Step-by-Step Guide to Conducting an Effective Skill Gap Analysis

In the modern-day competitive business world, every company intends to reskill and upskill its employees, aiming at achieving new milestones in the industry. However, that’s possible only when you can effectively execute skill gap analysis.

Beyond leveling up the skills of existing employees, this analysis will also prove beneficial while hiring the best-fit candidates for important positions in the company. Consider this the most important approach you must take in order to stay competitive and reach your business goals.

Here is a detailed guide on how you can effectively conduct skill gap analysis and derive actionable insights from it.

What is Skill Gap Analysis? When Do You Need It?

For organizations, skill gap analysis is a simple yet powerful process for identifying what capabilities the company lacks in terms of workforce and building a plan to overcome those shortcomings.

In this analysis, it is not just the workforce that will be assessed, but the entire organizational approach will also be put to the test. For instance, the quality of training provided, recruitment strategies, succession planning, and more.

Reasons Why Skill Gaps Occur in Any Organization

You might have invested the best of your recruitment strategies in recruiting top talent to be part of your organization. So, it is an obvious question among many employers, “Why is there a skill gap even after hiring top talent for respective roles in the company?”

Well, the evident reasons why the skill gaps exist in any organization are:

1. New Skills Being Introduced

Over time, as the industries evolve, there are always modern ways to tackle existing or new challenges in organizational practices. For instance, data analysis today demands a completely different approach than what it needed a decade ago.

Beyond that, AI (artificial intelligence) is now part of several business tools and requires employees to have a specific skillset to be able to master them. Such a rise in new skill demands often outdates the employees’ existing abilities, causing an evident skill gap.

2. Wrong Hiring

If your organization still follows the traditional recruitment strategies and omits the skill-based hiring approach, you will end up hiring inefficient people. When employees lack the priority skills, it might slow you down on achieving progress milestones.

In addition to that, a skill gap due to wrong hiring also happens when your job description doesn’t highlight the required skills for a role. As a result, the job posting will attract candidates with varying skills, except for the ones you need for the role, causing a skill gap.

3. Inefficient Training

Your employees, whether new or existing, must undergo targeted and personalized training specific to their roles. There must be strategic objectives to help employees channelize their existing skills for the company and learn new ones.

Without such curated training efforts, your employees won’t develop the required skills they need for productively doing their jobs productively. As a result, the skill gap will overshadow your business milestones, possibly delaying them.

4. Change of Business Objectives

Suppose your company decides to launch a new product or enter a completely new market. In that case, the skills of your existing workforce might not be sufficient to reprioritize business goals or adopt new technologies.

Thus, a skill gap would take place, and it will demand hiring new employees or strategic upskilling of existing employees.

Step-by-Step Guide on How to Conduct a Skill Gap Analysis

If you have figured out that your organization is going through an evident skill gap, here are the steps you must adopt in order to conduct an effective analysis:

Step 1: Create a Proper Plan of Action

When approaching skill gap analysis, a proper plan is what you need to get started, remember, your analysis must take place on two levels: individual and organizational.

Under individual analysis, you will be identifying specific skills needed for a job, and comparing them to the skills that your current employee has.

On the other hand, organizational skill gap analysis will require a high-level assessment of your entire team, a department, or the company as a whole. For this, you will be assessing collective skills required for a specific project or to run the company in the direction of achieving new success milestones.

Your plan must include:

List of stakeholders you will be talking to for this skill gap analysis, starting from ground-level staff to managers and beyond.
For individual analysis, figure out the best people within the organization for assessing the skill gaps of select employees.

Step 2: Identify the Critical Skills

In this step, you and your select partners for gap analysis will figure out the knowledge or skills required for your business to meet the new objectives or goals. Keep in mind to not just consider the skills you need at the moment, but also the ones that you might need for future goals.

You can review your business goals, industry trends, and regulatory changes for collecting relevant information in accordance with this step. Furthermore, you can also talk to stakeholders about which skills they think are the most important for their specific roles, departments, or teams.

When taking up this step, you must consider:

The skills that are most valued in your company.
Skills you will need to stay competitive within the industry in the long run.
The skills that your employees need to do their jobs better with more productivity.
Trending skills that are in demand in the industry.
The new technologies that your employees need to master.
Job roles that your company doesn’t have yet but might need in the future.

Step 3: Measure the Skills

It is the most important step in skill gap analysis, where you will be measuring the level of proficiency your employees hold for existing and new skills. There are many ways you can do that, which include:

Get performance reviews for select employees. Consider a 360-degree feedback that includes evaluation of job-related skills, accomplishments, competencies, areas of improvement, work ethics, and more.
Conduct skill assessments for new job applicants and existing employees, which will give a clear report on their proficiency in expected skills.
Monitor the KPI contributions of individual employees or a complete department/team over a specific period of time.

Step 4: Analyse the Data

When you have collected all the data on the level of skills that your employees hold, you can then start analyzing the same. This is the step where you will be actually analyzing the gaps and giving them importance ratings.

The simple step to analyze the skill gaps is to compare the data collected in the last step with the critical on-demand skills you identified in step 2. You can then take note of employees, departments, or teams who have the required skills or lack them.

Filter out the list of employees who show signs of knowledge and moderate proficiency in critical skills that your business needs. Beyond that, you can also take note of the skills that are missing in your workforce, demanding the recruitment of new talent.

Step 5: Take Necessary Action

With the skill gaps now identified, you can take adequate action suitable for the purpose. There are two potential actions for you to fill the skill gaps, which include:

Training Existing Employees

You need continual reinvention of your workforce by facilitating lifelong learning, which is important not just for their development but also for the company’s growth. There must be a timely and proper training plan for upskilling existing employees with new trending skills required for updated business objectives.

This can be done through subscriptions, in-house training sessions, online courses, mentorship programs, subsidized certifications, participation in events, and more.

Hire New Team Members

At times, the skill gaps can be too big to recover from with just training. Therefore, the better way to handle those gaps is to hire new employees to onboard the required knowledge and skills into your team.

Make sure you include skill-based assessment, specific to the role, as an integral part of your recruitment process. Test the candidates’ potential not just for the skills you currently need, but also for the capabilities you might need in the future.

At Ducknowl, we offer comprehensive skill assessment software that can help you test your candidates for 200+ skills. You can seamlessly integrate it into your usual recruitment strategies and assign the skill-based test for candidates to take.

As a result, you will have a holistic overview of their capabilities, making it easier for you to hire the right talent who can fix the skill gap in your organization.

Let Ducknowl Help You Overcome Skill Gaps Within the Organization!

With skill gap analysis, you will have in-depth insight into how efficient your current team is at tackling the modern-day industry competitiveness and business challenges. Following that, you will be able to take appropriate action to improve your workforce capabilities and achieve new success goals in the future.

This guide has clearly elaborated on the key steps you must implement for conducting an effective skill gap analysis. Furthermore, Ducknowl is here with its comprehensive suite of skill assessment tools to help you assess your existing employees or new job applicants thoroughly! If you want a demonstration of how our skill assessments work, raise a request for it right away!