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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.
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?
A skills gap is the difference between the skills an organization’s employees have and the skills the business actually needs to achieve its goals. It is a fundamental mismatch between employees’ current capabilities and the organization’s requirements, both presently and for the future.
Skills gaps are more rampant than ever. A Workday survey confirms this, stating that over half of business leaders (51%) are concerned about a future talent shortage. The report further states that only 32% strongly believe the skills within their organization today are the same that they will need for future success.
This gap occurs because the business landscape has evolved faster than employees are trained. New technology, automation, AI, and shifting work models like remote and gig work constantly change the skills businesses need. Meanwhile, traditional institutions with their more rigid curricula have a slower pace, leaving companies short on the capabilities required to compete.
What is a skills gap analysis?
A skills gap analysis is an assessment an organization uses to identify which skills a workforce needs, but doesn’t necessarily have yet. Knowing what skills you lack can help guide hiring priorities, create opportunities for training and development, or allocate funding for new technology or partnerships.
Generally, there are two ways to analyze a skills gap in any organization. While they have similar procedures, the actions you take following each analysis may differ.
- Talent gap analysis
- Employee skills analysis
1. Talent gap analysis
A talent gap analysis seeks to understand an organization’s hiring requirements. It highlights which skills are missing entirely from the workforce and need to be brought in through new hires. This approach is especially useful when expanding into new markets, adopting new technologies, or building teams from scratch.
2. Employee skills analysis
An employee skills analysis examines what professional development and training current employees will need to continue to contribute to the company’s growth. Instead of hiring externally, this analysis focuses on upskilling and reskilling existing staff to close gaps, boost retention, and maximize the talent you already have.
Why should you perform a skills gap analysis?
A skills gap analysis offers clarity, showing you exactly what skills are missing so you can make smarter hiring and development decisions. Here’s why you should conduct skills gap analyses:
1. Gain insight into your workforce
A skills gap report provides detailed insight into the talent already within your company. It provides detailed breakdowns of each employee’s abilities, showing their strengths and areas where they fall short.
Using this insight, you can improve internal mobility by placing employees where they thrive, focusing training on necessary areas, and recruiting where gaps exist.
2. Practice strategic hiring
Strategic hiring considers the skills your company needs currently and in the future, preventing the need to hire reactively. Instead of rushing to fill roles based on resumes or gut instinct, a skills gap analysis pinpoints the precise skills your business lacks.
Regularly conducting a talent gap assessment also gives your recruiters a longer window to source the best possible new hires. This way, every hire is intentional, targeted, and aligned with long-term goals.
3. Increase productivity
When employees have the right skills, projects run smoothly, mistakes are reduced, and teams collaborate more effectively.
Skills gap analyses provide an opportunity for career development and the chance to move someone into a role they are best suited for. Investing in your employees is a surefire way to increase motivation and boost productivity.
4. Future-proof your business
A Pearson 2025 research predicts that AI-led disruption could transform 1.5 million Australian jobs by 2030, making adaptive learning and pathways more urgent. Simply put, industry demands continue to evolve and change with modern innovation.
By forecasting the skills your industry will demand in the years ahead, you can upskill or reskill your team before the need becomes urgent. This proactive approach keeps your organization adaptive and resilient in times of change.
5. Stay ahead of the competition
Offering employees regular training and development opportunities gives you a positive employee value proposition.
With an attractive brand, you can attract top talent and strategically bring on new perspectives and skill sets that continue to fuel growth. This keeps your organization relevant and positions you to lead competitive markets.
How to complete a skills gap analysis
An effective skills gap study demands careful planning and measurement. However, the approach you take depends on your workforce size, budget, and even company culture. Below, we’ll discuss practical steps to take when completing a skills gap analysis.
1. Plan your analysis
Every effective skills gap analysis starts with clarity. At this stage, you create a framework that helps you ask the right questions and collect data that suits your business goals.
Proper planning begins with identifying your level of focus. Skills gap analyses generally happen on two levels:
- Individual level: This involves assessing if an employee has the required skillset and technical depth needed for their job.
- Team or company level: Here, you evaluate whether your employees have the skills needed for an upcoming project and assess if you need to hire externally, conduct training, or shift resources.
We’ve prepared a handy chart below to guide your planning:
Regardless of which level you choose, assign clear ownership, usually HR or Talent, and decide how you want to measure proficiency. Any of the following methods can give you results, but combining more than one provides a more rounded view of your skill needs.
- Surveys and skill assessments – These ask questions that provide quick, scalable insights into an employee’s core capabilities.
- Employee interviews – Here, employers have personalized conversations with employees that reveal strengths and challenges that numbers may not reveal.
- Performance reviews – These refer to structured feedback tied to employees’ past projects and outcomes.
- Exit interviews – These target departing employees and request their perspectives on what skills the organization is missing or needs to develop.
- Pre-employment assessments – These are job-relevant evaluations employers use to assess candidates’ performance before hiring them.
2. Define important skills
Before measuring skills gaps, you must define your exact goals and pinpoint the skills you actually need to succeed. Beyond generic job descriptions, you must think strategically to determine what skills drive value and performance in your business. Think of these skills in two layers:
- Super skills: Skills that rarely lose relevance and remain a priority regardless of role or industry changes, such as problem-solving, adaptability, and communication.
- Micro skills: Skills that are technical, role-specific, and dynamic, such as coding, graphic design, project management, or QA testing.
A smart move at this stage is to involve employees in the conversation, asking what skills they hope to develop. Getting their opinions shows that you’re invested in their future, improves their morale, and boosts productivity.
3. Measure current skills
Next, take inventory of your current employees’ capabilities. Measure not only their skills but also their level of proficiency. This will help you discern whether your skills gap presents a hiring need or a training opportunity.
A skills assessment is the most reliable way to measure technical and soft skills and get objective proof of ability. While you can layer in manager feedback and performance reviews for input variety, focus mainly on observable performance. This way, you’re assessing not just what employees know, but what they can do.
4. Identify the gaps
At this stage, compare your business’s skills needs with your assessment results to identify gaps. Some gaps may be critical and need urgent hiring, while others present opportunities for growth or internal mobility. The key is to prioritize which gaps require external expertise and which can be addressed internally.
5. Act and iterate
A skills gap analysis has no value if it ends at the reporting stage. To enjoy its real benefits, you must turn its insights into action, whether through hiring fresh talent, upskilling and reskilling older employees, or internal mobility.
No matter what action you decide on, remember that skills gap analysis is an ongoing cycle. Reassessing regularly to track progress and stay ahead of change is the key to a successful skills-first organisation.
Future-proofing your business with skills gap analysis
With the dynamic nature of most industries and AI evolution, companies that last are the ones that anticipate change and build the skills to meet it. A skills gap analysis gives you a roadmap for doing exactly that. Here’s how to put it into action:
1. Spot trends before they become urgent gaps
A well-run skills gap analysis isn’t just about looking inward; it also compares your workforce data against external market signals. By reviewing industry reports, monitoring job boards for rising in-demand skills, and analyzing assessment results over time, you can identify what’s growing in importance. This lets you anticipate future needs and prepare your teams before those skills become hard to find.
2. Tie skills planning to long-term goals
Running a skills gap analysis in isolation from your goals is unlikely to propel you towards the results you want. Instead, connect it to your business roadmap and vision, whether that’s scaling into new markets, adopting AI, or launching new products. This prevents skills shortages and ensures the skills you’re developing now will pay off later.
3. Build a continuous learning culture
Future-proofing is never a one-time fix. Treat your skills gap analysis as an ongoing cycle, where employees are encouraged to upskill and develop their abilities regularly. Continuous improvement keeps your team agile and engaged while reducing the cost of external hires.
Why use a skills gap analysis template?
Running a skills gap analysis can feel overwhelming without a clear structure. This makes it necessary to have a skills gap analysis template that organizes the process into a simple, repeatable framework.
Our free template breaks down roles, required skills, and current capabilities, then auto-populates the results so you can see gaps at a glance. Instead of vague benchmarks, it compares employees or candidates side by side, highlighting both strengths and development needs. Its collaborative format lets HR teams work together in real time, keeping the process transparent and inclusive.
However, its real power shows up with consistency. With steady use, you can track training program results, monitor skill growth, and make data-driven adjustments to your hiring strategy. This way, you can judge your organization’s progress more effectively.
Free download: Employee skills gap analysis template
Ready to get started with your own skills gap analysis? Download our free skills gap analysis template to get started.
Bridge skills gaps and grow your business with Vervoe
Running a skills gap analysis is critical for any company that wants to grow and stay ahead. Without the right tools, it’s easy to miss blind spots or make hiring decisions based on guesswork.
Vervoe makes this process seamless with a robust assessment library, an automated assessment builder to create role-specific hiring tests, and an AI grading system that’s transparent and fair. Every assessment can be fully customized to your hiring needs, while built-in anti-cheating features ensure results are both accurate and trustworthy.
Experience our superior hiring solution for yourself. Book a demo with Vervoe and build a workforce ready for tomorrow.
Free download: skills gap analysis template
Ready to get started with your own skills gap analysis? Download our free template to get started.
