Bridging the skills gap: A blueprint for effective skills gap analysis

Want to do a skills gap analysis in your business – but need help figuring out where to start? Our guide includes strategies, best practices, models, and more, to help you get started in minutes.  

It’s thought that 14 of the G20 countries have lost out on almost $12 trillion of GDP growth thanks to skills gaps in the corporate sector not being properly addressed. 

87% of companies know that they have a skills gap issue now or will face one within the next few years.

Skills gaps will cost the U.S. economy an estimated $1.748 trillion by 2030 

So, if you’re not using skills gap analysis already, you’re clearly missing out on a fantastic way to stay competitive, improve how your business operates, and boost revenue. 

Sounds good, but not sure where to start? 

We want to help. 

In this article, we give you the lowdown on how to get started with skills gap analysis by giving you strategies, best practices, and models that you can incorporate into your own processes. 

As if that wasn’t enough, we’ve interviewed business leaders at high-growth companies, so you can also get insights into their approach to skills gap analysis. 

Ready to learn more?

Click the links on the right to jump to specific sections, or scroll below to learn more about bridging your organization’s skills gap with strategies and best practices. 

Summarise this post with:

About the research

The data we’ve included in this article is our own independent research that is based on input from business leaders, interviews, and online communities. We analyzed everything to help provide you with unique research from organizations using skill gap analysis to transform how their company performs. 

One of the first things we did was analyze more than 200 posts on skills gaps and skills gap analysis from business-focused online communities.

We did this to understand at a high level what the business community online is saying about skills gap analysis. Here’s what we found:

A staggering 98.8% of responses spoke either positively or highly positively about analyzing skills gaps in business. 

64.3% spoke about it in glowing terms, whilst a further 34.5% were classified as neutral – but were often curious, asking questions about how they could perform skills gap analysis in their own business. 

What is skills gap analysis?

A skills gap refers to the difference between the skills that an employer needs for a specific role, team, function, or objective  – and their employees’ current skills.

These skills gaps can cause several issues for employers both at an individual employee level and at an operational level. These issues can often include decreased productivity, lower-quality output, or even problems with employee retention. 

Skills gap analysis is the catch-all term used to describe a variety of processes and strategies that a company or manager can use to understand where the gaps are and identify ways of bridging those gaps. 

When should I use skills gap analysis?

One of the common questions we hear is, “When should I do a skills gap analysis?” or “How often should I do a skills gap analysis?”.

The answer is – it depends.

The frequency of when you should undertake a skills gap analysis largely depends on several factors, including the rate of change in your industry, your company’s growth and evolution, the introduction of new technologies or tools, and shifts in your strategic business goals.

As a general rule, however, conducting a skills gap analysis annually can be a good starting point for many organizations – and is usually done alongside strategic planning to ensure alignment.  

An annual review of skills within your company allows for timely adjustments to training programs and hiring strategies as part of performance reviews and objective setting for the year ahead.

However, more dynamic industries like tech, digital marketing, or data science that are prone to rapid changes might require more frequent skills gap analyses. In these cases, a semi-annual or quarterly review could be more appropriate to ensure your team’s skills stay current.

Don’t stand on ceremony and stick to a rigid schedule, though, as conducting a skills gap analysis can also be hugely beneficial whenever significant changes occur within your organization, for example:

• Before and after a major organizational change or restructuring.
• When planning to enter a new market or launch a new product.
• Before and after introducing a new technology or tool.
• When a performance issue indicates that a skills gap might be the cause.
• When you’re considering hiring or expanding.

Remember, the aim of a skills gap analysis is to keep your workforce’s skills aligned with your organizational goals. Therefore, how often you conduct an analysis should be dictated by how frequently the need for new skills changes.

Bridge the gap – skills gap analysis strategy

So, by now, you’ve established what a skills gap analysis is and when you should do one.

Next up, you’re going to need some strategies to help you not only undertake the skills gap analysis itself but to ‘bridge’ the skills gap that you’ve identified as a result.

To help you bridge the skills gap in your organization, we’ve put together the following strategies and approaches:

Identifying the Skills Gap: The first step is for you to identify what skills are lacking in your workforce. You can do this in a number of ways, including conducting regular skills assessments, analyzing performance metrics, and communicating with employees about skills they feel they’re lacking.

“Our Managers have a good understanding of each employee’s strong and weak points – if there is a common weak point among the team, we see this as an educational opportunity. We then fill the gap with training and education, usually by purchasing a course for the team,” says Joshua Host – Founder at Thrivelab.

Training and Development Programs: Once you have identified the skills gap, you should look at rolling out targeted training and development programs for your team. Exactly how you do this can vary, but it may include on-the-job training, online courses, professional qualifications, workshops, or seminars.

Mentorship and Coaching: You should consider establishing a mentorship or coaching program to share the expertise and knowledge of your more experienced employees and transfer it to newer ones. Starting a program like this helps you to develop a culture of continuous learning within the organization.

Hiring with the Skills Gap in Mind: When you hire new employees, consider the skills that are currently missing from your organization. This may involve looking for candidates with specific skills or experiences – or even altering your active job descriptions and people requirements.

Collaboration with Educational Institutions: You can collaborate with universities, colleges, and trade schools to ensure that students and employees alike are being taught the skills that are in demand in the industry. You can also work with these institutions to set up internship and apprenticeship programs to provide students with practical experience and fill gaps in your workforce.

Similarly, this approach can be a great hunting ground for identifying and recruiting fresh graduate talent into your business. 

Promote a Culture of Lifelong Learning: You should consider promoting and rewarding continuous learning within the organization. This could be in the form of learning allowances, time off for self-study, or acknowledging and celebrating employees’ learning achievements.

Companies with a culture of lifelong learning are less likely to stagnate and also achieve higher levels of staff satisfaction and retention. 

“It makes sense for individual employees to learn different skills for a consistent flow of innovation and cutting-edge ideas to contribute to the team,” says Shelley Hancock – Founder at Shelley Hancock Consulting.

Upskilling and Reskilling: You can upskill your team by training employees in new areas of their role or the wider business – either to take on additional responsibilities or to simply stay up to date with industry changes. You can also reskill members of your team, training them for entirely new roles in the organization. Reskilling can be a great option, particularly when it comes to success planning or expansion plans – and works best when you identify highly capable yet under-utilized members of staff to reskill.  

“We pinpointed the ten most important skills needed in our company and identified the employees who possessed these skills. To keep them motivated, we promoted these individuals and assigned them new tasks and responsibilities,” adds Matthew Ramirez – Founder at Rephrasely.

Realistically, different strategies and approaches will work better for some organizations than others. It all depends on your size, the industry you’re in, and the specific needs of your company. Above all else, make sure you’re proactive and flexible in your approach, choosing the tools and techniques that will work best in your unique circumstances. 

Useful skills Gap analysis models

To help you think more holistically about where skills and skills gaps fit into your wider organization, we’ve outlined five popular models that you can use to inform your own thinking.

McKinsey’s 7-S Framework

The McKinsey 7-S framework outlines the core components needed for an organization to perform well. Skills play a big part in this, and by following the associated lines on the diagram, you’ll see how skills interlink with the rest of the attributes of a business that performs optimally. Using the 7-S framework should help you think more strategically about the bigger picture of your business.

Human Capital & People Analytics

Human Capital Analytics and People Analytics are not strictly a framework or model like some of the others we’ve suggested, but nonetheless, a valuable tool in your toolkit when it comes to understanding the skills gaps in your business and how to bridge them. 

Put simply, using a technique like Human Capital Analytics or People Analytics involves gathering and studying data to make decisions on the effectiveness of your human resources (employees). This could involve analyzing data on employee performance, productivity, engagement, and other metrics to identify areas where skills might be lacking.

The findings from this could help inform your overall skills gap analysis and identify areas for improvement. 

The Competency Model

The Competency Model will help you to identify the specific skills, knowledge, and abilities you need in a given job role within your organization. 

Using the model in conjunction with a Competency Framework document can help you map out the skill requirements for a role and then work with individual employees during one to one’s and performance reviews to map out their skill level against this. 

It can be an invaluable tool to help align individual staff more closely against company objectives.

The ADDIE Model

The ADDIE model is a well-known framework used to manage training design.

The acronym stands for Analysis, Design, Development, Implementation, and Evaluation, giving you five key areas to focus on as you roll out a training program to help you bridge the skills gap in your organization. Using this model enables you to understand not only what training is required but how you will approach it and report on its effectiveness.

Kirkpatrick’s Training Evaluation Model

Once you’ve rolled out a training program in a bid to upskill your employees and bridge the skills gap in your company – you’re going to want to understand if it was a success.

Using a framework such as the Kirkpatrick Training Evaluation Model will enable you to take training from a ‘tick box’ exercise into a key part of your company improvement strategy.

Following on from the ‘Evaluation’ part of the ADDIE model, This simple framework allows you to measure the success of any training undertaken across four different levels. To help you finetune your training offering, you can use the model to evaluate at which level it fell in the hierarchy. You should ultimately aim for all training to deliver level 4 results and influence the performance of your employees. 

Skills gap analysis methods – done right

So, once you’ve gone to the effort of reviewing the existing skills in your company, analyzed where the gaps are – and then rolled out a series of strategies to help bridge that gap, you’re going to want to know how successful the exercise has been.

With that in mind, we’ve outlined some of the key indicators that help you determine that you are on your way to successfully bridging the skills gap in your organization. 

Bear in mind that some of these can take time to see results on, and there is a myriad of factors that can impact their overall success. Still, you should look out for the following:

Improved Employee Performance: The biggest and most obvious indicator is an overall improvement in both individual and team performance. If your employees are applying new skills effectively in their roles, it stands to reason that this new approach should result in better performance metrics.

“Our approach achieved multiple successes: increased employee retention, improved skillset and adaptability, and increased overall productivity,” says Sarah Watson – COO at BPTLAB.

Increased Employee Engagement: Your employees will be more engaged when they feel confident and competent in their roles. If your strategies to bridge the skills gap include learning and development opportunities for them, then chances are you’ll see an uptick in employee engagement as a result.

Reduced Employee Churn Rates: When your employees feel that their skills are valued and well utilized within your business and have opportunities to learn and grow, they’re more likely to stay with your company. No one wants to stay in a ‘dead-end’ job forever, so if you start to see your employee churn rate drop, then you can chalk this one down as an indicator of success in addressing the skills gap.

Meeting Business Objectives: If your company is achieving its strategic goals and business objectives more consistently, this could be a surefire sign that your workforce now has the necessary skills to perform their duties effectively and execute properly against your company strategy.

Positive Feedback from Customers: If your customers notice an improvement in the quality of your products or services, not only does it help with customer retention rates and the ability to turn those customers into advocates – it also indicates that your workforce has the skills to consistently deliver value to your customers. 

Lower Hiring Costs: We already talked about the benefits of reducing employee churn as a result of skills gap analysis. The flip side of this is a reduction in hiring costs. Because your existing staff’s skills align with business needs, you can reduce the hiring you need to do – which can become incredibly expensive once you factor in salary, benefits, recruitment fees, etc.

These are all great indicators that your program of work to bridge the skills gap in your organization has been a success.

However, you shouldn’t wait to see what happens after the event. Before you do anything, you should understand what success looks like for you and agree on a way to measure it effectively. 

Measuring success could involve setting specific targets for performance metrics, engagement scores, turnover rates, or other measurable outcomes. You can then use tools like surveys, performance reviews, or data analysis to understand your progress against these targets.

What are the risks of doing skills gap analysis?

While skills gap analysis is crucial for identifying and addressing workforce development needs, it does come with certain risks and potential challenges that you’ll need to look out for. These include:

Inaccurate Assessment: If your skills gap analysis doesn’t accurately identify all the existing gaps in your organization – which can happen if your methods are flawed – it often causes big issues. For example, inaccurately assessing your company’s in-house skillset could lead to employees undertaking the wrong training or managers hiring the wrong kinds of employees. The upshot of this is wasted budget, missed opportunity, and likely lack of progress against organizational objectives. 

Change in Business Needs: Your business needs – and the associated skills you’ll require – can change rapidly, especially if you work in certain fast-paced industries. If these changes happen more quickly than you are able to implement your skills improvement strategies, you run the risk of operating in a perpetual skills gap.

Spiraling Costs: If you’re not careful, implementing training programs, upskilling existing employees, or even hiring new employees to bridge the skills gap can be a very costly exercise. At every turn, you should consider the ROI (return on investment) of any training or hiring you do. The return on these investments doesn’t have to be purely financial – e.g., charging more for your services – it could be intangible, like retaining key staff. 

Unintended Consequences: You’re going into this skills gap process in order to improve things, right? Well, you need to be careful with it. Focusing too much on certain skills could lead to overemphasizing those areas and neglecting others, which causes new skills gaps to form. 

It’s also worth considering how your employees might feel about the change. Some of your employees will feel threatened if they perceive that their current skills are being undervalued. However, this can then lead to another more difficult discussion about whether they’re the right people to help take the business forward anyway. 

Over-reliance on Hiring: One of the quickest ways to bridge a skills gap is to hire new people to bring their skills into your company. This sounds great on paper, but it comes with its own risks. Hiring to fill skills gaps, rather than upskilling existing staff, can eventually lead to an over-reliance on new hires. Not only is this expensive but hiring too many people too quickly will likely create a disjointed company culture – leaving your existing staff to be demotivated and all your staff at risk of employee churn.

To mitigate against all these potential skills gap risks, it’s important to approach skills gap analysis and the subsequent strategies with careful planning, clear communication, and regular reassessment – making sure they always align with your overall business objectives. 

One of the simplest things you can do from the outset to save yourself several headaches in the long term is to Involve your employees in the process – and get them bought in. Don’t forget to make sure you show appreciation for their current skills and explain the benefits of new training for both them and the company. 

Conclusion

Skills gap analysis and bridging skills gaps within your organization are tactics that you can regularly leverage to dramatically transform your team’s and your business’s performance – regardless of your scale, size, or position in the market. 

They give you an opportunity to realign your workforce against your company objectives, monitor performance more accurately, and identify star performers who you should be priming for promotion and succession.  

Without performing an ongoing skills gap analysis and taking action to remedy any shortcomings in your workforce, you’re setting yourself up for a future of failing to hit targets, disillusioned staff, and untapped potential. 

We’ve outlined models, strategies, and approaches you can use to get started with bridging the skills gap in your organization – but when you’re ready, we’re also here to help you with hiring the ideal talent for your business. 

Ready to use transform the way you hire new staff and bridge your skills gaps?

Try Testlify now for free or Book a Demo 

Frequently asked questions (FAQs)