Special offer 

Jumpstart your hiring with a £100 credit to sponsor your first job.*

Sponsored Jobs deliver 85% more applicants on average than non-sponsored jobs.**
  • Attract the talent you’re looking for
  • Get more visibility in search results
  • Appear to more candidates longer

Skills gap analysis: why is it important and how to conduct one?

In today’s business environment, change happens at a fast pace. Conducting a skills gap analysis is likely to benefit your business by ensuring that your resources display the skills needed to achieve your organisation’s goals. Skills gap analysis is a tool used by companies to understand the difference between the skills that their employees have and the skills that are required by the business for its growth or transformation. In this article, we shed some light on why organisations should consider implementing a skills gap analysis, and we provide some guidance on how to conduct one successfully.

Ready to get started?

Post a job

Ready to get started?

Post a job

Definition of skills gap analysis

There are many tools out there to help companies continuously understand their state of play and identify what direction they need to evolve towards. A skills gap analysis is one of these tools or techniques that focuses on employees’ skills. It measures the gap between the skills that are needed by the business and the skills that employees working for the business display at a moment in time. Through this process, often led by the human resources team, an organisation can gauge whether they are underperforming due to a lack of knowledge in any specific area.

The types of skills gap can be categorised by sectors. For example, digital skills gap is the gap between what is demanded of workers and what is provided by workers in relation to IT. A lack of digital skills can have a significant impact on a company’s productivity. If the business does not have the appropriate digital tools and solutions in place and staff capable of using them effectively, they may be lacking in efficiency and struggle to maintain a competitive advantage.

Reasons why a skills gap analysis is important

If your business is functioning well, you may wonder why you should conduct a skills gap assessment. In the below section, we explore the rationale for continuously evaluating the skills of employees and taking actions to elevate them towards the business’s ambitions. Here, we answer the question, why is skills gap analysis important and why should it be conducted on a regular basis?

It brings visibility and awareness of the workforce

The skills gap analysis will involve a discovery phase, where the project lead will collect data and gain an understanding of the skills required by the business, as well as the current set of skills that each team member has. Collecting these insights brings visibility and awareness of the state of play with the workforce in terms of expertise, and therefore makes the identification of the gaps easier. With this knowledge in hand, the individual conducting the skills gap analysis will gain a clear understanding of the competences that are lacking and by whom. The solution could be targeted training aimed at improving performance.

It positively affects motivation and increases employees’ learning and development

Having clear development plans means that the workforce knows what to aim for. During the annual performance reviews conducted by leaders, employees need to have a clear understanding of their performance and any potential gaps or development areas they should focus on to continuously develop and grow. The skills gap analysis will provide further guidance on what skills employees should aim to enhance. This has a direct impact on motivation, as it creates a clear message and allows for development of competencies. In the long term, this motivation will result in better productivity.

It sets the baseline for the development of strategic workforce planning

Strategic planning requires a lot of awareness. The importance of such planning in relation to the workforce is even more critical due to its direct consequences on staff. Strategic planning is about making sure that the business is ready for the journey it is set on. Therefore, knowing where it stands in terms of employees’ competences and taking appropriate actions to elevate them will help with planning for the future.

It provides essential direction for effective recruitment

When the skills gap analysis identifies that there are core skills missing among the workforce, leaders might decide that recruiting new resources who already have the desired skills will be more efficient than providing training to their current staff. Recruitment teams can be instructed to seek the desired expertise in potential candidates. For recruitment tips, see our guidance on how to choose the right candidate.

Investing for the long term can create a sustainable competitive advantage

Conducting a skills gap analysis may be time consuming and the effects of the actions resulting from it may not be seen immediately. However, frequent skills gap analysis has an impact on the long-term performance of the business. It allows the company to streamline employees’ work efforts and increase quality. The business becomes equipped with the skills required for the future and will be more competitive in the long term.

With the points highlighted above, it is easy to see the benefits of conducting a skills gap analysis regularly. There are many more benefits to improving employees’ skills. For examples of these, see our article on how teaching employees new skills can improve employee retention. Investing time and resources into conducting them will generate positive outcomes in the long term. 

Guide to conducting an effective skills gap analysis

When conducting a skills gap analysis for an entire business or for a specific team, following some key steps makes the process more effective. Below is some guidance we recommend when engaging in a skills gap analysis.

Set yourself on the skills gap analysis journey

Starting an analysis without clear awareness of the end goal is likely to lead to failure. Clearly identify what you are trying to achieve by doing this analysis and establishing where the end point should be. A skills gap analysis can be conducted at an individual level, where it is used to assess the skills of a specific employee. It can also be conducted at a team level or among a particular group of employees, such as leaders. The latter will involve multiple conversations to understand the level of skills among the group being assessed. The desired skills should be mapped out for each department or role.

Define what you wish to achieve

Having a clear understanding of where the organisation is going in the short, medium and long term will allow for granularity of the skills gap analysis. This approach should enable a clear planning process that highlights the timeframe for when the desired skills will be required for the anticipated business growth. It may be of value to include benchmarking and competitive analysis to stay ahead of the curve.

Consider the future of work trends

The future of work trends is an increasingly present topic in organisations’ self-assessments. New technologies are popping up all the time, and ways of working are evolving with them. As an example, working from home is a trend that has accelerated significantly over the last few years. It is essential that organisations are aware of these trends and follow them where they will be beneficial. As a result of these constant changes, there might be skills that teams will need in order to be able to carry out their work effectively.

Anticipate the future

Looking ahead and anticipating the future will put the organisation on the front foot. Companies that are able to anticipate and have visibility of where the market is going will have a competitive advantage if they take action. The skills gap analysis may be one of these actions that will make employees future-ready. To prepare for that future, organisations can measure the skills gap by setting KPIs, implementing employee surveys or having conversations about employee performance.

Identify the gaps

This phase consolidates all aspects of the analysis and identifies the skills missing in your teams. Be thorough and prescriptive, as this will ensure that accurate, tailored actions are implemented. You can also categorise the types of skill that are identified as a gap. For example, you could split the skills between soft skills and hard skills. Hard skills refer to knowledge that relates to the job itself, such as the use of specific tools, whereas soft skills are personal qualities, such as communication.

Measure the results and act upon them

Don’t just leave it there. Having a plan is good, but it is no use if actions are not taken. Employers should make sure they address the gaps by delivering a plan. This can be assigned to the human resources team or other staff responsible for performance and development. Actions in the plan could include developing a mentorship programme, implementing training sessions or workshops, encouraging employees to go to conferences, and many more possibilities. See our article on learning and development needs assessment for ideas. If the gaps identified are significant, recruiting new employees with the skill set needed might be the most effective solution.

In addition, it is essential that the performance of the actions taken is measured in order to find out whether they have been effective or understand whether other actions need to take place.

Overcoming skills gaps is a continuous effort for businesses to perform in their journey towards continuous growth. By investing time in skills gap analysis, companies will ensure that they are ahead of the curve and have the right talent pool to deliver.

Recent Managing your Business Articles

See all articles in this category
Three individuals are sitting at a table with a laptop, a disposable coffee cup, notebooks, and a phone visible. Two are facing each other, while the third’s back is to the camera. The setting appears to be a bright room with large windows.

Ready to get started?

Post a job