Skills Management

Skills Gap Analysis

Every company needs to refresh the skillsets of its workforce in order to match new market conditions and advances in technology. Skills gap analysis offers the insights needed to acquire the desired employee skills in a targeted and strategic manner, delivering a workforce capable of achieving success.


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 gaps vary considerably depending on the specifics of a company and the roles they need to be successful.

Defining the skills required to achieve organizational goals and assessing current employee capabilities is a challenging process. However, this is the purpose of skills gap analysis, measuring the difference between the existing and desired skill sets and developing plans to bridge any gaps.

Skills Gap AnalysisSkills 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.

Why Do You Need Skills Gap Analysis?

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.

Skills Gap vs. Performance Gap. What is the Difference?

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.

5 Steps on How to Conduct a Skills Gap Analysis

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.

5 steps for effective skills gap analysis

The process of skills gap analysis can be divided into five steps:

1. Review company goals

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.

2. Identify the skills you need

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.

3. Develop a skills taxonomy

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.

4. Measure existing workforce skills

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.

5. Analyze your findings

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.

Skills Gap Analysis Guide

How to Conduct a Skills Gap Analysis in 5 Steps

Start to decrease your employees’ skills gap by using our guide. Learn the five practical steps to asses the skills gap and identify what to do next.