Skills Gap Analysis: What It Is & How to Conduct One

Five professionals with laptop open doing a skill gap analysis sitting around a rectangle wooden desk

Hiring for the skills your company needs is challenging enough on its own. The last thing you want to do is spend precious time recruiting people with redundant skills, or worse, that you don’t truly need. 

A skill gap analysis can help you hire more precisely while meeting your market’s demands and keeping pace with changes in your industry.

What is a Skill Gap Analysis?

A skill gap analysis is used to determine which skills are missing from a company’s workforce and create a strategy to fill those gaps. For example, if a new business contract requires CSS development but the company’s developers only know HTML, there’s a skill gap. A careful analysis can reveal this. 

It helps employers better understand their vulnerabilities to capitalize on business opportunities and recruit new employees more effectively. 

A skill gap analysis’s utility goes beyond just pinpointing improvement areas; it provides a roadmap for proactive growth. By recognizing their vulnerabilities, companies can seize business opportunities more effectively. It guides the direction in which resources should be allocated, especially training and development funds.

Importance of Analyzing Skill Gaps

Understanding and addressing the gaps in skills within your organization isn’t merely a checklist item; it’s a foundational element for ensuring continued growth and competitive advantage.

Tailor recruiting efforts

A thorough skills gap analysis ensures you’re recruiting for the skills you need right now and will need in the near future rather than skills you already have, don’t really need, or could fill with another type of labor like a freelancer. When you have an ultra-precise list of skills you’re looking for, you can better customize your job listings to speak directly to candidates who possess those skills and can provide the specific expertise you need. 

Understand market shortcomings

Companies regularly analyzing their skills gaps are better positioned to compete in their industry. A skills gap can reveal areas where your competitors have the upper hand regarding knowledge, technology, and experience. Recruiting teams can then adjust their strategy to address these shortcomings. With this insight in hand, recruiting teams are better equipped to craft a responsive strategy. Rather than simply filling roles based on immediate needs, they can actively seek out individuals who possess the skills currently lacking in the organization, thereby bridging the competency divide.

Aid managers

Skills gap analyses provide essential insights for managers. With a clear grasp of each team member’s strengths and areas for improvement, managers can allocate tasks more effectively, ensuring projects are entrusted to those best suited for them. This strategic alignment enhances overall efficiency and output quality.

Such analyses also enable more tailored training initiatives. Instead of generic training programs, managers can design sessions that directly address individual needs, maximizing both engagement and results. This detailed understanding refines the mentoring process; coaching becomes more precise and actionable, fostering rapid professional growth.

Boost employee engagement

Good employees want to feel that their development is important to the organization. A skill gap analysis helps employers create more customized training and continued education programs, advancing employees’ skills and boosting their engagement in their work and loyalty to the company. This culture can be a key differentiator in retaining top talent and ensuring sustained organizational growth.

Improve performance

Analyzing and addressing skills gaps ensures that employees have the knowledge and tools they need to do their jobs to the best of their ability. When employees are equipped with the right skills, not only do they feel more confident, but they also become more competent. This competence translates into them working more efficiently, making fewer mistakes, and being able to problem-solve more effectively. Furthermore, well-trained employees can more easily adapt to changes, stay updated with industry trends, and showcase a proactive approach, which is vital in today’s fast-paced business environment.

How to Conduct a Skill Gap Analysis

1. Analyze motivations

Begin by naming your reasons for conducting the analysis.

Are you falling short on organizational KPIs? Looking to expand into a new line of business? Adapting to changes in your market? Seeking to add new technology to your workflows?

Keeping your motivations in mind will help guide your analysis and aid you in assigning priority to the various skills you identify. 

2. Assess current skills

Next, conduct a thorough investigation of the skills your employees currently possess. 

You’ll need to gather input from several sources to do this. Tap managers, conduct skills assessments, look at past performance reviews, and speak directly with employees to understand your strengths and weaknesses from a skills perspective. 

3. Identify needs

Take the skills you identified and look at them alongside your organization and/or departmental goals. Include goals you’re currently working on and things you’ll be undertaking in the near future. 

For each goal, decide whether your workforce currently has the knowledge and technical expertise to support it. If the answer is ‘no,’ you’ve just identified a skills gap. 

A simple chart can help you visualize this step:

SkillCurrent Proficiency Level (1-5)Desired Proficiency Level (1-5)
Hubspot CRM35
Email marketing45
LinkedIn advertising13

4. Assign priority levels

Each gap you identify should be categorized by time frame and urgency level. 

For example, if the start of the holiday season is a month away, you’re short two-floor managers; that’s a short-term need with an urgent priority level. If you plan to target a new sales region within the next 12 months and need to build the staff for an office there, that’s a long-term need with a moderate priority level. 

Track these priority levels by adding two more columns to your chart:

SkillCurrent Proficiency Level (1-5)Desired Proficiency Level (1-5)Time FrameUrgency
Hubspot CRM35Short termHigh
Email marketing45Long termModerate
LinkedIn advertising13Long termLow

5. Create an action plan

Finally, decide what steps you’ll take to address the gaps you identified.

There are three ways to address a skills gap: train existing employees, hire new employees, or supplement with alternative labor like a contractor or consultant. The right solution for you will depend upon your level of need, budget, and bandwidth of your existing staff. 

If you’re finding the visual model helpful, finish out your chart by adding columns for action items:

SkillCurrent Proficiency Level (1-5)Desired Proficiency Level (1-5)Time FrameUrgencyAction ItemsTarget Deadline
Hubspot CRM35Short termHighEnroll marketing team leads in Hubspot certification10/1/2023
Email marketing24Long termModerateHire email marketing specialist1/1/2024
LinkedIn advertising13Long termLowHire LinkedIn ads freelancer1/1/2024

At the completion of your analysis, you should be left with a clear, timelined plan to close your skills gap and better position you to achieve your organizational goals. 

Another important note about conducting a skills gap analysis: remember that it’s a valuable opportunity to engage current staff. In your talks with employees about skill levels, gauge their interest and willingness to participate in upskilling and cross-training. 

Many employees will jump at the opportunity to broaden their skills and take on additional responsibilities, which kills two birds with one stone: you eliminate a skill gap while lightening the burden on your recruiting team and contributing to increased employee retention.

Pete Newsome

About Pete Newsome

Pete Newsome is the President of 4 Corner Resources, the staffing and recruiting firm he founded in 2005. 4 Corner is a member of the American Staffing Association and TechServe Alliance, and the top-rated staffing company in Central Florida. Recent awards and recognition include being named to Forbes’ Best Recruiting Firms in America, The Seminole 100, and The Golden 100. Pete also founded zengig, to offer comprehensive career advice, tools, and resources for students and professionals. He hosts two podcasts, Hire Calling and Finding Career Zen, and is blazing new trails in recruitment marketing with the latest artificial intelligence (AI) technology. Connect with Pete on LinkedIn