How to conduct a skills gap analysis

Skills gaps, the missing skills that are necessary for success, are all too common in today’s workforce. In fact, 70% of leaders believe their organizations suffer from a skills gap. 

Fortunately, a skills gap analysis can help you identify important skills your teams are lacking and guide your upskilling and hiring efforts. 

In this article, we explore what a skills gap analysis is and explain the importance of performing one regularly. We also take you through the process of performing skills gap analysis for individuals and teams.

Skills gap analysis meaning

A skills gap is a mismatch between the abilities an employer requires and the capabilities employees or job candidates actually have. Skills gaps may exist due to poor retention, an inability to hire qualified candidates, or a combination of the two. 

Skills gap analysis involves analyzing skills a role or project requires and validating whether a workforce has the expected skills. You can perform a skills gap analysis on an individual, team, or company level.

Individual skills gap analysis

During an individual skills gap analysis, you identify the skills a job or role requires and compare them to those of a specific employee or applicant. This helps determine whether that person can handle the demands of a role and fulfill its requirements. 

Team skills gap analysis

A team skills gap analysis involves identifying the skills required for a specific project or department within the company and comparing them to those your current employees have. 

For example, a company's marketing team might excel in social media management and content creation but struggle with data analytics. Team leaders can identify this gap and suggest training or hiring to improve the team's analytical capabilities.

Company or organizational skills gap analysis

In a company or organizational skills gap analysis, you analyze your entire workforce’s skills and qualifications and compare them to the skills required to shift strategies, take on new projects, or develop new products. 

For example, a manufacturing company might realize they're falling behind their competitors in automation technologies. This analysis would reveal a company-wide need for upskilling in robotics and AI.

Benefits of performing a skills gap analysis

If you don’t fill your company’s skills gaps, you run the risk of not meeting your business goals and customer expectations. Regular skills gap analysis gives you the following benefits:

Sets company priorities To start a skills gap analysis, you have to be clear on your company’s goals. This spurs important conversations on the company’s priorities and expectations for employees and teams.

Proactive staffing Skills gap analysis is a proactive process. It helps you discover potential staffing issues before they occur at an inopportune time and disrupts production.

Employee development When you know which skills employees are missing, you can tailor employee training and development initiatives to improve your workforce. Aligning employee training to match the skills that your company lacks can also reduce training costs.

 Provides clear hiring direction Skills gap analysis shows you exactly what skills to focus on when hiring new talent. By pinpointing skill gaps, businesses can make strategic hiring decisions that align with their long-term objectives and improve overall productivity.

Assigning responsibility for skills gap identification

Depending on the nature of the analysis, there are different people you can put in charge of the process. You can choose someone internal to perform the analysis or outsource a skills analysis expert. Here’s what to be aware of about both of these options:

Internal team member

Getting an internal professional to perform the analysis is beneficial because they already know your employees and teams — plus, these individuals are deeply familiar with the company’s goals and priorities.

The downside to going internal is that it can be difficult to remain objective, and the analysis process may distract the person from their other duties. 

The following internal individuals can conduct a skills gap analysis: 

• HR department: They have a broad view of the organization's talent landscape and access to employee data.

• Department managers: They understand the specific skills their teams need.

• Learning and development teams: They can align gaps with various training programs.

• Senior leadership: They can provide strategic direction and insights into future skill requirements.

External consultant 

An external consultant can approach a skills gap analysis with an objective point of view. Hiring externally also frees up leaders and managers to focus on their duties. 

However, external consultants can be expensive. And their understanding of various skills’ priorities might not reflect the company’s values.

When to conduct a skills gap analysis

There’s no specific time interval that skills gap analyses must be performed. That being said, many companies perform one every year or in the following instances:

On an individual level

• When an employee’s duties change  

• After a poor performance review 

• When new employee skills are needed for a promotion 

• When planning for succession in key job roles

• After receiving customer feedback indicating service quality issues

On a team level

• When a project involves different tasks from normal 

• When adopting new technology 

• After completing a project to an unsatisfactory degree

• When experiencing a decline in productivity or quality

• Before creating a budget for training or development programs

• When considering outsourcing or insourcing certain functions

On a company level 

• Before an organizational restructuring 

• After a merger or acquisition to align skills across the new entity

• When experiencing difficulties meeting business goals 

• Before launching a new product or entering a new market

• When experiencing high employee turnover

4 steps to execute a successful skills gap analysis

Companies often face two roadblocks when approaching a skills gap analysis. First, they have difficulty analyzing the results they find. What do all the numbers actually mean for the company? Second, they have difficulty acting on the results they find.

If you want to perform a skills gap analysis that produces results you understand and can act on, here is a four-step guide:

1. Create a skills gap analysis plan

Thorough planning ensures you and your employees know who’s in charge of each phase of the process, how data will be collected and organized, and what the timeline is for the entire process. 

You can create a skills gap analysis plan through the following tasks: 

Identify business goals Before you start the analysis, clearly define why the analysis is necessary in the first place and what the findings will be used for. In other words, what business goals are you hoping to achieve once the analysis is complete? What trends do you want to compete with? To consolidate and You can refine your understanding of the company’s goals by consulting with key stakeholders and leaders.

Decide the scale  Decide what level of skills gap analysis is necessary for the company goals you settle on: individual, team, or company. 

Are you focusing on changes within one role or a systemic shift throughout the company? The larger the goals, the more likely it is you’ll need a team or company-wide analysis. 

Identify who’s in charge of each phase  You want to know who’s in charge of each phase to prevent overlaps in responsibilities that waste time and resources. Key roles to identify include the following:

• Who collects the data 

• Who organizes the data

• Who initiates action once the results are gathered 

• Who communicates the results to the employees, teams, or company

2. Identify the required skills

Once you’ve isolated the business goal you’re focusing on, identify the key skills required to reach that goal.

Decide on a set number of skills to prioritize. Usually, three to five is a good place to start. You can then use a numerical rating system to illustrate the level of importance for each identified skill — and clearly define what each number means. For example, a rating system of one to five could range from inexperienced, amateur, proficient, adept, and expert.

3. Assess current employee abilities

Gain an accurate understanding of the skills your employees have and those that they lack. Take note of the tasks they perform and the skills they use to do so.

You can measure current skill levels in the following ways: 

• Self-assessment surveys 

• Peer assessments 

• Manager assessments 

• Feedback from performance reviews 

• Skill-gauging workshops 

• 360-degree evaluations 

Be sure to explain to employees that a skills gap analysis is about finding opportunities to strengthen the workforce. Make sure your employees benefit from the process, not leaving your team members unconfident of their abilities.

4. Close the gap

This is where you act on the data you’ve gathered. To close the skills gap, you’ve got two general options: train an existing employee or team, or hire someone else.

Training In terms of resources and time, it’s preferable to train existing staff to bridge the skills gaps. Existing individuals are familiar with your other employees and the company’s systems and methods. Training them also means that you’re directly investing in your workforce, and you’re building employee loyalty by providing them with opportunities to grow.  

There are several ways to train employees, including the following:

• Mentorships 

• Online courses and educational subscriptions 

• Professional events, conferences, and seminars 

• Workshops and training sessions 

• Certifications 

Hiring Hiring is preferable when the skills gap is too large to bridge (if the expense and effort of the required training aren’t worth the payoff). But how do you hire the right people to fill a skills gap? 

You may want to temporarily modify your screening process and recruitment strategies for new hires. You can take the approach of skills-based hiring, where you focus on a candidate's abilities rather than their educational background or previous job titles.

You can also consider expanding your talent pool by offering remote work. Make sure you have the right technology and processes in place for remote collaboration.

For short-term needs or highly specialized skills, contractors can be an excellent solution. By hiring contractors or freelancers, you can finish projects while saving time and fees for onboarding and training employees.

Fill your skills gap with Remote

Performing a skills gap analysis takes a lot of effort, but the insights you can get from it are invaluable when you’re trying to build and maintain a competitive workforce.

It’s almost guaranteed that skills gaps will occur in your teams. Remote makes it easy to action the results of your skills gap analysis by helping you find your ideal candidates, speeding up the hiring process, and simplifying employee management.

Remote Talent helps you cut down on mismatched applications by including location and time zone details in job listings. You can also revise job descriptions with AI to attract the best candidates with the skillsets you are looking for.

If you’re ready to start filling your skills gaps, start a free trial with Remote Talent today.

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