How to conduct a skills gap analysis: A complete guide

Building strengths and working on weaknesses are important to achieve success in any business. Companies need to reskill and upskill employees to bridge growing skill gaps while leveraging the right tools and processes to equip teams for future changes and challenges.

Explore this comprehensive guide and future-proof your organization by conducting a skills gap analysis to achieve company goals, keep teams competent, and hire the right people.

What is a skills gap analysis?

A skills gap analysis identifies the difference between the skills needed to achieve your business goals and the skills that employees and job applicants currently possess. It is a tool designed to enhance performance and can be applied at the individual, team, department, or organizational level.

A gap analysis should be conducted annually, or whenever new positions are created or new employees join the organization. A skill gap can look like teams not being fully trained in OSHA regulations or it could manifest as employees struggling with clear and concise communication.

Keep in mind that gaps can exist in both hard and soft skills, so it's essential to address both areas so your workforce stays equipped to handle current responsibilities and adapt to future innovations.

Why is a skills gap analysis important?

By 2030, the US is projected to face a staggering $8.5 trillion loss due to talent shortage and a widening skills gap, according to data from PwC. But only 3 in every 10 workers feel supported by their company’s skill development initiatives.

Conducting a skills gap analysis is important to understand how to align training efforts with personal and organizational needs. Here are more reasons why a gap analysis is important to meet demands and achieve long-term success for your organization:

• It enhances productivity by maximizing employee potential and building high-performing teams.
• It guides recruitment strategies by pinpointing skills and competencies needed to fill gaps.
• It offers a cost-effective approach to training by focusing resources on targeted and high-priority areas.
• It gives a competitive advantage by allowing businesses to proactively address industry changes, new technologies, and changing market demands.
• It improves employee retention by making employees feel supported in their career development and helping them prepare for future roles and opportunities.

A skills analysis not only highlights strengths and identifies critical gaps, it also fosters a culture of continuous learning and collaboration.

Skills gap analysis examples

There are several ways that you can conduct a skills gap analysis to evaluate your employees’ skills. It can be as straightforward as creating a template on a spreadsheet with the list of skills and a point system for existing and desired skill levels. There are also more thorough and scientific methods available online if you want a more specific and measurable approach.

You can also use these skills gap assessment methods depending on your needs and preferences:

Self-assessments

This is the simplest approach in the list. Your employee just has to list all the current skills relevant to their job, honestly rate each skill on a scale, and compare those with the required skills. From these, an employee development plan including training and mentorship can be developed to address the gaps.

• Pros: Self-awareness, targeted development, increased confidence
• Cons: Subjectivity, overlooking gaps, lack of feedback

Manager assessments

Unlike self-assessments, this approach lets the employee’s manager identify skill gaps. It can use the same rubric as the self-assessment, except this time, it’s created for every member of the team. Regular check-ins should be in place to review progress, offer feedback, and recognize improvements.

• Pros: Improved team performance, enhanced communication, objectivity, better task delegation
• Cons: Limited perspective

Peer assessments

Employees are often more comfortable with their peers so conducting peer assessments may lead to more open and honest conversations about skill gaps. Since several people are conducting assessments, it’s crucial to establish standard criteria for the skills and competencies to be evaluated. You can also include open-ended questions for qualitative feedback.

• Pros: Broader insights, enhanced communication, team cohesion
• Cons: Subjectivity, resistance to feedback, lack of training for giving feedback

360-degree assessments

This assessment type is the most comprehensive one on the list. It’s basically a combination of all the previous approaches where multiple people, including managers, peers, subordinates, and even customers, can evaluate an employee’s skills. 

• Pros: Well-rounded feedback, improved collaboration, increased self-awareness
• Cons: Time-consuming

How to perform a skills gap analysis

Here is a step-by-step guide on how to identify skill gaps and conduct an analysis, featuring some tips and best practices to make the process smoother and more effective.

1. Identify your company’s goals and objectives

Your business goals and objectives will serve as the roadmap for determining the necessary skills and competencies that your teams should have. You should also review the company mission and discern which hard and soft skills are valuable to the organization.

2. Define the scope of the analysis and the needed skills

It’s important to pinpoint if you’re doing a gap analysis on the individual, team, and organizational level. When listing the specific skills you’re assessing, this step is a helpful way to narrow down what questions you need to answer and what factors should be considered.

At the individual level, an analysis is necessary when an employee’s responsibilities are changing or when they’re falling behind performance standards. For teams, you can look at projects that have to be accomplished and whether they need new technologies and skills for it. 

If you’re conducting a skills analysis for the entire organization, aim to answer questions such as: “Is the company achieving its business goals?” or “Does our shift in strategy entail new competencies?”

3. Evaluate your team’s current skills

After determining your organization’s current and future skill needs, now is the time to assess your employees' existing competencies and skill sets. There are several methods to do this, including using surveys, conducting interviews, and carrying out performance reviews.

You can also use tools with built-in assessment templates to conduct skills tests. For example, SC Training houses over 80 microlearning templates, featuring interactive formats such as multiple-choice questions, surveys, and gamified elements.

After knowing the current skills, it’s best to compare them with the organization’s needed skills to recognize the gaps you need to fill. You also need to establish how many employees have a skill gap before creating a targeted action plan to bridge them.

4. Design effective interventions

Training and hiring are the two most common ways to close skill gaps. Your analysis also acts like a training needs assessment. Your data will tell you how you can tailor training to address weaknesses and resolve gaps. Maximize tools for employee development training to help make the process a breeze.

You can opt for e-learning platforms like SC Training. It houses 1,000+ ready-made courses built to strengthen different skill sets. Its powerful reporting and analytics dashboard also lets you see the training results in real-time, so you’ll know immediately if training tackles the gaps you need to fill.

If your skills gaps can’t be addressed by training, hiring is an alternative way to bring new competencies into the business. Make sure to modify the hiring process for your needs and conduct structured interviews to guarantee that the gap will be addressed.

Train your way to closing skill gaps

Prioritizing training is often the right move when filling in skill gaps. It’s more cost-effective than recruiting new talent. It also enhances job satisfaction, builds a resilient workforce, and fosters a culture of continuous learning.

When preparing  to close gaps, SC Training houses many features that help improve and personalize the learning experience:

• Practical Assessments: Check if gaps are being addressed effectively by assessing your team’s skills in person and tracking their progress alongside digital training.
• Course Review: Get detailed feedback so you can make the changes you need to make your course more effective.
• Certificates: Recognize your team’s skills in specific areas and improve performance outcomes with custom certificates.
• Social and Peer Learning: Encourage your teams to collaborate and build a knowledge-sharing culture so your teams can share ideas and turn to peers for help.

Stay ahead of industry changes with skills gap analysis. Sign up with SC Training today!