Skills gap analysis in 4 steps: How to identify and bridge talent gaps

A skill gap occurs whenever your employees need to possess all the desired skills your company needs to meet its goals and objectives.

Skill gaps have become increasingly common in the United States, especially after the shift to remote work post-pandemic and the emergence of new technologies like artificial intelligence chatbots (ChatGPT and the like).

This means human resources professionals and organizational leaders need to know how to conduct a skills gap analysis – which is how you pinpoint the discrepancy between your required skills and your employee’s current skills.

According to a survey conducted by Centiment in 2023, 70% of corporate leaders report a critical skills gap in their organizations, negatively impacting their employees’ performances as a result.

The survey polled 1,031 U.S. corporate leaders hailing from companies with at least 5,000 employees. It featured a split of 510 organizational leaders (with a title of Director or above) and 521 junior-level employees (with a title of Manager or below).

Conducting a skills gap analysis is necessary to remedy your workforce’s skill gaps, so read on to learn how.

What’s a Skills Gap Analysis, and Why Do They Matter?

Since the business landscape is constantly changing and evolving, it’s only natural for skill gaps to occur.

For example, the introduction of computers to offices in the late 1970s/early 1980s caused a skills gap for employees who only used typewriters up to that point. All of a sudden, they were forced to learn a new skill in order to complete the same tasks they already had.

The rapid adoption of artificial intelligence and automation technologies presents a similar skills gap in today’s age.

It’s increasingly common for jobs to have skill needs related to AI prompting and automation software, which presents a challenge for employees needing more familiarity with these new technologies.

A skills gap analysis is how you determine if your organization is currently experiencing a skills gap.

Even if you aren’t experiencing a drop in productivity or efficiency at the moment, a skills gap may lie dormant in the background, waiting to rear its ugly head and catch you off guard.

For instance, besides skill gaps caused by emerging technologies, there are lots of reasons why a gap may occur, including:

• Poor training programs. If your onboarding process needs to be equipping your employees with the necessary skills to do their jobs correctly, you’ll likely experience a skills gap.
• An uninformed hiring process. Your recruiters, team leaders, and hiring managers must unanimously agree on the hard and soft skills you want new hires to have. Otherwise, you’ll wind up with team members inadequately equipped to meet your employee performance standards.
• A lack of employee development. Employees’ existing skills shouldn’t be all they bring to the table during their tenure at your company. Instead, you should provide a professional development plan for each employee to teach them essential skills for career advancement (and to keep up with new trends and technologies).

Regardless of the reason, it’s crucial to address skill gaps before they negatively affect your organization. While this isn’t always possible, resolving a skill gap will help you recover from any detrimental effects (like a dip in productivity or employee engagement).

The Benefits of a Skills Gap Analysis

Adequate employee skill levels are a must if you want to meet your primary business goals.

Otherwise, your people will need more know-how to meet critical initiatives, and your overall business performance will start to diminish.

That’s why it’s imperative to keep up with things like:

• Performance reviews
• Skills assessments
• Employee training
• Retention (you don’t want to lose the people who you train and develop)
• Development programs (to teach current employees new competencies)
• Performance KPIs (key performance indicators)
• Mentorship programs

These are all key components of maintaining a skilled workforce, and conducting a skills gap analysis is the first step in implementing them all.

Regular skills gap analyses will yield the following benefits:

• Insights into your current workforce’s expertise. Your existing employees may have skill sets you’re unaware of, and skill assessments can shed light on them. For instance, you may discover that a member of your HR team excels at strategic workforce planning, even though it’s not a required skill for their current role. This could lead to a promotion from within, so it’s always worth exploring your employee’s current skills.
• Boost employee engagement and development. A skills gap analysis will help your employees realize any necessary improvements or certifications to develop their careers further. 53% of employees report that their position requires specialist training, so your team likely needs all the help they can get.
• More robust hiring and recruiting. A core aspect of a skills gap analysis is to make a list of the skills you need to list in your job descriptions. As a result, you’ll know which skills prospects must have to function well at your organization. This will improve the efficiency and quality of your hiring process.
• It gives you a competitive advantage. Regular skills gap analyses will give you an edge over organizations that aren’t. They’ll likely have skills gaps negatively affecting their productivity, while your company will be firing on all cylinders.

Now that you know why a skills gap analysis is worth your time, let’s learn how to conduct one.

How to Conduct a Skills Gap Analysis in 4 Steps

It’s essential to structure your skills gap analysis in a way that makes sense. For instance, you need to define the scope of the project and your business objectives first.

If you don’t, you’ll likely lose track of your goals and become distracted by industry trends instead of your organization’s needs.

Also, you need to know the difference between these two terms:

• Reskilling. Sometimes, employees need to learn specific skills to perform their jobs properly. An example would be an office worker who gains the responsibility of keeping track of business expenses. However, they need to learn Microsoft Excel to perform the task correctly, which is something they still need to learn. In other words, reskilling is the process of adding new skills to an employee’s existing repertoire. It differs from retraining, which refers to teaching an employee a skill they already knew but forgot.
• Upskilling. Whenever an employee has to expand on what they already know, it falls under the umbrella of upskilling. A quick example would be an office worker from the 70s who had to transition from a typewriter to a computer. They’re still performing the same tasks, but now their skills are expanded to include working on desktop computers.

Here’s a step-by-step breakdown of a skills gap analysis.

Step #1: Determine the Scope of Your Analysis

The first step is to determine the type of skill gap analysis you want to conduct.

Your options are as follows:

• Individual. This type of analysis looks at each job role and compares its required skills to the individual employee’s skill sets. It’s best to conduct this type of analysis when duties for specific job positions keep changing or when you notice certain employees falling beneath your performance standards.
• Team. This analysis examines specific projects and teams. A team analysis comes in handy when you have an upcoming project requiring new or expanded skills from your employees.
• Organization-wide. Lastly, this skill gap analysis takes a comprehensive look at your organization as a whole. This is the type of analysis to choose if you’ve been failing to meet essential business objectives.

How do you know which type of analysis you need to conduct?

A quick way to find out is to ask yourself these three questions:

1. Are you having problems with certain employees?
2. Does an upcoming project concern you?
3. Is your organization falling behind as a whole?

If the answer to #1 is yes, then you must conduct an individual skill gap analysis.

If you answered yes to question #2, then using a team skill gap analysis is best.

Did you answer yes to number #3? If so, an organization-wide skill gap analysis is what you need.

Step #2: Pinpoint Your Most Desired Skills

Next, it’s time to sit down with your organization’s leadership and stakeholders to determine the skills you need the most moving forward.

Dive into your company’s existing job descriptions, values, and business objectives.

Are any crucial skills missing? Have your employees successfully adapted to remote work and artificial intelligence? Are there any skills your stakeholders value that must be represented in your job listings?

These are all critical questions to ask during this phase.

Also, build a chart that breaks down the following:

1. Each department
2. The skills required
3. Skill level (beginner, moderate, or expert)
4. The level of importance to your company (low, medium, or high)

If you are still determining if pinpointing the right skills for your needs is correct, you can always look at what the competition is doing.

Analyze your competitor’s job descriptions on websites like Indeed to uncover the skills they feel are most valuable.

Step #3: Measure Employee’s Current Skill Sets

Next, you need to know which skills your employees possess to determine if there’s a discrepancy between the skills you defined in step #1.

Here are a few ways you can assess your employee’s current skill levels:

• Send out specific skill assessments for each department.
• Conduct employee interviews.
• Read feedback generated from performance reviews.
• Email employees and ask them to respond using their unique skills (which can be different from their current position).

Once you’ve got the data, compare it to the list of your desired skills. Note what’s missing, but also pay attention to unique skills employees have that match other positions. This will help you identify opportunities for cross-training and cross-promoting.

Step #4: Find Ways to Bridge the Gap

By now, you have A) a list of desired skills from your leadership and B) a list of current skills your employees possess.

The challenge then becomes finding ways to bridge the gap between the two.

In a nutshell, there are two things you should do, which are:

1. Train for skill gaps. This involves training your current employees on the skills that they’re missing. They need to learn new technologies, or they may lack crucial soft skills that align with your company’s values (like excellent interpersonal communication skills).
2. Hire for skill gaps. In addition to reskilling and upskilling current employees, your training programs should reflect the skills you defined in step #1. That way, all the new hires you onboard will have all the skills they need from the get-go.

Also, regular performance reviews and mentorship programs help bridge skills gaps.

Closing Thoughts: Skills Gap Analysis

As stated in the intro, skills gaps are surprisingly common and can negatively affect your business’s performance.

Regular skills gap analyses should be added to your human resources department’s routine.

That will ensure that your employees always have the skills they need to meet your business goals, which is what you want.