How To Make a Skills Gap Analysis Work For You

From lamplighters and milkmen to switchboard operators and bowling pinsetters--there are plenty of jobs that once got people up in the morning but no longer have a place in the workforce today.

For whatever reason--whether upgrades in technology or changes in the way we do our day-to-day business--those skills are no longer considered critical. Other jobs, though, have arisen in their place. Think social media managers, digital marketers and app developers--50 years ago, would anyone have even imagined their existence?

In fact, the skills we rely on to keep up with our business demands are always changing. And it's up to HR, in partnership with business leaders, to stay on top of those needs. Understanding the skills you no longer require--and anticipating those you'll need in the future--is part of ensuring you have the right team for your business.

That's where a skills gap analysis comes into play. To determine where you need to fill your skills gap--and how--consider the following:

What Is a Skills Gap Analysis?

HR and workforce planning teams can use a skills gap analysis to identify--and eventually fill--the skills shortages that exist in their company, in order to meet current and evolving needs and pave the way for future plans. 

After all, those gaps aren't just a hypothetical: data shows that of those employers actively hiring, 70% report a skills shortage. And by looking closer at that gap, you can better determine the best way to fill it--whether that means investing in learning and development programs, upskilling, reskilling or recruiting. You can also start to see who on your teams are suited for executive or leadership roles and begin to prepare them for those future positions.

Such an analysis might be par for the course for your company as you look ahead and identify all of the pieces you need to put in place to meet your growth goals. It may be part of your recruitment strategy as you identify exactly what skills to prioritize as you hire for your future needs. Or you may decide to undertake a skills gap analysis when you find that your current team isn't keeping up with your business needs--to better understand whether they're missing some of the key competencies they need to do so.

Whatever the reason you decide to initiate a skills gap analysis, it can be a critical tool to help you build towards your people and business needs.

Why Do You Need a Skills Gap Analysis?

By 2022, the World Economic Forum predicts that at least 54% of employees will require upskilling or reskilling to keep up with workplace demands. Technological changes, rising automation, artificial intelligence and machine learning are all having an impact on the types of jobs people do. But they're just as likely to add jobs as replace them--in fact, in the same study, 28% of employers said expanding their current workforce because of automation was part of their current growth strategy. 

In other words, some jobs will become obsolete and others will be introduced in their place--while others will be redesigned completely. A skills gap analysis will help you determine where those changes may be necessary in your own business--not just to keep up with emerging technology and industry changes, but to keep pace with your own future business demands. Specifically, a skills gap analysis can help your organization:

• Recognize where important skills are missing as well as which employees are most in need of them--allowing you to target your learning and development programs accordingly to meet your business goals.
  
  
• Identify individual growth opportunities in your employees, to determine how they might develop in their roles and within the company. These kinds of opportunities can benefit the organization by building on the skill sets available to you while also keeping employees challenged in their roles.
  
  
• Inform your recruitment efforts, empowering you with the data you need to determine which candidates have the requisite skills to fill your current gaps and keep up with future needs.
  
  
• Empower your workforce planning by letting you determine not just whether you have enough people to keep up with your growth goals, but that they also have the skills you need to thrive.

In doing so, it can improve your long-term productivity and team building--ensuring you have the right people in the right jobs and that they're equipped with the right skills to empower everyone.

So how do you go about undertaking a skills gap analysis and determining the competencies your business demands?

4 Steps to a Successful Skills Gap Analysis 

Where you start your analysis is up to you--and will depend on where you see the most need in your organization. But there are a couple of different skills gap analysis methods you can use:

• Consider each individual employee and the skills they bring to the table. How do they match up with the skills their job requires and the goals your company is trying to achieve--both now and in the future?
  
  
• Consider each team or department, or the company as a whole, and the skills you need to complete the projects currently underway and those you're planning on undertaking in the future. Do your teams have everything they need to bring your strategy to fruition--and what's the best way to fill the shortage? 

The first step, then, is determining what level of analysis you want to start with--then putting a plan in place for how you're going to get it done. From there, a skills gap analysis example might look something like this: 

Step 1: Determine Your Business Goals

Not every business is created equal or operates based on the same set of strategies. And because of that, not every organization needs the same set of skills. The skills you do require will largely depend on your business goals. 

With that in mind, every skills gap analysis--no matter the method you're using--should start by determining your business goals. Consider where your organization is going in the near and long terms and what strategies you're going to use to get there. Do you have the team in place to make it all possible? Are there new jobs you need to fill or skills you should add to your existing team's repertoire to get to where you want to go? 

Step 2: Look Into the Future

While knowing your business goals is critical for success, your organization doesn't work in a bubble. Technology advancements and other trends will influence the skills you require almost as much as your own internal strategies will. Regulatory changes, a need for specific technology expertise or industry trends may all factor in and affect future skills requirements. 

To stay ahead, take a look at where your industry and the workforce itself are going--and determine what skills you'll need in order to maintain a competitive edge. Then consider the opposite as well. Are there jobs you see becoming obsolete--whether due to automation or new directions your business is taking? And will you need other skills to replace them? 

Step 3: Dig Into the Data

Data drives all aspects of business today, so it's no surprise that it plays a critical role in your skills gap analysis as well. A skills inventory will help you get the data you need, with data accumulated from:

• Employee KPIs
• Surveys or skill assessments
• 360-degree performance reviews

From there, you'll need to define the role-specific competencies you require and where your employees' skill sets align. Consider the research you've done on future needs and the goals you've established for your business. Gathering all of this data into a single source of truth will let you better analyze the key information and identify the gaps that exist.

Step 4: Fill the Gaps

Of course, identifying the gaps is just the start. You need to fill them as well. Upon completing your skills gaps analysis, you'll have a clearer idea of where the biggest disparities exist between the skills you already have on your team and what you need to meet your current and future goals. Then it's time to put those discoveries to work and figure out the best way to fill the spaces that exist.

Likely that will involve a range of tactics--including upskilling and reskilling your current employees through learning and development programs, redesigning jobs to better meet your business needs and putting together a hiring strategy that will allow you to recruit new team members that have the experience and skills that don't exist internally. Your HR budget should also reflect the plan you make going forward to ensure you have the resources you need to make it a reality. Relevant change management processes, meanwhile, might help you retain the high-performing employees most critical to future success even as you make other shifts in your workforce. 

What Comes Next?

Of course, filling the skills gaps in your organization isn't a one-time thing--ideally, it should be part of your annual HR budgeting process and the forecasting you do throughout the year. After all, your business goals will change and evolve, technology is always advancing and industry standards are often in flux--all of which means the skills you need on your team will always be changing. So even after your skills gap analysis is over, it's important to stay on top of your team requirements--so that you have the right people in place for whatever comes next. Why not get started with this free Workforce Planning Template?

(Check out The Ultimate Guide to Workforce Planning to help you plan your team now and for the future.)