Skills Gap Analysis: Why It’s Important & How To Conduct One? (2023)

Are your employees' performance not up to the mark? 

Is your business getting affected because of it? 

Then, it's high time you conduct a skills gap analysis! 

This underused technique is quite effective in identifying skills gaps in your organization and gives you a clear picture of what factors you should look into before planning your reskilling and upskilling strategy. 

But, how do you go about it? 

Let's find out. 

In today's post, we cover everything you need to know about skills gap analysis - what it is, why it's important, and how to conduct a skill gap analysis in 4 simple steps!

Without further ado, let's dive straight in. 

A Skill gap analysis is an assessment done either by an organization's HR team or the L&D team to find out if their workforce's current skills match with their organization's needs and goals. It clearly points out the list of skills your employees already have, the list of skills they lack, and the list of skills they need to develop in order to work towards your organization's goals. 

Based on these data, the organization comes with a list of training programs and online courses to address these skill deficiencies. 

"70% of employers who are actively hiring report a skills shortage". 

Source: Challenger Hiring Survey

A skill gap analysis is an important tactic that can be used to upskill and reskill an organization's workforce according to the emerging trends and technologies in the corporate world. It also gives you a clear picture of your employees' overall strengths and weaknesses. 

Here's a more detailed list that explains why it's important to perform a skill gap analysis on a consistent basis. 

1. Keeps Up With Digital Transformation 

Source: Mckinsey.com

It's important for both the employees and companies to adapt to the ever-evolving changes in the industry. Incorporating these necessary digital changes will help in increasing the overall productivity and ROI of your organization. 

For instance, if your company moved from traditional, in-person training to online training, you might want to know if there are a few employees who find it difficult to get accustomed to the new form of online training. Here, a skill analysis will help you identify the number of employees who struggle with new technology. You can then try to address it by providing additional support to those sets of employees. 

2. Gives a Clear Picture About The Skill Level of The Entire Workforce

A skill gap analysis gives a holistic insight into each individual and helps the organization understand its employees better. 

By performing a skill gap analysis, a company gets a detailed breakdown of the list of employees that are most productive, and the ones that are falling behind. 

These insights help the HR and L&D teams customize their upskilling and reskilling strategies accordingly. 

3. Helps Plan Your Hiring Strategy

Once the organization successfully identifies the skill gaps, it does one of these two things - it either hires new talent to address these skill deficiencies or plans to upskill and reskill the current workforce on those missing skills. So, based on the insights the organization receives from the gap analysis, it plans its hiring strategy. 

4. Helps Use Your Training Budgets Strategically 

Instead of investing in generic training programs, you can craft customized learning paths addressing each individual's strengths and weaknesses.

Now that you are aware of what a skill gap analysis is, and understand why it's important, you may be wondering "who is responsible for performing a skills gap analysis?"

It depends on which groups you'd like to evaluate and what kind of skills you take into consideration. 

If you're evaluating individual employee performances, then the team manager would be the one responsible for evaluating skill gaps. 

If you're evaluating team-level skills, the head of the departments will be taking charge. 

And, if you're evaluating the overall skills of your workforce, the HR team will be playing a major role. 

Here are 3 simple steps you can follow. 

1. Plan Your Analysis 

As we discussed earlier, a skill gap analysis can be performed on three levels - an individual level, team level, and organization level. To plan your analysis, you need to figure out who you need to talk to, including C-suite, team managers, and staff-level employees.

Be clear about who you need to talk to to get a clear picture of the list of skills that each department lacks. 

2. Identify Important Skills 

Although employers across the globe complain that they struggle to fill jobs pertaining to skill gaps, some people argue that skill gaps are an outcome of unrealistic expectations. So, make sure you answer these two important before start evaluating skill gaps in your organization: 

1. What skills do you value as a company? 
2. What skills do you think your employees need in order for them to do well now and in the future? 

Take a look at your company's job descriptions, and study your company's values & business objectives. You can also try to conduct a survey to find out what kind of skills your employees look forward to learning. Involving your employees and seeking their answers will not only make them feel inclusive and valued but also help you draw a clear picture of the important skills they lack. 

3. Measure Current Skills 

As we discussed in the previous step, surveys are a wonderful way to identify and measure the skill gaps in an organisation. But, there are a few other techniques you can follow to measure the list of skills your employees currently possess. 

You can try out implementing a few of these methods: 

• Written tests & online tests 
• Skill-based assessments and surveys
• Interviews with different individuals across the organization based on your needs 
• Feedback from performance reviews

4. Address Skill Gaps

Once you have identified the list of skills your workforce lacks, you can move ahead to the next step and address these skill gaps. 

Here's a list of things you can do: 

• Training 
• Hiring 
• Outsourcing 

i) Training

Providing the right kind of training will help you reduce the skill gaps between your employees' current skill level and desired skill level. 

At times, skill gaps can be a result of a lack of experience. This might ring true if you're evaluating new hires. You don't have to worry about these skills gaps as they can easily be closed by incorporating one-on-one coaching and training sessions. 

You can also try creating training programs for your employees with the help of a few course authoring and video creation tools. There are several user-friendly tools available online. 

If you're looking forward to creating engaging training courses incorporating cool animations, you can check out Vmaker Train. It helps you create cool animation courses, and lets you host your training programs under the same platform! 

ii) Hiring

If you feel that a few skills are wide and difficult to be trained on, then, you can consider hiring new talent. 

You can try out the following methods: 

• Customize your hiring process based on the skills you look for by adding skill assessment tests
• Include structured interviews to help interviewers avoid biases 
• Source passive candidates using effective sourcing techniques (for eg, try sourcing candidates using boolean logic, or try recruiting candidates via Twitter, LinkedIn, etc.)

iii) Outsourcing 

A few skills aren't required all around the year. Sometimes, it would only be required for as long as a project is expected to go for deployment, and during other times, it would only be required for a particular period/season. In such cases, you may decide to outsource. Outsourcing is also an effective way to address skill gaps. 

Some common skills that can easily be outsourced are videography, public relations, graphic designing, etc.

A skills gap analysis, when done effectively will help uplift both the employees and the organization together!

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