How to Conduct A Skills Gap Analysis? A Step-by-Step Guide

How to Conduct A Skills Gap Analysis? A Step-by-Step Guide


A skills gap analysis is a process that an organization conducts to find out where an employee or team falls short in terms of skills. It is the prerequisite process for improving performance by identifying skills gaps and taking action to fix them so that the organization can stay competitive and achieve its goals. Read this article to find out how you can conduct an effective skills gap analysis. 

It goes without saying that there is a well-documented cause-and-effect relationship between the skill sets of your employees and the success of your organization. So, here is a critical question for you - Do you stop at hiring the right talents? Or, do you go that extra mile, monitor the skills gap in your organization, and plan effective employee training programs? To stay ahead of the competition and to increase productivity and employee engagement, businesses need to make sure they are constantly assessing their skill gaps. 

How can an organization go about analyzing its skills gap? What are the steps involved? Keep reading to find out.

What is A Skills Gap?

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The fabric of technology is ever-evolving, so much so that today’s state-of-the-art may easily become tomorrow’s obsolete. This is bound to create a mismatch between the skills an organization needs to fulfill its goals and the skills its employees already have. It is this discrepancy that is referred to as the skills gap in an organization. 

This gap, if not bridged, becomes a threat to business performance and prevents organizations from operating as efficiently as they should. In essence, timely analyses of employees’ skills are mandatory. This is why skills gap analysis is a necessity.

Skills Gap Analysis - The Ultimate Tool to Stay Competitive

A skills gap analysis is a process that an organization conducts to find out where an employee or team falls short in terms of skills. It is the prerequisite process for improving performance by identifying skills gaps and taking action to fix them so that the organization can stay competitive and achieve its goals.

A skills gap analysis can be conducted mainly at two different levels:

  1. Individual
  2. Team/Company

Here is an overview of the skills gap analysis:

Scope Person in charge When to conduct? How to solve the gap?
Individual Team Lead
  1. Poor performance review
  2. A new project that demands new skills
  3. Changes in employee responsibilities
    1. Mentoring programs
Team/Company Team Lead/ HR/Consultants
  1. Challenges in meeting business goals
  2. New technologies that demand new skills
  3. Strategy shifts
  1. Mentoring programs
  2. Hiring

In the corporate world, it is usually the responsibility of the Human Resource Manager and the Operations Manager to undertake the skills gap analysis. In some companies, the gap analysis is conducted by CEOs, CFOs, and other top management personnel.  

How to Conduct A Skills Gap Analysis? A Step-by-Step Guide

There is no hard and fast rule that the skills gap analysis has to be periodical or annual. Some companies do a skills gap analysis throughout the year as well. So, how does one conduct a skills gap analysis? 

Here are the five steps to conduct an effective skills gap analysis:

Step 1 - Plan your analysis

A skills gap analysis should be done on two levels – at an individual and an organizational level or team level. To plan your analysis effectively, you need to establish who you will need to talk to, including every stakeholder, team lead & staff-level employee. Team leads can help with uncovering the skills gaps of the individual employees in their respective departments. 

Step 2 - Define your organization’s future goals based on the vision

Where do you want your organization to be in a year, in 5 years, or in 10 years? You need to ask yourself a few questions to be able to know where you’re headed and to figure out what skills you will need from employees to get there. This long-term visualization of goals comes in handy during skills gap analysis as you are encouraged to look at the big picture. 

Step 3 - Measure and assess the current skills 

You can use the following methods to gather data on the current skills:

  1. Employee interviews
  2. Surveys
  3. Performance reviews
  4. A skills assessment software that helps track employee skills. 

Here are some skill assessment tools for you to explore:

Step 4 - Analyze the data

The next step is data analysis. The goal of this phase is three-fold: 

  1. To analyze what tasks are being done 

  2. To rate how important these tasks are

  3. To inquire about the skills required to do the work properly

Proper data analysis can take your skills gap analysis to the next level of formulation. It will help you create an effective training program and/or define your hiring requirements. 

Step 5 - Strategize

Now that you have an overview of the skill shortage, there are two ways to go about fixing it: 

  • Hire new talents

If the current skill gap is far too wide to be bridged with training, you may need to bring new talents into the picture. Here are some tips to enhance your hiring process:

    1. Use structured interviews to do away with biases.
    2. Cast your net wider; include passive candidates who may have the skills but aren’t actively looking for jobs.
    3. Finetune your skills assessment techniques.
  • Upskill current employees

Of course, hiring brings in new talents to the organization. But, upskilling the current workforce is much more economical and effective than looking for new talents. According to a study conducted by Citrix, 62% of hiring managers believe that employees need to upskill or reskill themselves at least once every year. This will help them take up new responsibilities, gain upward mobility in their job, and brace themselves for the changes triggered by technology and automation. 

The company needs to decide which of these approaches or combinations works better for each skill gap.

Why Should You Choose Upskilling Your Employees Over Hiring?

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While 87% of employers admit that they have a skills gap in their organization, only 34% of professionals feel they are given upskilling opportunities by their organizations. As companies are looking to prepare in advance for technological developments, it’s important to facilitate learning and growth opportunities for employees. 

Here is why you should choose upskilling your current workforce over hiring new talents:

  • There are fewer risks in upskilling

No matter how rigorous your screening process is, there is no definite way to find out how a new hire will perform. And, of course, there is the added disadvantage of the learning curve; one cannot expect a new employee to start performing well right off the bat. 

  • Current employees know the business better

Not only do your current employees make a great cultural fit, but they also have first-hand knowledge of your business and operations, and are well-aligned with your business goals and vision.

  • Upskilling consumes less time and money

Hiring new talents is a cumbersome process. It involves:

    1. Defining your hiring requirements
    2. Creating job posts and advertising them
    3. Hunting for talents
    4. Getting profiles vetted
    5. Interviews

Skilling your employees is much easier and more effective when it comes to fixing the skills gap.

  • Upskilling helps retain great talents 

Upskilling is one of the best ways to retain the best talents in your organization. By helping them expand their skill sets, both you and the employees benefit. By upskilling your employees, you're expanding their skill sets, and you are giving them a reason to stay.

Looking to Upskill Your Team?

Are you looking to upskill your team? OdinSchool, with its close ties with the industry, has always been at the forefront of helping organizations reach their potential, by catering to their specific skilling needs. Connect with us now to learn more about how we can help you upskill your employees and fulfill your business goals!


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