The concept of “skills gaps” has increasingly come into sharper focus. And for good reason. If not adequately addressed, the current global skills gap will stunt GDP growth by $11.5 trillion. For the U.S. alone this equals losing $8.5 trillion between now and 2030.
Skills gaps — the difference between the skills an employee has and those needed to perform a job well — impact both organizations (their ability to accelerate) and individuals (employees with mismatched skills tend to have lower engagement and less productivity).
The good news?
Businesses have the power to address these challenges by conducting regular skills gap analyses. When executed correctly, a skills gap analysis can be a powerful tool for gathering insights into where your workforce falls short on critical skills so that you can proactively address gaps before they pose a problem.
What is a skills gap?
Understanding skills gaps
A skills gap describes the phenomenon of having a workforce, or members within a workforce, whose skill sets and competencies do not align with the requirements of their work.
The exact skills that fall under this category are going to vary widely depending on the industry and specific function that a job unit or individual is responsible for. It can include a lack of technical knowledge, as well as soft skills.
Examples of emerging skills gaps observed across today’s workforces include:
- Leadership and management
- Critical thinking and problem solving
- Writing proficiency
- Data literacy
Although there are many interconnected factors, a primary driver of the current skills gap crisis is the rise of digital transformation. The rate at which technology is currently advancing is outpacing workers’ ability to keep up, especially when education and training are often inaccessible or inadequate. For instance, a company might implement a new piece of technology within a team, but fail to train or upskill its employees adequately so they know how to use it.
This common problem is widely felt by organizations today. In fact, LinkedIn reports that 64% of learning professionals surveyed are prioritizing reskilling opportunities in an effort to close the growing skills gap within their companies.
At the same time, employees are also feeling the pressure of skills gaps. Recent research shows that 46% of employees are concerned that their current skill sets will become obsolete within the next two years, and just 34% say they feel they are given adequate learning opportunities by their place of work.
What is a skills gap analysis?
What is a skills gap analysis?
A skills gap analysis is the process of auditing your workforce to identify the skills that your employees currently have compared to the skills that are needed to succeed in current and future positions within the company.
Knowing that skills gaps can pose a threat to your business and its ability to grow, a skills gap analysis is a critical tool for HR leaders to understand where the knowledge gaps are and what processes need to be put in place to address them.
When to perform a skills gap analysis
When to conduct a skills gap analysis
The days of viewing a skills gap analysis as something to check off a to-do list and revisit a year or two down the line are long gone. In-demand skills are quickly changing, meaning it’s imperative that skills gap exercises happen on an ongoing basis.
That said, there are certain events or “triggers” that should prompt you to re-examine skills needs within your business. Here are a few examples:
- A shift in business strategy
Before you roll out a change to the structure of your organization and/or make a shift in business priorities, it’s important to make sure that your workforce is prepared for it. Think about the skills your employees will need to accommodate these changes and have a preemptive plan in place to help them upskill or reskill to meet those needs.
- Introduction of new technology
Similarly, you should conduct an anticipatory skills gap analysis before any technology is standardized across a team, business unit or the entire organization.
- When business objectives are unmet
Although there are many factors that may cause a dip in business performance, it may indicate that your employees aren’t equipped with the learning and education resources that need to meet the demands of their roles.
How to perform a skills gap analysis
How to conduct a skills gap analysis
Let’s discuss how to analyze your organization for gaps in employee competencies. Here are a few best practices you can employ:
Determine the project scope
As a first step, be sure to clarify whether you are examining individual skills required to perform within a specific role or a broader team functionality. The scope of the analysis determines who should be involved and how robust the follow-up action plan is.
For example, conducting a skills gap analysis for an entire team may require input from additional organizational stakeholders or even hiring an external consultant to help with the process. Depending on the results, you may need to consider investing in new L&D initiatives or re-evaluating existing ones.
On the other hand, a skills gap analysis for an individual can be an ad-hoc project that involves the employee’s manager and outlines a straightforward path to upskilling through existing training avenues or workforce education.
Align with organizational goals
As with any HR process, a skills gap analysis should be closely aligned to broader business objectives. Even if you’re looking at an individual job function, it’s important to understand what skills and competencies are required by the organization as a whole first.
Know the difference between critical vs. “nice to have” skills
Work cross-functionally with team leaders to help develop criteria that outline the differences between skills that are critical to the function of a job role, and others that may not be as important. This should include both soft and hard skills.
For example, advanced knowledge of a programming language is likely a critical skill for a Senior Software Developer. This skill is essential to completing the job responsibilities of the role. On the other hand, the ability to lead and manage a team is a great addition, but not having these skills perfected will not hinder the individual from completing their core responsibilities.
There are a variety of methods for gathering data to understand the current state of employee skills including:
- Historic performance review data
- Employee surveys
- Skills assessments
- 1:1 conversations
- Completion of goals and/or progress on key performance indicators
Encourage managers to have open conversations with their direct reports and ask them what skills they feel most confident in and which skills they wish they could improve upon.
Get granular with internal data
Conducting a skills gap analysis can be a time and labor-intensive feat so be sure to use internal data and resources you already have to your advantage. For example, if you’ve already developed employee career paths, you can use this to start thinking about the skills and competencies for each role, and what’s needed to progress an individual from one level to the next.
If your organization has a human resources information system (HRIS), leverage data from the software to help you pull insights about your workforce.
Examine industry trends
Look outside of your organization to get a feel for what the skills landscape looks like for your industry and what trends are emerging among your competitors. This type of data can be found via publishers such as the World Economic Forum and other industry-specific associations.
Combine company data and industry trends to run a true skills gap analysis
Your collected data will give you critical insight into where the disparities are happening. When reviewing the data, ask yourself:
- Which skills does the organization define as needs that are unfilled?
- What roles are being inadequately performed?
- Which skills and competencies do employees feel the least confident in?
Outline an action plan
You have your skills gap analysis complete, so what’s next? It’s time to take action. Based on your analysis, build a plan to present to leadership to being discussions and garner buy-in for your proposed next steps. An action plan can map out what progression looks like in a job family (jobs that have similar education, skills, training and experience), as well as the progression of skills and knowledge from entry-level all the way to a senior position.
Addressing skills gaps
How to address skills gaps
A skills gap analysis is only as useful as the action you take after it’s complete. If the results of your analysis indicate that skills gaps do exist within your current workforce, here are some tactics you can integrate as part of your action plan:
- Prioritize sourcing from within
Look among your current employee base for high-potential workers with the right soft skill sets, especially for leadership roles.
- Keep reskilling in mind
Upskilling is not the only way to address skills gaps. There are situations when an employee can fill an entirely different job role within an organization through reskilling and setting the course for a new career path.
- Conduct skills assessments
Stay on top of skills slippage by integrating skills assessments as a standard process. It’s common for skills assessments to be administered during the hiring process, but they can also be conducted post-hire as well. There are a variety of software tools available on the market that make administering these assessments smooth and easy, both for you and the employee.
- Offer workforce education opportunities
Think beyond training and implement a workforce education program that provides your people with access to degrees, credentials and certifications to support skill-building needs and long-term career progression.
- Connect career paths to skills needs and learning options
Many companies create career paths, but they fall short when it comes to going the extra mile to dig into the skills and competencies that employees require to progress along these paths. To adequately address skills gaps, people leaders need to invest the time and effort into figuring out what learning is needed to fuel skill-building.For this reason, many organizations seek to partner with workforce education experts that can do the heavy lifting and work directly with your team to carefully curate learning options that fill the highly specific skills needs of your people and organization.
Closing the skills gap
Many companies could grow faster today, if they just had the talent, with the right skills, to fill key roles. That’s why companies need to invest careful thought and effort in their approach to skills gap analysis.
With the right skills gap analysis strategy, you can upskill and reskill your workforce, while uplifting your workplace. To get started, learn the 5 steps to reskill your workforce today and build a workforce ready for tomorrow.