Continuing evolution—in products, services, processes, and procedures—are the hallmarks of today’s workplace. Add to that a disbursed, mobile, and remote workforce as well as ever-changing employee, client, customer, and business partner needs, and it’s not hard to understand how employees’ competencies and capabilities might not match stakeholder expectations. A periodic skills-gap analysis can help bridge that divide by assessing existing talent in your team and matching it to future skills needed by the organization.
What Is a Skills-Gap Analysis?
Whether you are in the service industry, a producer of raw materials, or running a manufacturing business, there’s always a demand-supply equation that determines the success of your endeavor. Offer, produce, or make what your market needs, and you’re sure to succeed. So, what is a skills-gap analysis, and how does this analogy fit in with it?
A skills-gap analysis is a periodic pulse-check of the skills that an organization needs to function as a profitable entity and the skills that they currently have, in terms of existing workforce competencies. In a highly competitive global business environment, identifying those gaps is the initial step in ensuring that organizations can compete effectively.
Consider “skills” as the service, commodity, or product that your business either offers, grows, or creates. If you don’t have the right ones (skills) within your workforce, it’ll likely impede your ability to fulfill the core mission of your business.
Why Conduct a Skills-Gap Analysis?
There are multiple reasons why business leaders and people managers must continually measure and analyze their inventory of workplace skills. One of the most influential educators, thinkers, writers, and speakers on contemporary business management and consulting, the late Peter Drucker, was a great proponent of data-driven business management. One oft-cited quote of his that underscores the need for measuring business milestones, is:
You can’t manage what you can’t measure.Peter Drucker
If you can’t analyze and measure the capabilities and competencies of your staff, how will you manage them? And, if you can’t manage them, how will you compete effectively? This observe-measure-manage process must be ingrained into any successful staff and leadership development plan. If organizations wish to survive and thrive in today’s highly evolving, globally competitive business environment, it’s imperative that they provide their leaders with the right skills and support them with teams that also have the right quantity and quality of skills needed to accomplish their business objectives.
But, how will business leaders know:
- What skills are needed?
- How much of each skillset do they need—now, and over time?
- How many of those skillsets do they currently have?
- Can they bridge any shortages in critically needed skills—perhaps by training existing staff?
- How much time, effort, and resources do they need to bridge those gaps?
The answer: by conducting a skills-gap analysis.
A great skills-gap analysis example might be a business taking stock of its in-house skills before pivoting from bricks and mortar service delivery to an online-only or online-first service model. Skills such as web design, graphic design, digital marketing, or website administration might not exist in-house or may not be high on the organization’s current workforce plan. Yet, those are precisely the skills needed to realize you business objectives. Business leaders will never know what their skills shortfalls are unless they take stock of their existing organization-wide skillsets.
How Does a Skills Gap Analysis Help Your Organization
Based on survey respondents in their 2020 report titled The Future of Jobs, the World Economic Forum’s review of global workforces forecasts that by 2025:
“… increasingly redundant roles will decline from being 15.4% of the workforce to 9% (6.4% decline), and that emerging professions will grow from 7.8% to 13.5% (5.7% growth) of the total employee base of company respondents.”World Economic Forum Report – The Future of Jobs (Page 29)
So, what does this mean for businesses today? It means that many of the skills that organizations rely upon now might not be as relevant in the future. It also means that newer skills, some of which are only just evolving, will take on greater prominence for future competitiveness.
The Forum laid out a list of certain jobs that will see higher demand in the future, as well as those that are likely to see a decline in demand. If businesses are to embrace the future, then they must consider using these findings to tailor a skills-gap analysis template as part of determining what skills shortfall each industry or organization must prepare for.
To help businesses measure those shortfalls, it’s important to conduct a comprehensive and ongoing skills-gap analysis. But such an analysis does more than just highlight what skills a business lacks or has an insufficient supply of. As a direct (and often indirect) consequence of performing the analysis, business leadership can do the following.
Motivate Learning & Development
Continuous workplace learning is essential to develop skills needed for future jobs. Analyzing existing organizational skills and mapping the shortfalls to future skill requirements can help better prepare employees to fill those roles. When employers present employees with data-driven, evidence-based future-career-path roadmaps, it’s more likely to motivate them to embrace recommended learning to develop the skills needed for those future jobs.
When faced with an imminent staffing shortage, many HR departments feel the urge to go on an immediate hiring binge to mitigate the current shortage. As a result, organizations may spend a lot of money hiring staff with skills that may be redundant in a few years. Instead, it’s vital to look at future needs too when making recruitment decisions.
As part of the skills review, preparing an individual skills-gap analysis template for each role highlights those additional skill requirements, resulting in improved, future-focused recruitment initiatives.
Identify Team Needs
If you don’t analyze what skills your teams require to succeed, how will they get what they need? One of the basic goals of performing a skills-gap analysis is to identify gaps in skillsets required versus what organizations have. That analysis is the initial step in empowering team success.
Help With Strategic Workforce Planning
The World Economic Forum study, referenced earlier, provides businesses with a clear roadmap of the state of future workforces. Rather than tactical staffing (staffing to fill existing skill gaps), the most successful businesses will take a longer-term, strategic view when making staffing decisions today. That journey starts with analyzing the skills gaps within the organization.
Gain Competitive Advantage
The biggest competitive asset that any business has are its staff. It is people—more so than technology, machines, processes, and policies—who position businesses for profitability and competitiveness. The first step to ensure you have the right people with the right skills on board is to perform an analysis of organizational skills and identify competitive skill gaps, so these are plugged through long-term workforce planning strategies.
Help Better Understanding of Your Team
Although a “gap analysis” connotes identifying what’s lacking, a well-prepared skills-gap analysis questionnaire template sometimes reveals some interesting data about existing organizational skillsets. When analyzing data from the review, many business leaders may discover that their current teams have untapped skills that are potentially invaluable to the organization. Rather than hiring new staff, rechanneling those existing skills might be a better solution. HR leaders should then consider conducting a Training-Needs Analysis (TNA) to determine how those existing skills may be enhanced through additional learning.
Other direct and indirect benefits of a skills-gap analysis include support for training plans and as an aid when preparing long-term staffing models—e.g., remote versus on-premises; in-house versus contracting; temporary versus permanent.
Skills-Gap Analysis Template
Like many business tools, using a skills-gap analysis template in Word or Excel can save a lot of time and effort when conducting the analysis.
However, because no two industries or organizations have the exact same skill requirements, your choice of the right template can determine the course of your analysis and the outcome it delivers.
You can download or make a copy of our template in Google Sheets below.
Prerequisites of a Good Skills-Gap Analysis Template
When choosing a template to conduct your gap analysis, make sure that the tool you select is:
- User-friendly—templates that are excessively complex often lead to poor results.
- Concise—extremely lengthy and overly complicated templates take a longer time to complete and an even longer time to analyze. Use short, targeted templates for best results.
- Well-documented—instead of using endless grids and check-boxes when doing the analysis, use a skills-gap analysis questionnaire template that supplements each question/analytical element with helpful instructions and examples.
- Customizable—because this analysis is unique to your organization, it’s important to use a template that you can tailor to your needs.
Elements of a Good Skills-Gap Analysis Template
Regardless of the format and layout of the template you select, the tool must, at minimum, be comprised of the following elements:
- Snapshot: the template must be able to capture the current state of your organization’s skills and a vision of what the end state must be.
- State of the Gap: the current and future snapshots will help determine if there is a gap. In the previous skills-gap analysis example, we highlighted, for instance, that a gulf might exist in the skillsets required to manage the company’s transition into digital marketing.
- Gap-inducing Factors: the skills-gap analysis template must articulate the factors responsible for the gaps.
- Gap Remediation: this is the “call to action” or the “action items” section of the template. Rather than being aspirational goals, the proposals must be Specific, Measurable, Achievable, Realistic, and Time-bound (SMART).
So, what is a skills-gap analysis template used for? Well, it is a tool to help analysts stay on point while performing the analysis. Think of it as a roadmap comprising of a series of logical steps that leads up to a clear picture of organizational skill shortfalls and an action plan for remediating those shortfalls.
How To Perform a Skill-Gap Analysis
The analysis is a set of logical steps that typically occur serially—with results from the previous step feeding into the subsequent one.
Before you begin, it would help to create a skills-gap analysis template (here’s ours in Google Sheets or feel free to use any other tool) with the following steps.
Define Your Plan
This involves identifying your methodology, choosing a team—internal or external—setting realistic timelines, and allocating resources to the analysis team (budget, personnel, technology, space). Does this step also determine the scope of the analysis: Org-wide? Department-focused? Functionality-specific (marketing skills, engineering skills)?
Get Clear on Goals
Organizational goals determine the capabilities (i.e., skills) needed to accomplish them. Make sure your skills-gap analysis template clearly sets out your business goals and objectives.
Identify Future Skills
Look at your goals and objectives, and identify the skills you’ll need to deliver those objectives.
Identify Current Skills
Next, do an inventory of your existing skills. Remember, people and skills are not the same things. It’s possible to have a single person deliver multiple skills and vice versa (single skills delivered by multiple people). Focus on skills!
Identify the Gaps (Perform the Analysis)
Here’s where you match existing to future skills and document the shortfalls in your skills-gap analysis questionnaire template.
Create a Strategy and Act on the Results
This is where you put strategies and tactics into place to help you bridge the skills shortfalls. The action could be as simple as hiring (more) staff with specific skills. Or it could be training existing staff to acquire new skills and fill those gaps. Alternatively, you can use the results from your skills-gap analysis template to feed into your staffing and hiring plans, as well as cultivate outsourcing relationships to fill gaps in in-house skills.
A skills-gap analysis is the first step in determining organizational competency gaps that hamper the ability to compete. While some gap analysis might identify the lack of specific skills required for a business to compete effectively in the future; others may reveal more pressing skills needed for a business to survive and thrive now! With the help of an individual skills-gap analysis template and detailed training-needs analysis, HR leaders can quickly identify upskilling requirements.
Discover 5 Steps to Conduct a Training-Needs Analysis in support of your short- and longer-term workforce planning strategy.