5 Steps to Conduct a Skills Gap Analysis

Skills gaps - discrepancies between the capabilities required by an organization and those provided by its workforce - are a pressing problem for many businesses around the world.

The Skills Gap 2019 study from the Society for Human Resource Management highlights:

83% of HR professionals in the US struggled to recruit suitable candidates in the previous 12 months
75% of those reporting hiring difficulties said there were skills shortages among applicants
52% felt talent shortages had become more acute in the past two years

Other countries are experiencing similar difficulties. Research in the UK last year showed that 68% of employers struggled to find the skills they need in the previous 12 months, at a total cost to businesses of $5.5 billion (£4.4 billion).

To address this problem you need to understand its severity. This requires a skills gap analysis, which you can complete by going through the following phases:

1. Plan

This is the stage where you answer some of the most important questions about how the skills gap analysis will run, such as:

Will it function on an individual or a team/organizational level?
Who do you need to speak to, from the C-suite all the way down to frontline employees?
Who will lead the project?

If you plan to run the analysis on an individual level, the process will involve identifying the competencies required to fulfill a certain role and judging whether a member of your workforce can provide these abilities.

Taking a broader approach that focuses on teams or the organization as a whole will require more time and resources, but could yield results that inform wider business strategy and help you overcome long-running challenges.

2. Identify required skills

In order to pinpoint areas where skills are in short supply, first, you must have a strong understanding of the knowledge and capabilities the company needs the most.

To identify the key skills you need, you should look at the organization's current strategy and what it wants to achieve in the future. This will make it easier to decide which attributes you need to reach these targets.

For example, if the firm has ambitions to expand into new geographical markets, do you have the necessary local understanding and competitor insights to maximize your chances of success? Do you have the right experience at management level to guide teams and the workforce through what could be a particularly busy and challenging time?

The digital skills gap is a particular concern for many businesses, so it's worth considering if you can access the tech expertise you need to meet customer needs and thrive in the modern era.

3. Measure current skills

When evaluating current skill levels within your workforce, there are various ways to go about it.

You could engage with team leaders to get their insights into current team abilities, areas where their employees are highly effective, and where they feel capabilities are lacking.

There are also useful results to be gained from one-on-one interactions with individuals, in the form of skills assessments, surveys, and appraisals.

Another possible approach is 360-degree feedback, which allows you to create a detailed picture of particular workers' skills and strengths by speaking to colleagues, managers, customers, and other people they deal with on a regular basis.

4. Identify gaps

Once you've built up reliable sets of data on the skills you need and those currently available in your workforce, you can compare the two to draw conclusions about where the biggest gaps lie and where action is needed.

With this information, you'll be better-equipped to drive the organization not only to achieve better results in the short term but to position itself for growth and profitability in the future.

Analyzing your gaps should involve a certain amount of looking ahead and anticipating the skills needs you'll have to meet in the coming years. This will be partly based on the company's unique plans and objectives, but also reflective of your industry and how you expect it to change.

5. Act on your findings

Everything you've learned will be of little use if you don't act on it. This is why the final stage of your skills gap analysis should concentrate on the practical changes that need to be actioned and the steps you should take to address your biggest disparities.

A key decision to make at this stage is whether you want to nurture and develop skills within your existing workforce, or bring in fresh talent.

Given the costs and potential risks involved in recruitment, many firms choose to go down the training and development route first. Consider the various training strategies and methods on offer to find one that’ll deliver results for your people and the business as a whole. You can also look into approaches like mentoring and succession planning.

If you choose to recruit to fill skills gaps, it's advisable to modify and structure your hiring process to screen for the capabilities and experience you need the most.