Steve Warnham 24 May, 2024

11 min read

How to conduct a skills gap analysis

Unpack the essentials of conducting a skills gap analysis and discover actionable steps you can take to conduct them across your workforce.

Over a quarter of businesses see finding candidates with the right skill sets among their biggest challenges. In fact, the importance of skills has never been higher, with 98% of business leaders aiming to transition to a more skills-based organisation in the coming years.

However, only a fifth of employers have conducted a skills gap analysis of their current team. This suggests that, that while the ambition is there, 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.

What is a skills gap analysis?

A skills gap analysis is the process of comparing the existing skills of your workforce with the level of expertise that your business needs for them to succeed in the role. Typically performed on a role-by-role basis, the aim is to figure out the competencies and skills lacking across teams and reveal what might potentially hinder an organisation from achieving its goals.

Typically, 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 that are essential for a particular role, e.g. web development, data analysis, video editing.
Soft skills: Personality traits that contribute to how someone works, e.g. leadership, communication, and teamwork.
Emerging skills: Rapidly evolving skills driven by technology and industry trends, e.g. data science, artificial intelligence, and digital marketing.

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 well-equipped to meet current and future challenges.

Currently, 6 in 10 employers are increasing their investment in learning & development, with 50% realigning their recruitment efforts to fill skill gaps. However, without mapping the current skills landscape of the business, this can lack direction, meaning that vital functions and areas may be overlooked and skills gaps unaddressed.

Skills gap analysis offers several significant benefits:

Grow your understanding of your team’s capabilities and the areas for improvement across your entire workforce.
Prioritise learning initiatives and development programmes based on high-impact or widespread skills gaps.
Pinpoint critical skill gaps and equip yourself to tackle them proactively with strategies like skills-based hiring, and competency-based interviews.
Focus your succession planning by knowing the most valuable and irreplaceable skills in your business, the people who possess them, and those who could be next in line.
Align employees’ skills with your long-term goals and get ahead in developing and attracting the talent you need to meet business goals.
Acting on the results of a skills gap analysis ensures that your employees feel supported in their professional development and committed to you as an employer.
Whether it’s the introduction of new technology, building smoother workflows, or fixing performance issues, by highlighting skills gaps you have, you can boost the entire team’s productivity and output.

When to complete a skills gap analysis

Ideally, employers should look to complete 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

With plenty of benefits on offer, it’s time to get started. But what format should a skills gap analysis take, and which methods should you employ for the best chance of success?

Below are 7 steps you can follow when conducting a skills gap analysis.

Plus — remember that you can start with a smaller group, hone the process, and roll it out to the wider team.

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 business 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. Define 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. Define the required level of expertise for each skill

Now 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 business needs to succeed.

An example of this would be:

5 = Very highly skilled and extensive experience in the area
4 = Moderately high skill level and good experience in the area
3 = Average skill level and some experience in the area
2 = Low skill level of competence and little experience in the area
1 = No experience in the skill area

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:

Analysing feedback from previous performance reviews
Working closely with each manager to create an up-to-date picture of their performance and abilities
Seeking 360-degree feedback from colleagues, direct reports, and customers
Tests or assessments for skills
Reviewing an employee’s most recent CV
Interviewing, surveying, or asking each team member to fill in a self-assessment

5. Analyse the current skills gaps alongside future needs

Having done this, you can begin to effectively identify 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

This is where your skill requirements become clearer.

Take for example, the role of a Sales Executive:

If someone on the team is deemed to have weak negotiation skills and little experience in this area (2), then this would be highlighted as a key area for them to develop for them to be successful in the position.

Once you’ve conducted your analysis, and ranked them based on their importance and urgency, you should communicate this with all stakeholders and management for their feedback.

6. Develop your 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.

Work with your stakeholders to create a strategy that has clear timelines, milestones, and deliverables, and clearly lays out what’s needed from each party.

This can be focused on learning & development. 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:

Internal workshops
In-house training sessions
External training courses or qualifications
Attendance at events and seminars
Subscriptions
Mentoring

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 shows that 85% of employers are turning to a skills-based approach within their recruitment.

To address this, review your job descriptions to ensure the required skills are prominently featured in the advert. Modify your screening process to focus on the necessary skills, using skills assessment to identify strengths and weaknesses. Additionally, you can use competency-based interviews to ensure new hires possess the appropriate skill level.

7. Monitor and adjust

To really change the way your organisation sees skills, you should repeat the process every 6 months, or failing that, 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 analyses, 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: