How To Conduct A Skill Gap Analysis: An Effective Guide For HR Teams

As part of the strategic planning in any organization, a skill gap analysis serves as a powerful tool that helps businesses pinpoint their current position and their future goals. It acts as a connector between the present and the future, enabling organizations to uncover their full potential.

Skills gap analysis is aimed at pinpointing the difference between the skills your workforce currently has and those needed to achieve organizational goals. It helps uncover skill deficiencies, training needs, and opportunities for professional growth. 

For example, in technology companies, this analysis involves assessing employees' existing skills, identifying gaps, and creating targeted training programs to enhance skills, such as improving the company’s cybersecurity capabilities. 

In short, a skills gap analysis in the workplace enables managers to figure out which skills are missing to help their employees achieve their goals. It helps them shape their employee training and hiring strategies more effectively.

So why is it important to conduct a skills gap analysis for your employees in the workplace? Let us explore this blog to understand its importance and the best strategies to conduct an effective skills gap analysis.

Importance Of Conducting A Skills Gap Analysis

Wiley recently surveyed 600 US professionals, which revealed that 69% of them claimed that the organization had a skills gap. Furthermore, an extensive survey report by Korn Ferry revealed that over 85 million jobs could go unfilled due to a talent shortage.

According to the Future of Jobs Report 2023, around 44% of companies expect some kind of hindrance in their employees’ skill development process in the next 5 years. This is why it is important to conduct a skills gap analysis to promptly address the identified gaps, thus ensuring the ongoing growth of both the organization and the employees.

There are many reasons why a skills gap analysis can be valuable for advancing company goals through learning and development. Here are a few key reasons why:

1. Increases Workforce Visibility

It provides a clear view of your entire workforce—helping you pinpoint where gaps exist and where additional resources might be needed, whether it's at the department level, within teams, or for individual employees. According to McKinsey & Company research, realigning the HR processes to improve your employees’ skills can boost productivity by up to 40%.

2. Improves Workforce Planning

A skills gap analysis highlights which key positions are missing essential competencies. From this insight, you can establish goals and set benchmarks to ensure your workforce develops the necessary skills to meet organizational needs.

Proper skills gap analysis helps with long-term workforce planning by highlighting major skills gaps through a skills matrix. It enables the L&D specialists and HR managers to adjust their hiring practices or goals according to a specific plan, considering the future of the team.

3. Enhances Learning And Development

It enhances learning and development for individuals by revealing new goals, identifying additional skills needed for their current roles, and highlighting the skills required for future promotions. Even the PwC Global Workforce Hopes and Fears Survey showcased that 53% of employees believed they required specialized training to work in a specific role.

4. Increases Productivity

It boosts productivity by focusing on taking action. By addressing the skills gaps identified, you can enhance overall productivity and performance across your team.

5. Increases Competitive Edge

By addressing the areas where your team may be lacking, you can improve performance and position your company ahead of the competition. This insight enables you to strategically enhance your team's capabilities, ensuring you're not only meeting industry standards but also setting new benchmarks.

How To Conduct A Skills Gap Analysis?

Here are some steps to help you conduct a skills gap analysis in your company, address these gaps effectively, and keep track of progress going forward.

1. Identify The Scope

If you notice that team performance has plateaued or is declining, efficiency and productivity have stalled, or new methods and technologies are being poorly adopted, it’s a clear sign that it’s time to conduct a skills gap analysis.

So as part of the initial step in an employee skills gap analysis, outline the scope and determine the essential skills needed. 

This analysis can be carried out at various levels, including individual, team, or organizational levels.

For example:

• Individual: When the responsibilities of a specific role are evolving or an employee is not meeting performance expectations.
• Team: When a project requires employees to undertake new tasks or adopt new technologies.
• Organizational: When the company is struggling to meet its business goals or a strategic shift demands new capabilities.

Start analyzing by asking yourself questions like:

1. What is the mission here?
2. What are the organizational goals?
3. Which hard and soft skills are important in the organization?
4. What are some of the most critical skills required to meet the business goals?

2. Collect Data

The second step is to gather and analyze data. In this phase, you'll evaluate the current tasks being performed, assess their importance, and identify the skills needed to execute them effectively.

To identify the skills your organization will need to succeed in the coming years, start by outlining your company's goals and upcoming projects. Collaborate with senior managers from various teams to create a list of skills that employees will need to achieve these goals effectively.

Here, it is important to develop job profiles by thoroughly examining the critical skills needed for each role.

Here’s how you do it:

• Check current job descriptions to see if they align with future needs. 
• Think about how upcoming regulations, changes, and future work trends might affect the roles. 
• Create a list of key competencies that best capture the skills required to perform the work effectively.

While identifying the critical skills required for the job, ask yourself these questions:

1. Are there skills that are increasingly in demand?
2. What skills are most important to us as a company? 
3. What skills do our employees need to perform their current roles effectively and to meet future demands?

Then identify your employees’ competencies and skill levels:

• Conduct performance evaluations and competency assessments
• Consolidate the data and enter all employees with their current competencies
• Compare the information and analyze whether your employees are equipped with the relevant skills 

3. Measure Actual Skills

Measure the actual skills of your employees in the form of:

• Surveys
• Assessments
• Interviews
• Performance reviews
• Soft skills assessments

A skills gap may often stem from limited experience, particularly among new hires. So, instead of opting for formal training, consider using on-the-job coaching to bridge this gap effectively.

4. Bridge Gaps Through Training

According to Deloitte, 84% of companies agree that ongoing workforce reinvention through lifelong learning is crucial or highly significant for their learning and development strategies. However, 16% of them expect to increase their investment in reskilling in the next three years.

One of the best strategies to overcome the skills gap in the workplace is to train the existing employees rather than focus on new onboarding. The organization must give importance to and invest in reskilling and upskilling initiatives.

Apart from the formal training provided to employees, HR managers can also offer:

• Mentorship programs
• Live events and web conferences
• Online courses and video modules
• Sponsored certifications

5. Hire People

If you find that the skills gaps are too significant to address through training alone or if time constraints are tight, it is best to hire new employees who possess the required skills and expertise to complement your existing teams.

Now, whether you choose to recruit immediately to fill a skills gap or adjust your job descriptions and hiring process to ensure future candidates have the required skills, hiring will ultimately be necessary. So always ensure that your new hires have the necessary skills required for the role and it does not require you to provide a separate orientation training program.

Pro Tip: If you are facing difficulty hiring new people who fit right into the role, it is best recommended to look out for freelancers or project-based employees who would work on the gigs in a shorter period of time. This saves you hours invested in hiring and doing the paperwork for a full-time employee and gives you sufficient time to look out for a person with the right skills and experience.

Streamline Employee Development Process

In conclusion, a well-executed skills gap analysis is key to understanding your employees' current capabilities and figuring out how to develop a workforce that can achieve even greater things.

As companies gear up to get their teams ready for the future, it’s really important to know what skills your employees already have and what they might be missing. If you don’t address these skill gaps, you might miss out on new opportunities and fall behind the competition.

So how do you get started?

Calibr LXP allows you to deliver engaging learning experiences through an AI-powered learning experience platform. With the help of our platform, HR Managers, L&D experts, and instructional designers can effectively onboard new employees, reskill the existing employees, and help the employees build their skill set for a lifetime. Schedule your demo to explore our trending employee course modules and upskill your employees now!

FAQs

1. What is a skills gap analysis?

A skills gap analysis helps you see the difference between what your employees can do now and what they need to do to meet your business goals. For HR, it’s a useful tool to pinpoint which skills and knowledge are missing in your team.

2. Why is conducting a skills gap analysis important?

A skills gap analysis provides a clear picture of your workforce's abilities, enhances individual learning and development, aids in strategic workforce planning, refines recruitment efforts, and gives you a competitive edge.

3. How do you conduct a skills gap analysis?

In simple terms, you begin by pinpointing the skills required to meet your organization’s mission and goals. Next, gather and assess your employees' existing knowledge and skills. Finally, create a plan to address any skills gaps you've identified.

4. How to develop the skills gap analysis in Excel?

To develop a skills gap analysis in Excel, follow these steps:

• List all the critical skills in an Excel spreadsheet.
• Rate each skill's importance on a scale, such as 1 (expert level) to 5 (not present).
• Evaluate individuals, teams, or departments based on each skill.
• Create a sheet to compare the current skills assessments with the critical skills needed.
• Identify any gaps and formulate an action plan to address them