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 a skills gap analysis on a regular basis. When executed correctly, this 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.

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. 

Skills gap examples that are emerging across today’s workforce include:

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.

A skills gap analysis (also referred to as a skills gap matrix, workforce gap analysis or skills gap framework) 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. 

The days of performing a skills gap assessment just to check it 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 of when you should 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:

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 skills 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.

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.

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 durable and perishable 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:

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.

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. 

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.
 

Your collected data will give you critical insight into where the disparities are happening. When reviewing the data, ask yourself:

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.

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:

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.

Free skills gap analysis template: Let us take care of the heavy lifting. Download this free skills gap analysis template to kickstart your efforts.