How to conduct a skills gap analysis

70% of businesses see finding candidates with the right skills as a challenge, with 98% of business leaders aiming to become a more skills-based organisation. However, only a fifth of employers have conducted a skills gap analysis of their current team, suggesting that the challenge lies in knowing where to start.

In this guide, we’ll explore what a skills gap analysis is, how to conduct one, and how it can take your hiring and learning & development strategies to the next level.

Key takeaways

• A skills gap analysis compares the skills the workforce currently has with the skills an organisation needs
• When acted on, skills gap analysis can deliver sharper hiring, targeted L&D, better succession planning and improved employee engagement
• Skills gap analysis should be conducted regularly (i.e. every six months) or whenever teams face performance issues
• A structured process should: define objectives, map required skills, assess current skills, identify gaps, prioritise actions, create development/hiring plans and measure outcomes

What is a skills gap analysis?

A skills gap analysis is simply the process of comparing the existing skills of your workforce with the level of expertise that your organisation needs for them to succeed.

Typically performed on a role-by-role basis, the aim is to identify the competencies and skills lacking across teams and reveal what might potentially hinder an organisation from achieving its goals.

Employers use skill gap analysis to identify their focus areas for learning and development, succession planning, workforce planning, potential restructures, and of course, their hiring strategy.

In order to be successful, a skills gap analysis should take into consideration:

• Hard skills: Teachable areas of expertise essential in a role, e.g. web development, data analysis, video editing.
• Soft skills: Personality traits that contribute to how someone works, e.g. leadership, communication, teamwork.
• Emerging skills: Rapidly evolving skills driven by technology and industry trends, e.g. data science, artificial intelligence.

The importance of skills gap analysis

Conducting a skills gap analysis is crucial for any organisation aiming to stay competitive and ensure its workforce is equipped to meet current and future challenges.

This is because a comprehensive skills gap analysis offers several significant benefits, such as:

1. Enhancing understanding of team’s capabilities and thereby uncovering areas for improvement across the entire workforce.
2. Helping to prioritise learning initiatives and development programmes based on high-impact or widespread skills gaps.
3. Pinpointing skill gaps and uncovering strategies to tackle them, like skills-based hiring and competency-based interviews.
4. Providing insights for succession planning by identifying valuable and irreplaceable skills, the people who possess them and those who could be next in line

Further reading

What is skills-based hiring and why it matters

Learn more

Further reading

How to conduct competency-based interviews

Learn more

When to complete a skills gap analysis

Ideally, employers should look to conduct a skills gap analysis every 6 months, although understandably that’s not always possible. There are, however, some tell-tale signs that an individual or an entire team requires a skills gap analysis.

For individual team members, this includes:

• Receiving a poor performance review
• Taking on a promotion or new responsibilities

When it comes to broader groups, employers should consider a skills gap analysis when a team:

• Has failed to hit targets
• Needs to adopt new technology, methods, or processes
• Is launching a new product or service
• Has been restructured
• Has new targets to hit or a new strategy to follow

7 steps to conducting a successful skills gap analysis

What format should a skills gap analysis take and which methods should you employ for the best chance of success?

Let’s explore the steps you can take to conduct the process successfully.

1. Define your objectives

You need to know what success looks like if you’re going to become a skills-based organisation.

This means considering how a skills gap analysis will inform your wider people strategy, shape day-to-day interactions between your team and change the way you approach talent acquisition. It should be aligned with organisational objectives, making skills and talent development integral to these ambitions becoming a reality.

Consider establishing some clear KPIs, such as:

• Improved employee retention
• Higher average scores in annual performance reviews
• Increased revenue

2. Establish the skills you’re looking for

Next, you need to identify the hard and soft skills relevant to each position. And define how important they are to the role.

You can do this by:

• Reviewing each job description to note essential skills, responsibilities and required experience
• Speaking with managers or those currently in the role to get their input
• Referring to business or team objectives to identify additional skill sets that may be necessary
• Exploring similar roles online at www.totaljobs.com

Marking how important each skill is to the role will help you prioritise and focus your actions down the line.

Rank each skill as either:

• 5 = Essential
• 4 = Very important
• 3 = Important
• 2 = Not important
• 1 = Unnecessary

3. Identify the required level of expertise for each skill

Work with managers to create another 5-point scale that defines the specific requirements of each role against the skills you’ve outlined.

This provides the framework for you to see the skill level of each person in the team against the competencies your organisation needs to succeed.

4. Assess the skills in your team

It’s time to review and identify the skills and knowledge you currently have in your team. You can do this by measuring each member of the team against the five-point skill level you’ve created in step 3.

Be sure to complete this for every skill listed against their current role and potentially for the skills they would need to develop in order to progress in your organisation.

You can assess each member of the team by:

5. Analyse current skills gaps alongside future needs

You can now start effectively identifying skills gaps within your workforce using your five-point scales to create a spreadsheet for each role that includes:

• Each required skill
• Its importance to the role
• The level required for the role
• The current level of the employee

6. Develop an action plan

To see the benefits of your skills gap analysis and to increase the overall performance of your team, you need to put a plan in place. This will require working with stakeholders to create a strategy that has clear timelines, milestones and deliverables, and clearly lays out what’s needed from each party.

When skills gaps are identified on an individual level, consider how you can work with management to help them develop employees’ target skill. This approach should be an opportunity to hone their development and help them progress in the role, rather than a method to chastise the employee.

This development can take various forms, such as:

This can also involve prioritising skills-based hiring. For example, in the case of widespread skills gaps, you may need to bring new expertise into the team. This is echoed by our research, which suggests that 43% of businesses are looking to prioritise a skills-based approach.

To address this, consider:

• Reviewing your job descriptions to ensure required skills are featured prominently
• Modifying screening processes to focus on necessary skills
• Utilising skills assessment to identify candidate strengths and weaknesses
• Using competency-based interviews to ensure new hires possess appropriate skills

7. Monitor and adjust

To really change the way your organisation sees skills, you should repeat the process every 6 months, is possible. If that proves impossible, see if it can be carried out annually.

Stay on top of results and measure the impact it is having. This will help you to adjust the way you conduct your skills gap analysis, the measures you put in place, and the effectiveness of it on the performance of your overall team. Plus, with new talent regularly joining your business, it’s a good way to ensure consistency across the entire team.

You can track progress using:

• Annual performance reviews
• Overall business and team performance
• Comparing the results of each skills gap analysis
• The number of internal promotions
• Employee churn

Close the skills gaps and open the door to growth

In a rapidly evolving world of work, a robust skills gap analysis is not optional for employers. It’s essential. By clearly defining objectives, identifying required skills, assessing capabilities and comparing those against future needs, you can unlock a blueprint for targeted development and upskilling.

The process outlined in this article offers a practical path to aligning workforce strengths with wider organisational goals. When implementing thoughtfully with a schedule for review and adjustment, this approach can nurture growth, boost retention, and keep your organisation agile.