We all know that business adaptability and operational efficiency are important. According to Deloitte, 85% of executives believe that “organizations should create more agile ways of organizing work to swiftly adapt to market changes.”
A robust gap analysis is the foundation for doing just that.
In fact, a well-executed skills gap analysis helps your organization not only respond quickly to new challenges (like market shifts or technological disruptions) by developing a workforce ready to pivot, but also helps increase employee satisfaction and productivity.
Below, we discuss the benefits of performing a gap analysis, how to identify a skills gap, and ways to use your data to improve organizational success.
A skills gap analysis is a method used by organizations to identify the difference between the skills their workforce currently has and the skills needed to meet business goals.
Think of it as taking inventory. By knowing your team’s strengths and areas for growth, you’ll help build a blueprint for staying competitive or adapting to new challenges.
Whether you’re an HR leader planning for long-term talent development or a finance leader aligning training budgets with ROI, a skills gap analysis helps set the stage for better workforce planning and stronger business outcomes.
Conducting a skills gap analysis is a strategic move that offers measurable benefits for your organization, employees, and overall business performance. Sounds like a win-win, right?
Below are a few reasons why performing a gap analysis should be a priority (if it isn’t already).
It’s clear that learning and development have a strong impact on retention efforts and the employee experience.
Performing a skills gap analysis involves several steps, and we’ll be honest – the first go-around, it’ll seem time-consuming and slow to start.
Barry Marshall, founding partner of P5, explains: "This is critical work for any organization that wants to increase its ability to pivot and adapt to constantly changing market conditions. It is time-consuming, but its impact is broad. You will find applications for headcount planning, job descriptions, career mapping, succession planning, and so much more. So, to get things started, I always recommend piloting it first with a smaller part of the organization so you can learn and adapt your approach as you go."
However, once you’ve conducted a few gap analyses, you’ll understand which steps to rework to best fit your schedule, goals, and company.
Here’s an overview to help you conduct an effective gap analysis for your organization.
Before diving into the skills gap assessment, clarify what you’re trying to achieve.
Are you preparing for a major project, adapting to new technology, or addressing industry changes?
For example:
Determine the skills required to meet your goals.
These skills may include:
To get started, review job descriptions, consult with department leaders, and research industry trends. Tools like the U.S. Department of Labor’s O*NET Online can provide insight into essential skills for specific roles.
Note that you’ll need to cross-collaborate with team leaders and project managers to understand exactly what skills are needed and what processes look like to develop a full list of necessary skills.
Evaluate the skills your employees already have to better understand the gaps (in the next step!) and help you pivot if need be.
You can use:
CoAd's LMS is a user-friendly, scalable solution that allows you to easily tailor training programs to your teams’ needs and professional goals.
Compare the skills you need with the skills your team currently possesses.
Identify:
For instance, if your HR gap analysis reveals that mid-level managers lack leadership skills, you might prioritize training programs for this group.
TIP: It’s also important to consider employee workload. Create a general (but honest) workforce capacity plan for your teams to help retain top talent and prevent voluntary turnover. You’re doing this analysis to maximize team output and upskill your people – don’t inadvertently drive them away by overworking them.
Once you’ve identified gaps, create a plan to address them.
This plan might include:
Regularly measure the effectiveness of your plan by tracking metrics such as employee performance, retention rates post-training, and the ROI of training investments.
Tools like performance management software, employee surveys, or your LMS can help you monitor progress and refine your strategy.
The right LMS will help you track completion rates and understand employees’ upskilling interests to better adjust your processes.
Once you’ve conducted a skills gap analysis, the next step is turning those insights into action. The gathered data should guide your workforce planning, training programs, and long-term business strategies.
Here’s how to make the most of your gap analysis data.
It’s important to remember that not all skill gaps need to be addressed at once. Use your analysis to identify gaps that have the most significant impact on your organization’s goals.
For instance, focus on technical gaps that hinder immediate productivity (such as software proficiency for remote teams) or prioritize leadership gaps if succession planning is imperative.
Example: If your analysis shows that only 30% of employees are proficient in data analytics but 70% of upcoming projects require it, you’ll want to prioritize training in analytics tools.
Use your gap analysis data to design training initiatives that address specific needs.
Consider:
Example: A financial firm that identified a training gap in compliance regulations implemented a series of workshops and e-learning modules, resulting in a 25% reduction in compliance errors within six months.
For gaps that can’t be resolved through training alone, adjust your hiring practices.
Use your analysis to update job descriptions to reflect your needed skills, partner with recruiters specializing in hard-to-fill roles, and develop internships or apprenticeship programs to cultivate talent.
Example: A tech company used its analysis to identify a shortage of cybersecurity expertise and adjusted its recruitment strategy to target professionals with Certified Information Systems Security Professional (CISSP) credentials.
With CoAd's Applicant Tracking System, you can quickly see which candidates have the preferred training and qualifications for your workforce plans.
Skills gap data provides valuable insights for workforce planning.
Use it to:
Example: A healthcare provider used gap analysis data to predict an increasing need for telehealth expertise. They proactively upskilled their team in virtual patient care and onboarded additional support staff trained in telehealth software.
Track the return on investment (ROI) of your gap-closing initiatives.
Evaluate increased employee performance metrics, improvements in retention rates and employee satisfaction, and cost savings or revenue growth tied to newly developed skills.
Example: Companies that invest in learning and development see 218% higher income per employee than those that don’t. Use this type of benchmarking to gauge your efforts' success.
Don’t treat your skills gap analysis as a one-time event.
Use the data to:
Example: Companies like Google and Microsoft conduct regular gap analyses as part of their continuous performance management strategies, ensuring they remain innovation leaders.
The insights, benefits, and steps above should solidify the need for a gap analysis for your company. But if that wasn’t enough, here’s the cherry on top – it’s low cost, high reward.
Yes, it can take significant time at first, but conducting a skills gap assessment is something that can be done in-house and on your schedule. And by doing so regularly (whatever that means for your team or company), you’ll time it right to get the most out of your results to achieve organizational success.
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