How to Conduct a Skills Gap Analysis: Your Complete Guide

Skills gap analysis has become a critical business tool as organizations are experiencing a fast expanding demand for reskilling and upskilling their workforce. But where should the organization even begin? This post will define skills gap analysis, discuss its potential applications, and provide step-by-step instructions for carrying out such an analysis. Let us start.

What Are Skill Gaps?

Research has revealed that 78% of participants predict their firms will experience a skills gap in the coming years and that 83% of respondents report a skill shortage in their organization. Additionally, approximately three-quarters claim that the discrepancy impacts the consumers, growth prospects, or delivery of services in their firm. While most businesses are aware of the problem, few prioritize it and give their employees the training they need. This issue is evident from the statistics.

The absence of a particular skill set when executing a job causes a person to perform relatively poorly, which is known as a skill gap. It refers to the extent of discrepancy between the worker’s actual outcomes and their ideal productivity.

It is an essential part of the staff development plan. A primary focus for achieving short- and long-term targets can be closing the skills mismatch. The short-term objectives seek to bridge gaps and resolve current company weaknesses through training and growth.

Planning and strategy are essential for achieving long-term objectives and addressing and resolving the core issues. The purpose of offering training and education is to prevent skill gaps and get people to function at their best levels.

What Is a Skills Gap Analysis?

Skills gap analysis is a tool for determining the gap between the current situation and the desired long-term vision. Companies employ it to pinpoint the competencies a particular person lacks, yet those competencies are necessary for them to successfully carry out their job or specific responsibilities.

Skills gap analysis is a tool HR uses to identify the abilities and knowledge that people inside the company need. HR can resolve the skills shortage in the organization when they have such information. You can accomplish it through succession planning, upskilling, downskilling, and other strategies. In the subsequent sections of this post, we will go over the numerous possibilities.

What Are the Advantages of a Skills Gap Analysis?

According to the World Economic Forum’s The Future of Jobs Report, 54% of all employees would need to upgrade or swap their abilities in the long term. This state is the consequence of accelerating digitization and technological advancements that impact our professional and personal lives.

Automation and AI-related Skill Shifts

A McKinsey paper claims that technology and AI would hasten skill changes.

This data implies that some jobs will be eliminated by automation for businesses in all sectors, whereas others might shift their primary responsibilities and duties. This situation is when job redesigning, or restructuring these tasks and responsibilities to fit them with the evolving nature of work, will become necessary.

However, it’s crucial to understand which knowledge and skills are currently lacking in your staff and which talents are essential for the operation of your firm before you start redesigning positions.

This gets us to the advantages of performing a skills gap analysis:

You Can Learn More About Your Entire Staff 

You will be able to spot personnel with (critical) skill shortages and those most knowledgeable about specific areas of the company.

As a result, you’ll be capable of concentrating on training resources more effectively on the talents that need the most work. As a result, the team’s overall performance will be improved through the best possible utilization of its resources.

It Promotes Personal Growth and Learning

Each employee shall be able to learn what changes they need to make to attain or strengthen the knowledge and competencies required to function and be practicable in their (later) role. Over time, a skills gap analysis will also increase the output of your staff members.

It Will Assist You in Strategic Planning and Management

Among other aspects, strategic workforce planning includes ensuring that the appropriate number of individuals with the right capabilities are available in the proper locations. However, it might be challenging to begin making future plans if you are unsure of your current ability level.

It Can Help You in Recruitment

Both this and the preceding sentence go together. If you can find individuals whose talents more closely match those required to perform in a specific capacity, hiring good employees will be much simpler.

It Gives You a Competitive Edge

You can build a competitive edge and stay ahead of your rivals if you integrate all the above strategies. Knowing your workforce’s limitations and strengths can enable you to prepare for hiring, learning, and growth, which will improve the success of your business.

How to Carry Out a Skills Gap Analysis?

We provide two techniques for actually doing a skills gap analysis: Qualitative approach and quantitative approach.

The initial strategy is qualitative and has a shaky foundation in the organizational growth cycle. The second strategy is a quantitative method that Antonucci and Ovidio put forth. We’ll go through both approaches to analyzing skill gaps, beginning with the qualitative approach.

A Qualitative Method for Skills Gap Analysis

Dimensions and Analysis

Zeroing in on the problem is the goal of the preliminary phase. Identifying the necessary skills is what this means in the process of skills gap analysis.

You must first inquire and get answers to specific queries to determine the abilities the company needs today and in the foreseeable future. For illustration:

• What is the purpose of the company?
• What are the company’s objectives?
• What essential competencies are required to carry out the mission and achieve the corporate objectives?

The following criteria are used to determine if talent is essential or optional. A skill is noncritical when an employee cannot do a task but succeeds nevertheless. On the contrary, an essential skill is absent if a worker completes a task assigned, but the results are subpar.

You should be aware of the following, among other things, in terms of the future abilities required in your company and industry:

• Which positions in your company or sector are most prone to be (partly) automated?
• Which talents are in demand right now in your sector?
• What types of (new) occupations will your business require more of?

Gathering and Analyzing Data

Data gathering and analysis come next. The objectives of this phase are to evaluate the tasks currently being performed, rank their importance, and determine the abilities needed to complete the work effectively. For a skills gap analysis, possible data collecting and analysis tasks include:

• Create job descriptions and determine the essential competencies for each professional role.
• Examine current job descriptions to identify future requirements.
• Consider how prospective (regulatory) changes and emerging trends in employment may affect your work.
• Make an effort to create a checklist of competencies that best explains what is required to perform the work.
• Create a list of the present talents of your personnel.
• Describe positions and job class requirements.
• Conduct performance reviews and employee assessments.
• Hold interviews and focus groups with workers, supervisors, and managers.
• Determine the skills and knowledge levels of your staff.
• Create a single, massive database using the information collected from competency evaluations.
• Maintain a record of all personnel’ current qualifications.
• Cross-walk with specified vital abilities that are required both today and in the future.

You may assist with numerous aspects of this using HR software. It rapidly becomes impractical to physically maintain a count of every employee’s competencies and ability levels, particularly when your firm is considered medium or large.

For example, a learning management system could be a singular, searchable database that compiles all the facts from your workers’ competency evaluations and performance reviews.

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Making an Intervention Plan

This phase creates an intervention that meets the organization’s needs. In our situation, this implies that you may formulate a plan to effectively fill these shortages once you’ve identified where the talent deficiencies are within your firm.

Research has revealed that 50% of workers lack basic digital skills, which is just one instance of a possible skills mismatch you may run into.

Another illustration is the dearth of workers with soft digital skills (including customer-centricity and a love of learning), which, according to a survey by Capgemini and LinkedIn, affects 59% of firms.

Then, there are instances of the industry- and job-specific talents that businesses may be lacking. For example, Deloitte’s skills gap analysis found that the manufacturing sector’s skills shortage might result in 2.4 million open positions by 2028.

The same survey revealed that it might be up to three times harder to fill roles related to skilled manufacturing, digital expertise, and operational management in particular.

According to managers and executives surveyed by McKinsey, the following business areas will need to fill the most likely skill gaps.

Skills Gap Analysis and Remediation

There are several “interventions” you can do, depending on the talents you’re lacking and the capabilities of your current workforce:

• Existing employees’ development and training
• Job redesign
• The hiring of those with specialized knowledge
• A medley of a few or all of the aforementioned

Let’s examine each of these choices individually.

Existing Employees’ Development and Training

Your skills gap analysis findings may influence the creation of learning and development (L&D) programs, which will retrain your staff in the outdated or lacking abilities.

Job Redesign

The duties and responsibilities of some occupations may need to be reconfigured as a result of inquiries into the organization’s values, corporate objectives, and the talents required to fulfill those targets – both now and in the future. This is exactly what we mean by “job redesign.” It may also lead to individuals undergoing retraining in newly necessary abilities.

The Hiring of Those with Specialised Knowledge

The findings of a skills gap analysis will probably alter the standards by which candidates are hired as well. Although you can retrain or upgrade your current staff, you will eventually need to hire new employees (because of employees quitting or retiring, etc.).

It will spare you time to hire an individual with the necessary expertise directly rather than having to train them. Additionally, it will hasten their tactical and productive transition. You can delve into the flexible, blended workforce and engage freelancers or contractors to assist you (temporarily) cover a skill shortage when you can’t seem to find people quickly enough.

Taking Steps to Fill Any Potential Skill Shortages

The steps companies take to meet talent shortages are broken down by area in a recent McKinsey survey.

A Quantitative Method for Skills Gap Analysis

Antonucci and Ovidio suggest a different way to assess skills gaps. Their quantitative method calculates the gaps in each ability for each subject under consideration. The algorithm they developed only considers the circumstances under which a so-called unfavorable gap was discovered. This discovery indicates that the individual lacks the necessary competencies.

Companies can set up self-training exercises, or they will be required to employ a training program depending on how big or small the skills gap is. Another differentiation that must be made in this context is between the skill gap of frequently used abilities and a deficit of infrequently used capabilities.

The modeling of the required skills for each job profile serves as the beginning point, similar to the approach we previously explained. A bottom-up (from subordinates to superiors) or a top-down (from superiors to subordinates) procedure can be used to establish the baseline for each needed competency.

These are the benefits of benchmarking this way:

• The process remains the same whether a top-down or bottom-up method is adopted.
• You receive quantitative assessments of the problem, considering the significance and usage frequency.
• It makes course design a dynamic, semi-automatic procedure possible.

This begs numerous questions, the first of which is how the pertinent data is gathered. In principle, you can use paper-based tests and supplementary discussions or skill software solutions for this purpose. The last one emerges as the more logical option, mainly when doing a talent gap study across multiple personnel.

Many businesses offer skills software applications that simplify tracking the abilities and interest levels of your total workforce and easily detect (future) skills needs. You can gather information for a skills gap analysis using skills management software.

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Another query that pops into your head is the kind of assessment you can use to gather the necessary data. Self-assessment questionnaires or 360-degree evaluations can be used to obtain information regarding, for example, the company’s skill requirements, how frequently various talents are used, and the pool of skills that are unique to each function. The latter is reviewed between bosses and coworkers.

HR technology can also be helpful here. You can utilize feedback tools to collect and analyze input about and from your workers.

A third query would be regarding the methodology of rating and scoring. The skills gap evaluations in the example provided by Antonucci and Ovidio are represented on a scale ranging from 1 to 5, with 1 denoting the lowest level and 5 the highest. Each interviewee is assigned a score based on the number of talents they hold and the level they deem required for each level. The same grading system is applied to show how heavily a component is utilized throughout the organization.

Once you have acquired all the needed details, you can analyze the discrepancies between the degree of talents each person possesses and what is required of them, as well as how frequently those skills are employed inside the business. It will then allow you to make changes, leading to skills gap interventions for any or all of the abovementioned skills.

Rounding it Up

A more affordable competency development method is to plan how to fill in the skills gaps in knowledge and abilities, create learning programs, and develop the necessary capabilities by collaborating with other groups. PlayAblo, an eLearning service provider, is the best option for all workplace training and learning requirements.

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