skills gap analysis to forecast future employee needs and then adopt strategies for hiring or training before certain necessary skills become an essential part of business operations.  
4. Create new recruitment strategies: With skills gap insights, companies can measure their current employees’ abilities against the skills common in the current job market. This knowledge can help create more effective recruiting strategies that fill needs while avoiding redundancies. 

Finally, more informed training and hiring strategies can help companies get a competitive advantage over the other firms in their sector. They may be able to adopt new technology and processes sooner by training or hiring employees to carry out the necessary tasks.  

Steps toward creating a successful skills gap analysis plan 

Decision-making skills are essential for business management professionals. Skills gap analysis provides the information necessary to make strategic judgments, create improvement plans and carry out steps to reach goals.  

Here are three steps toward creating a skills gap analysis plan and using it to bring lasting improvements to your company. Or, consider assessing current skills gap analysis practices to see if they are effective at bringing the necessary improvements. 

Identify necessary skills all employees should possess 

The first step to creating an effective plan is identifying the necessary skills that employees within the company should possess. Employers can do this by identifying the key talents and competencies required to deliver on the business’s mission and objectives. Then, compare these necessary qualities against the skills current employees possess.  

It’s important not to neglect skills during this first analysis step. Employers usually consider the technical (hard) skills necessary for peak company performance. However, you should not overlook the soft skills needed for the workplace. 

One of the simplest methods for handling this task is to review the job description and specifications for each role. You can map out the minimum necessary skills and add any abilities that can improve results or performance.   

HR specialists or leaders carrying out the analysis can then work with managers and the employees themselves to assess the current skill sets. In addition to current knowledge, you can also consider possible professional development steps each employee could realistically take.  

In addition to in-person insights, you can use information from skills tests or performance reviews to increase the amount of information you have for the next two steps. 

Acknowledge skill gaps 

The second step in the process is to identify and acknowledge the existence of skills gaps. Start by defining areas where employees’ hard and soft skills do not meet the minimum or preferred ability thresholds for their position. In addition to the individual level, you can also assess skills at team or department levels. See whether there is anyone within the group who can handle the necessary tasks.  

Finally, you need to define the size of the gap, which will be important for the final step in the process. If employees do not meet the required skill thresholds, it does not necessarily mean they need to be replaced. However, you need to acknowledge the gap and the fact that changes are necessary to fill it.  

Take necessary steps towards filling gaps 

The final step to a successful skills gap analysis is to develop an action plan to fill any gaps discovered during the first parts of the process. There are several methods for carrying out this process. The most common one is to offer training and professional development courses in-house to narrow skill gaps. Or hire new employees to fill wide gaps.  

There are other options for dealing with skills gaps:  

• Companies can also develop mentorship programs to help employees learn from more experienced peers. This on-the-job training can take advantage of the knowledge of veteran employees while also providing under-skilled employees with real-world experience.  
• Employers can also encourage employees to attend conferences, industry events, and other educational opportunities or utilize technology such as online courses and virtual reality training to learn the necessary skills.  
• A business can also consider offering incentives for employees who pursue training on their own or with a third-party educator. In addition to covering tuition costs, the company can offer pay increases, new job titles, or other rewards for employees who pursue these professional development opportunities.  

It typically takes a combination of strategies to effectively fill skills gaps. However, once it handles this task, the company could potentially enjoy better performance and an advantage over its competitors.