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Skills Gap Analysis: The Secret to Future-proofing Your Business

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Skills Gap Analysis

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In this article, we’ll walk you through the important steps and strategies for conducting a successful skills gap analysis. From exploring various methods for assessing employees’ skills and knowledge to offering practical tips to enhance its effectiveness, you’ll learn a lot to help your company build a stronger team. Let’s jump in and discover the strength of a thorough skills gap analysis.

What Is a Skills Gap?

A skills gap is a discrepancy between the skills required for a certain job or industry and the skills that job seekers or employees have.

For example, in the tech world, there might not be enough people with the technical coding skills needed for certain software development jobs. And in healthcare, there could be a shortage of nurses or doctors with specialized training in critical care or specific specialties. This gap can make it difficult to fill job roles and can hold back productivity and innovation in certain business areas.

Why Conduct a Skills Gap Analysis?

A skills gap analysis is a tool for assessing the gap between current employee skills and those they need in order to perform their jobs effectively. Here are a few reasons why it’s important to conduct it within an organization:

  • Identify areas for improvement. A skills gap analysis helps to pinpoint employees’ skill gaps and focus on creating the right training and development programs.
  • Enhance employee performance. By understanding the skills gaps, companies can provide targeted training to improve the productivity and performance of their staff.
  • Gain a competitive advantage. By addressing skill gaps, organizations can ensure their employees have the necessary skills and expertise to help the company stay competitive in their industry and adapt to market changes.
  • Increase employee satisfaction. Staff members who receive training and development opportunities to bridge skills gaps are more likely to feel valued and satisfied in their roles, leading to higher retention rates.

Overall, conducting a competency gap analysis helps organizations to better understand their workforce’s capabilities and needs, which leads to improved performance, corporate competitiveness, and employee satisfaction.

Methods for Assessing Employee Skills

There are several skill gap analysis methods you can use:

  • Self-assessments. An employee evaluates their own level of competency.
  • Manager assessments. The manager evaluates the employee’s competency.
  • Peer assessments. Coworkers provide feedback on an employee’s competency.
  • 360-degree assessments. The employee is evaluated by managers, peers, and subordinates.

360-degree evaluations are a particularly effective way to assess current employee competencies, offering a comprehensive overview of critical skills at every level of the business. So, we’ll focus on how to conduct an analysis by using this method in our guide.

How to Conduct a Skills Gap Analysis 

There are two common roadblocks organizations face when analyzing skills gaps:

  1. Employees don’t understand the process
  2. It’s difficult to analyze the results

Fortunately, with plenty of preparation and the right tools, it’s easy to avoid these issues. Follow our step-by-step guide to set your skill gap analysis up for success.

Step 1. Devise an effective skills gap analysis plan

Planning and preparation are key. Therefore, the first step is to come up with a detailed plan. This plan should address the following questions:

  • Which stakeholders will be involved in the training gap analysis? For example, business managers, HR teams, and leaders.
  • What is the project timeline for the analysis? 
  • How will you collect data? Do you need competency-tracking software or will you do this manually? 
  • How will you communicate the process to employees?
  • At what level are you planning to conduct a skills gap analysis? Individual, team, department, company?
  • What particular area of the business has the most urgent need? Is there a high turnover in certain roles? Are certain KPIs not being met?

Step 2. Identify skills needed to meet future organization’s goals

You’d probably check the weather forecast before you set off on a camping trip, right? Well, you may want to do likewise at this stage of a skill gap assessment. 

To identify what competencies the organization will need going forward, you should consider the business goals for the next three to five years. What specific skills will the company need in order to achieve those business objectives? This includes studying the market to forecast potential industry trends, disruptions, or pivots. Is there any new technology being developed in your industry? How will that impact certain job roles? Take into consideration that these factors will help you assess whether your employees have the skill sets to adapt to these changes.

Finally, consider key trends in your workplace. What technology is used more commonly in your organization? Are specific skills becoming more essential in the business? 

Once you have determined the desired skills, assign the required skill levels for all competencies – low, basic, proficient, or expert, as can be seen in this example:

Identifying an employee skills

Step 3. Assess current competency levels

Now it’s time to take stock of current competency levels in the business. As mentioned, the most effective way to do this is by performing 360-degree evaluations. This can be done either manually or digitally. 

Performing 360-degree employee appraisals manually can be labor intensive, although you can streamline the process using a skills gap analysis template like the one below.

Team analysis

Example of a template for a skills gap analysis of a team 

Individual analysis

Example of a template for a skills gap analysis of an individual

The easiest way to carry out 360-degree employee appraisals is by using specific software. Some standalone tools allow you to assess skills gaps, as well as solutions that come as a part of a talent management system (TMS) or a learning management system (LMS).

An LMS is a learning platform often used in corporate training. You can leverage it to build, deliver, and track online training activities in your organization.

Do you remember the two roadblocks we mentioned at the start of this section? An LMS can resolve both issues. It allows you to communicate with employees directly through the platform, sending reminders and leaving instructions on how to complete skills assessments, thus involving them in the process. Plus, you can pull comprehensive reports on employees at an individual, team, or organizational level to track and organize results easily.

A good example of an LMS that comes with a tool for performing a learning gap analysis is iSpring Learn. Using this single platform, you can identify your workforce’s skills gaps and conduct training to fill them. This makes iSpring Learn a great (and cost-effective) multi-purpose tool.

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iSpring’s 360-Degree Performance Appraisal module enables you to create a questionnaire and send it to the people who work with your employee – from subordinates to management. The LMS will analyze the results and generate a report highlighting the employee’s strengths and weaknesses. You can use these performance reviews to assess their competencies and determine if they fit their job role well. 

The platform will present this data in several ways – by creating a competency summary that shows employees’ strengths and areas of improvement, for instance. 

Competency summary

You can also run a comparative skills analysis to compare the survey results with your desired competencies. This quickly spotlights team members who match your criteria for internal promotions and those who need more training.

Comparative analysis

The competency radar report breaks results down by employee profile, showing evaluations from peers, subordinates, managers, and customers.

Competency radar

Using these reports, you can easily visualize where your skill gaps lie.

Step 4. Close skills gaps

Once you have identified skills gaps, it’s time to fill them. While it may be tempting to try to close all current skills gaps at the same time, that’s not possible. Just like packing for a camping trip, it’s important to consider the storms you foresee in your company’s future. This will allow you to prioritize and choose the best method for closing the gaps.

There are several ways to fill skills gaps:

  • Hiring
  • Training
  • Outsourcing 

How you choose to close a gap depends on how urgently you need that competency, your training budget, and the time needed to upskill existing employees.

Training is often the best way to address skills gaps. It’s a cost-effective way to build employees’ skill sets while keeping them engaged and motivated. Check out this Employee Training Starter Pack to learn how to launch corporate training. 

Step 5. Measure results

There’s more to filling skills gaps than running a training gap analysis. It’s important to measure how successful your training efforts have been in closing the gaps in competencies. There are several ways to analyze the effectiveness of your training:

  • Collect employee feedback on how beneficial training has been. 
  • Gather feedback from management on how training has impacted job performance.
  • Conduct regular reassessments to continuously track required skills in the business.
  • Use LMS reports to compare results with previous 360-degree evaluations to gauge progress and where more training is needed.

Skills Gap Analysis Template and Checklist (XLS)

If you’re planning to run a manual analysis, why not download a skills gap analysis template and checklist? Our free template is fully customizable, so you can get the most comprehensive review of employees’ performances. 

FAQ

Here are the most frequently asked questions on analyzing skills gaps.

Why is a skills gap analysis useful? 

A skills gap assessment offers valuable insights into the current state of skills in your workforce. This data will drive decision-making in your organization and facilitate building high-performing teams. For example:

  • Planning long-term recruitment strategies
  • Working out employee development initiatives that improve the person-job fit
  • Aligning training and development programs with business goals
  • Strategic workforce planning

The result is a more productive workforce that’s equipped to meet the organization’s future business objectives. This, in turn, will boost employee engagement. 

When should an organization deploy a skills gap analysis?

A skills gap analysis is typically carried out annually. That said, it’s always wise to carry out a training gap analysis if:

  • There is going to be a change to your business strategy, model, or organizational structure
  • You’ve noticed a decline in business performance
  • There’s likely to be a change in the market that may impact your business
  • You’re implementing new technologies, workflows, or processes

What are the best tools for conducting a skills gap analysis? 

While it’s certainly possible to conduct the analysis manually (we even provide a ready-made customizable template), it’s much easier to automate the process. Here are three top skills gap analysis tools that will help you do this automatically:

  • iSpring Learn. We’ve already mentioned that iSpring Learn provides all the necessary functionalities to perform 360-degree evaluations. You create a questionnaire and send it to reviewers. The LMS will analyze the results and generate a report. 
  • 360Learning. This is an AI-powered eLearning platform. Applicants can assess their existing skills level through a diagrammatic summary that is created by combining self and manager ratings. Based on this assessment, a recommended course is then suggested to help further develop their skill set.
  • iMocha. This skills evaluation platform allows you to create custom evaluations for each learning course. It also has a dedicated upskilling portal, which you can use to map individual employees’ growth and check your company’s overall skills level.

In Closing…

Conducting skills gap analyses on an ongoing basis is extremely useful for businesses aiming to build up a talented and skilled workforce. By figuring out which hard and soft skills are needed now and in the future, you can adjust your training plans to fill any gaps and make sure your teams are ready for whatever the industry throws at them.

iSpring Learn comes with a 360-degree performance appraisal tool to take the headache out of training gap analysis. Request your free 14-day trial today and start preparing your business for the future.