How to conduct a skills gap analysis

While skills gaps have always existed, workforces are currently undergoing dramatic changes that have exposed the shortage of expertise required for the new digital economy.

Therefore, in order to build an effective workforce for the future, organizations need to understand their existing skills gaps.

Discover:

• What is a skills gap analysis?
• Why do you need skills gap analysis?
• 5 important steps on how to conduct a skills gap analysis

What is a skills gap analysis?

A skills gap analysis is the assessment of the difference between existing and desired skill sets. This can be applied to individual employees or an organization’s workforce as a whole.

Skills gap analysis takes a deep dive into an organization’s workforce to understand what each employee is currently capable of, what the ideal workforce would look like, and the steps needed to get there.

When implemented successfully, skills gap analysis guides future decisions regarding the company’s workforce (including L&D and hiring) to ensure each position is filled by employees with the necessary skills.

Skills gap analysis provides the information HR and management need to understand existing performance deficits and the potential lack of skills or knowledge behind them. This requires extensive employee performance evaluations to learn what is holding the organization back and where skills gaps are having the most significant impact.

Whether it is discovering smaller skills gaps that can be overcome through upskilling or reskilling programs or larger gaps that require new hires and the creation of new teams, without skills gap analysis, organizations struggle to build the workforce they need effectively.

The importance of analyzing skill gaps in your company

Skills gap analysis offers a range of benefits, including:

• Providing a greater understanding of your existing workforce
• Boosting the impact of L&D programs
• Increasing your ROI from training initiatives
• Improving recruitment strategy
• Generating competitive advantages
• Building a workforce to meet modern demands

With new technologies finding widespread use across the business world, the need for skills gap analysis is only growing.

At a time when digitization and automation are redefining what companies need from their employees, skills gap analysis offers the roadmap to a better, more efficient way of working.

Even before the pandemic, the World Economic Forum estimated that half of all employees worldwide need reskilling to learn how to operate in the new technology-powered workplace. Skills gap analysis is the key to successful reskilling and upskilling programs and understanding where workforces need to improve.

Identifying any skills gaps present and understanding how they limit company performance is becoming essential thanks to new technologies transforming many business sectors.

With AI, automation, and other advances, many roles are becoming obsolete, and organizations need to source new skills to match growing technological needs. However, research by McKinsey in 2021 shows 87% of organizations expect to experience skills gaps in the coming years, with 43% saying they already have one.

A 2022 survey of CEOs by Deloitte found labor and skills shortages were the 2nd most cited external factor disrupting their business strategy. Also, with the rise of the digital economy, a Salesforce survey found that 76% of global workers don’t feel equipped to operate in new digitally-focused workplaces.

To respond to this gap, organizations must assess their existing workforce and develop active training programs and recruitment strategies to meet the moment.

Benefits of successfully overcoming skills gaps lead to a range of benefits, including:

• Developing a complete understanding of your workforce
• Greater productivity
• Improved agility
• Clear workforce planning strategy
• Competitive advantages over other organizations

5 important steps on how to conduct a skills gap analysis

To help you navigate this process, we’ve created a comprehensive guide that breaks down the skills gap analysis into five straightforward steps.

This guide is packed with practical examples, expert insights, and actionable tips designed to help you align your workforce with your company’s future goals.

Below, we’ve summarized these five key steps to give you a quick overview.

But for those who want to dive deeper and gain a complete understanding, our downloadable guide offers all the details you need to master skills gap analysis.

5 steps for effective skills gap analysis

Align with company goals

Start by defining your company’s goals.

Knowing where you want to go is key to identifying the skills you need. Break these goals down to specific teams and roles.

For example, if you aim to double sales in five years, you might need to upskill your management team and develop tech-savvy employees to implement new tools.

Identify essential skills

With your goals in mind, pinpoint the skills that will help you achieve them.

Ask questions like: What skills will be crucial in the next few years? Which roles might be automated?

Focus on the most critical skills—those that directly impact your ability to reach your goals.

Create a skills framework

Organize your desired skills into a clear system or taxonomy.

Categorize them by department, technical vs. soft skills, or other relevant factors. Use existing data, industry insights, and expert opinions to build this framework, which will guide your gap analysis.

Assess current skills

Evaluate your current workforce through surveys, tests, interviews, and performance data.

The goal is to accurately map out the skills your employees already have and identify where gaps exist. The more precise your assessment, the better your strategy for closing those gaps.

Analyze and act

Input your data into a searchable database to identify skill gaps and trends.

Use this analysis to guide your learning and development (L&D) efforts.

Whether you choose to train existing staff or hire new talent, this step is crucial for aligning your workforce with your company’s future needs.

What’s next?

1. Train or hire: Decide if you’ll train current employees or bring in new talent to fill the gaps.
2. Build a skills strategy: Develop a comprehensive approach to closing skill gaps and preventing new ones.
3. Create a learning environment: Foster a culture that supports continuous learning, using the right tools and technology to scale your efforts.

Ready to transform your workforce?

Download our full guide to get detailed examples, actionable insights, and expert tips on mastering skills gap analysis.