How To Perform an Effective Skills Gap Analysis and Future Proof Your Business [Free Template]

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Rapid changes in the way we work have caused many businesses to confront a growing issue: there’s a skills gap in their workforce. In manufacturing, for instance, the risk of a skills gap may leave an estimated 2.4 million positions unfilled between 2018 and 2028, with a potential economic impact of $2.5 trillion.

Infographic showing 2. 4 million positions unfilled between 2018 and 2028 due to skills gaps
Skills gaps may leave around 2.4 million positions unfilled between 2018 and 2028, according to the Brookings Institute

As an employer, there are a range of ways to address a skill gap in your organization: changing the way you hire, offering employee training, or updating your employee value proposition are a few examples. But, until you know the depth and breadth of your skills gap, it’s difficult to implement a solution. 

This is where a skills gap analysis comes into play. Regularly performing a skills gap analysis can help companies identify hiring needs, optimize existing resources, and stay ahead of competitors. Here’s what a skills gap analysis entails, how to carry one out, and a free template to help you get started. 

What is a skills gap analysis?

Let’s start by covering the skills gap definition. A skill gap is a “fundamental mismatch” between the skills that a company requires of its employees, and the skills that potential new hires possess. “This mismatch makes it difficult for individuals to find jobs and for employers to find appropriately trained workers,” explains the Brookings Institute

Skill gaps happen for a number of reasons. Automation, new technology, social movements, remote work and the gig economy have all shifted the way we work. As the way we do business changes, so do the skills an employee needs and an employer values. The speed at which the business landscape has changed has led to a higher prevalence of skill gaps in the workforce. Tech is especially susceptible to skills gaps. Traditional academic institutions cannot always teach students about rapidly changing technologies they will need to work with in the future. 

Accordingly, a skill gap analysis is a tool that companies can use to identify which skills their workforce needs, but doesn’t necessarily have yet. Skills gap analyses can be used to then guide hiring priorities, create opportunities for training and development, or allocate funding for new technology or partnerships. 

Broadly speaking, there are two ways to analyze a skills gap in any organization. One is through a talent gap analysis and the other is through an employee skills analysis. The procedure for both analyses is essentially the same, but the action you take following each analysis may differ. A talent gap analysis seeks to understand hiring requirements in an organization. What skills will employees hired in the next year or five years need? 

An employee skills analysis examines what professional development and training current employees will need to continue to contribute to the company’s growth. Employee skills analysis can also help with employee retention: LinkedIn’s 2019 Workforce Learning Report found that 94% of employees surveyed would stay at a company longer if it invested in new training and development opportunities. 

Infographic showing 94% of employees would stay longer at companies investing in new training and development
94% of employees would stay longer at a company if they invested in new training and development opportunities, according to LinkedIn

Ultimately, the process of conducting a skills gap analysis is the same. It’s what a company chooses to do with the result of a skill gap analysis that differs from one organization to another. 

Why you should perform a skills gap analysis

A gap skills analysis can guide your hiring strategy, improve your employee value proposition, and help your company stand out among its competitors.

Gain insight into your workforce

A skills gap report provides deeper insight into the talent that already exists within your company. This skills analysis allows you to optimize your resources, moving individuals to teams where they might be a better fit, targeting training resources, and determining which departments should be prioritized in recruiting. A skills needs analysis delivers a better understanding of each individual’s talent so that you can set your company up for success. 

Practice strategic hiring

Strategic hiring considers the skills your company will need in the future. It prevents the need to hire reactively when your business is faced with a new challenge or an employee leaves. Regularly conducting a talent gap assessment gives your recruiters a longer window in which to source the best possible new hires. With fair warning, your recruiters can reach out to passive candidates and begin speaking to those in their network about joining the team. Planning ahead also allows you to ensure you have the right number of people with the right skills in the right place.

[Read more: 25 Emerging Recruitment Trends In 2021

Increase productivity

A workforce skills gap analysis focused on your existing employees provides an opportunity for career development, as well as the chance to move someone into a role for which they are best suited. For instance, you may be able to promote someone internally who is ready for management, instead of hiring outside the organization. Investing in your employees is a surefire way to increase motivation and boost productivity. 

Beat the competition

Likewise, companies that provide regular training and development opportunities benefit from a positive employee value proposition. Not only will you be able to attract top talent, but if you identify current skills needs from identified staffing needs, you can hire strategically from the best of the best. Companies that perform skill gaps set themselves apart by offering professional opportunities, as well as strategically bring on new perspectives and skill sets that continue to fuel growth. 

How to complete a skills gap analysis

Any skill gap study takes careful planning and measurement to provide the insight you need. How you approach a critical skills gap analysis depends on the size of your workforce, your budget, and even your company culture. However, these steps remain the same regardless of the individual characteristics of your business. Here’s how to perform a skills gap analysis. 

Plan ahead

The process for addressing a skills gap starts with careful planning. In this phase, plan the who, and how of your skills gap analysis. Who will oversee the process, and who will be included in the analysis? How will the analysis take place? 

First, establish who you need to include and who will run the analysis. Skill gap analyses happen on two levels: 

  • Individual: Identify the skills each role requires and compare them to each employee’s actual skill level.
  • Team or company: Determine if employees have the skills to work on an upcoming project or if you need to hire externally, develop training, or shift resources.

Not sure which level is right for your business needs? Here’s a handy chart that can help you decide where to start. 

Skills gap analysis chart
A chart to help you run your own skills gap analysis

As to who should conduct the analysis, usually, this falls to HR or a senior team leader. Some organizations choose to work with an external third party to conduct the skills gap analysis. This option provides a level of objectivity and allows managers, HR, and team leaders to continue focusing on their existing priorities. 

Next, how will you run the skills analysis? There are many different ways to measure proficiency in a certain area, including: 

You may also want to use a combination of methods to get a 360-degree view of your skills needs. For instance, employee interviews followed by skill testing can help determine the professional development opportunities in which you choose to invest. 

Identify important skills

How do you know what skills your company will need in the future? It’s nearly impossible to predict how the market will change, but there are ways to guide your skills gap analysis to anticipate what your company will need. Consider these two questions: 

  • What skills does your company value? 
  • What skills do your employees need to continue to perform well? 

Micro-skills and super skills are a new way to think through what skills your team will need. Super skills are “the ‘components’ that make up the unique ‘operating system’ of a person.” Capabilities like critical thinking, creativity, coachability, leadership, and problem-solving qualify as super skills. 

Micro-skills, on the other hand, are “the ‘apps’ that the person ‘runs’ (or could run) on their unique super skills ‘operating system.’ These are the things a person can do really well (or learn to do), given their unique super skills footprint.” Micro-skills include things like graphic design, project management, QA testing, cold calling, or software development. Keep up with in-demand micro-skills by following industry trends. 

Super skills never go out of style: these talents will always be needed in the business world. Micro-skills, however, change over time. One strategy your company might take is to focus the skills gap analysis on super skills and micro-skills separately. What super skills do you need to develop over the next five years? What micro-skills will best serve your business now? 

This is also a good time to work with your existing employees to find out what skills they hope to develop. Getting your employees involved will show that you’re invested in their future and improve their experience. 

Measure current skills

Next, take inventory of your current employees’ capabilities. Measure not only what skills they possess, but also their level of proficiency. This will help you discern whether your skills gap presents a hiring need or a training opportunity. 

How do you measure current skills? A skills assessment is the easiest way. Tests run through Vervoe can be tailored to investigate the specific skills you have prioritized in the previous step. Design an assessment that includes immersive experiences, like coding challenges or job simulations, as well as validated psychometric assessments to identify those in-demand soft skills: things like motivation, conscientiousness, resilience, and emotional intelligence. Vervoe’s assessment library even includes questions designed to reveal if a candidate can climb the corporate ladder, adapt to a challenging work environment, or respond under pressure.

Skill assessments can be triangulated with performance reviews and employee feedback. Use a variety of inputs to get a clear picture of what your current workforce can achieve — and where hiring or training may be needed. 

Act on the data

The skills gap analysis will illuminate the next step. If there’s a clear lack of expertise in a particular area, hire someone new. If there’s some expertise, but not to the standard needed to move the company forward, consider offering training. 

There’s an art to hiring in order to fill a particular skills gap. Part of the reason why skills gaps exist in the first place is that hiring processes are flawed. Resumes are an imperfect way to assess someone’s talent. Interviews can be derailed by unconscious bias. Even the way a job description is written can prevent qualified candidates from making it through the screening process. 

[Read more: Resume Weaknesses: Why Resumes Are A Terrible Hiring Tool

With a skills gap analysis, however, you can quickly improve your hiring process. If you’ve set up a skills assessment to measure your team’s existing expertise, you can simply issue the same test to potential candidates. By doing job-related tasks, candidates can prove their skills in a uniquely relevant context to the job they are trying to get.

There are other ways to ensure your hiring is based on talent, rather than background or another irrelevant metric. Check out some of these guides for more information: 

Remember, replicating the same hiring process you’ve used in the past is unlikely to help you fill a skills gap. Integrate new ways for candidates to verify their expertise — your new hires will thank you, too. 

Benefits of a skills gap analysis template

Many companies use a skills gap analysis template to make this process streamlined, organized, and collaborative.

Using our free template provides an objective method for assessing candidates or employees. Like our skill assessments, employees or candidates are ranked in comparison to one another, rather than an arbitrary benchmark. This means that no one is screened out or singled out for consideration; rather, it shows where some people excel and others need more development. 

The skills analysis template auto-populates, making it easy to quickly spot skill gaps and move on to remedying the situation. And, because it’s hosted in a collaborative Google Sheet, members of the HR team can work together to identify next steps. It’s a transparent way to share information toward building an inclusive culture and strong employee value proposition. 

Finally, a skill gap analysis template provides a record against which teams can continually benchmark and improve. Regularly scheduled skill gap analyses allow companies to identify what’s working and what isn’t. Are your training programs effective? Are your hiring processes fair and balanced? How can you better set up employees to be successful? Compare one skill gap analysis to another one year later to get a better sense of how your efforts are having an impact. 

Free download: skills gap analysis template

Ready to get started with your own skills gap analysis? Download our free template to get started.

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