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.
A skills gap is the difference between an employee’s current abilities and the skillset best suited for their job.
Companies have a desired set of skills to perform a given role successfully. This list of skills is dynamic and changes depending on external market forces and internal organizational changes.
Finding employees to match the required skills for every position is challenging; therefore, skills gaps exist.
Many factors can contribute to skill gaps:
Skills gaps can lead to workplace inefficiency, with staff struggling to handle their responsibilities or perform assigned tasks. In addition, severe skill gaps may lead to employees being unable to perform their roles.
In addition to focusing on an individual’s skills gaps, the concept can also be applied at a company-wide level.
Management can use skill gap assessments when introducing new procedures, technologies or take them into consideration when looking at work culture.
Skills gaps can exist in various forms. However, generally speaking, they can be separated into three main types:
The concept of skills gaps can sometimes be confused with performance gaps. While similar, they describe different root causes for underperforming staff members.
|Skills gaps||Performance gaps|
|Refer to a lack of knowledge, expertise, or skills preventing an employee from maximizing the potential of a given role.||Refer to a lack of motivation or poor management misdirecting an employee’s efforts.|
|Occur when employees need to gain the skills, knowledge, or capabilities to apply them correctly to a given situation.||Occur when employees have the requisite skills but need more motivation or supervision to apply them effectively.|
|Examples could include understanding how an organization operates, how their work fits within wider processes, or the specific skills needed to fulfill the role, e.g., technical knowledge or soft skills.||Examples could include disgruntled employees with personal grievances in the workplace, new hires being a poor cultural fit, or managers failing to assign or oversee tasks correctly.|
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.
Skills gap analysis offers a range of benefits, including:
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:
While many workforces clearly have a problem, addressing skills gaps is challenging. Research from McKinsey found only 33% of capability-building programs always or often achieve the desired results.
So why is it so hard to overcome workforce skill gaps?
There are various ways to fill skills gaps and develop a future-proof workforce. This includes training in the form of:
Or new hiring practices based on filling existing skills gaps and recruiting better-skilled staff.
Addressing workforce gaps requires extensive skill gap analysis, the process of determining the difference between what an organization needs from its staff and what it currently receives.
Skill gap analysis requires effective HR processes to accurately reflect the performance of employees and identify the skillsets and knowledge currently lacking or underdeveloped.
When done correctly, a skills gap analysis requires significant time and resources.
You must determine realistic business goals and the skills your workforce needs to make them a reality. This means assessing every employee’s ability, their effectiveness in their current role, how effective they would be in your newly envisaged operations, the ideal skillset they would have in the future, and how to bridge the gap between the existing and desired skills.
The process of skills gap analysis can be divided into five steps:
You can’t measure the size of a gap without knowing where you want to get to.
Defining clear company goals provides the framework for your skills gap analysis. It lets you identify the future skills you need, setting the benchmark to assess existing skills.
To determine whether a particular skill is critical or not, consider whether its absence prevents an employee from completing a task to a high standard.
While many skills are desirable in the workplace, if an employee can successfully perform a role and collaborate with others without it, it is not a critical skill to future success.
Before assessing your existing workforce, a helpful step is to build a system for your desired skills, separating them with regard to the factors most relevant for your skills gap analysis.
You can use a Skills Matrix Template for this purpose. It is a great tool to assess the existing skills your organization has.
Assessing your existing workforce skills and the gaps present can take many methods, from interviewing your employees to using specific software.
Your goal should be to find the right combination of techniques to most accurately reflect the reality of your workforce.
Now that you have all the data, it is time to analyze and characterize the existing skills gap in your workforce.
Download the full guide for details on each step and what to do next.