Skill Gap Analysis & Everything You Didn’t Know About It

The greatest challenge that often keeps us from growing the business, is being able to do this with the right people on board. Yes, product-market fit matters. A good product matters.  And the motivation of the founding team matters. But even if all these boxes are ticked, it’s still not a guarantee for success. It’s the people in our teams that are responsible for transforming our dreams and ideas into reality. 

And it’s their skill set that makes them the right people for this challenge, or not. 

Yet..

Around 87% of companies worldwide say they already have existing skill gaps, but can you imagine that 40% of HR leaders are not even aware of the skills their workforce currently possess? 

We are living through times that are characterized by rapid change and need for adaptation. This means that growing companies need to continuously reassess and upskill their teams. 

This is exactly where skill gap analysis can be of tremendous help. But what is it and how do you conduct a skill gap analysis? 

 

What is skill gap analysis?

Have you ever marvelled at the beauty of a bridge as it crosses a gorge or a river? I live in the Netherlands, and this country is filled with beautiful bridges across canals everywhere you go. Yesterday I was walking through the city, and it crossed my mind – hiring is kind of like building bridges. And skill gap analyses are like the blueprints used to build bridges.

A skill gap analysis helps to identify the skill gaps an individual or group of individuals has. Just like a gorge or a river, you can probably recognize there is a gap from here to there when it comes to skills within your teams, but what is the best way to bridge (see what I did there 😉 ) that gap? The skill gap analysis is like a bridge’s blueprint- it helps you to identify the best way to close the gap. 

It is also a critical part of designing an effective employee training program as It allows you to have an overall picture of the current and desired representation of skills levels. Whether it be on a specific team level or of the organization as a whole. 

The importance of analyzing skills gap analysis in your company

Growing your business is all about achieving goals that have been set, and it’s the team who’s responsible for achieving this goal. The success of the team, however, heavily depends on its composition. But what makes a successful team? 

Perhaps the most common answer to this is the combination of prior startup or scaleup experience, product knowledge, certain soft skills and hard skills (industry specific knowledge). The problem is that when we start to think about skills, we automatically assume that if we have teams that consist of people that are all, for example, great problem solvers and excellent in terms of collaboration skills – then we’ve set our business up for success. However, in reality this can mean two things to your business:

  • If everyone is extremely collaborative it will allow them to work together better with other team members , but it will also result in slower processes and less independent decision-making.
  • If everyone is extremely individualistic problem solvers, people might find it difficult to ask for feedback and help when necessary. 

 

And that’s the thing – there is no one size fits all when you’re looking for new employees. On top of that, research by McKinsey found that the need for addressing skill gaps is prevalent throughout a wide range of business areas. 

So, as you can see in the visual above – the greatest need to address skill gaps is within data analytics, IT and executive management. 

However, that’s not where it stops. And sadly in most cases, companies fail to identify and address skill gaps because they simply do not know what they need.

The difference between knowing what you need and not knowing

In one company, there might be a bigger need for having people that are collaborative than in another. It’s all situation and context dependent. Perhaps you need people who may not know how to solve complex problems, but people who realize that there exists a problem and are willing to solve it. And perhaps you need more people that are creative thinkers, people that can help get your idea to the next level.

Regardless of what the situation or context might be, without having the right insights on this, collected in the right way and at the right time – you’ll end up making assumptions about your hiring needs & hiring people that will stagnate your growth. 

What happens when you don't conduct a skill gap analyis?

For now many organizations have placed too much emphasis on hiring employees that have similar or the exactly same set of skills as their current teams members. Thus, automatically assuming that these people will be successful at the company. Which is not necessarily a bad thing. However, most companies tend to forget that it’s also important to bridge the existing skill gaps within teams. 

No less than 54% of all workers need to update or replace their competencies as a result of rapid technological developments and an increasing digitalization that affect both our personal and professional lives. 

If that is not taken into account, then you risk:

  • Killing the diversity of your teams and thus, also all the benefits that come with it
  • Wasting time on unfit candidates during the screening & interview process
  • Eventually making mishires
  • Decreasing your hiring efficiency and simultaneously – hiring quality
  • And ultimately, significantly slowing down your company growth.

How to conduct skill gap analysis

Step 1. It’s all about the planning

As with everything else, planning is the most crucial step, also when conducting a skills gap analysis. Before diving any deeper, it’s important to understand whom is it exactly within the organization that has the most insights about the skills that your company might be missing. 

Is it C-levels, individual team leads or only staff-level employees? Carefully decide upon this as, for example, talking to only C-levels to find out what skills are missing in a department that they are not directly involved with might not be the best choice. As in that case the team leads probably have more insight into thei respective department and what skills are missing there.

 

1.1 Are you doing it on a team or individual level?

A skill gap analysis should be performed on two levels: 

 

  • Individual. Based on industry benchmarks, identify the skills a job requires and compare them to an employee’s (or candidate’s) actual skill level.
  • Team. By conducting a skill gap analysis on a team level, as I mentioned previously, you will gain insights into the overall strengths and weaknesses of your teams. Afterwards, you can decide whether you place focus on developing the skills or hiring for skill gaps.

 

By conducting skill gap analysis on both individual and team level you will be able to gather a more thorough understanding of the situation in terms of what are the strengths and weaknesses of your teams, as well as individuals.

1.2 Define the future goals of your business

I know it’s not always easy to think far ahead into the future when it comes to many things in life, but for a business to be successful – long-term thinking is definitely an absolute must. So, to be able to assess skill gaps to eventually either train for those or hire to fill them (but more about that later) – it’s important to have a clear idea in mind of where you want the business to be. 

Try having an open discussion with other employees about the following questions (and answer them yourself too):

  • Where do you see the organization in 2 years? In 5 years?
  • Is there anything important happening in the upcoming 12 months?
  • What are the skills currently required from our employees? Is it great flexibility? Or something else?
  • Are there any areas in which we lack knowledge or expertise?
  • What job roles need to be opened up and filled in order to help the business get where it needs to get?
  • Are there any skill sets that will be absolutely necessary for employees to succeed in the future?

1.3 Do some research into future of work trends

The future is here, not around the corner. If you want to build a successful business, then you should probably also focus on building successful teams. But in order to do that, it’s also important to do some research into future of work trends – because what worked in the past or works right now, might not work in the future. 

A great way to start thinking about this is to figure out:

  • Which jobs will eventually get automated?
  • Which skills are currently in high-demand? 

 

Not really sure how to answer these questions? No worries. Resources such as 100 Jobs of the future can serve as big help when it comes to this.

1.4 Identify & note down the most important skills

To identify the skills that are most important for you, think about the following: 

  • What skills do we value as a company currently?
  • What will be the key skills needed now vs in the future for employees to be successful? 
  • What are the skills required to be successful and thriving in your company? 
  • How do these skills fit in with your business objectives?

 

Note down the most important & crucial skills and begin looking into the different ways these skills can be assessed and measured. 

Step 2. How to measure skill gaps

There are five main ways you can measure and identify the current skill gaps within your entire workforce, as well as on an individual level.

Using skill gap analysis template (SKILL GAP TEMPLATE)

By using this template you can describe the current situation in terms of skill level in contrast to the desired skill level representation within your company. Then you will realize the gaps that you need to close by setting goals. Whether it be training programs or hiring to fill those skill gaps. We recommend you do this separately for each team.

On an individual team member level first and then draw conclusions about what skills gaps are present within each separate team. 

By asking your employees to complete a SWOT analysis (SWOT TEMPLATE)

This can go a long way – ask them what they think they are good at & what they see as areas of self-improvement and development. The danger with this, however, is that their answers might often be biased and less objective. Because let’s be honest – we all are our harshest critics, while simultaneously, often having the tendency to overestimate our capabilities.

By collecting employee feedback and comparing the changes over time

This way identifying whether there have been any significant changes in terms of the skill representation within the organization. Without a doubt it should be a transparent 360-degree feedback process throughout which everyone involved – peers, managers, employees’ themselves etc. – highlight what they perceive are the existing skill gaps.

Some tools you can use for this include: 15Five, Officevibe, Culture Amp, Leapsome, Hppy, TinyPulse, etc.

Through employer skill gap questionnaires/surveys

Take a look at this guide on how to design an employer skills survey.

By using assessment tools

Skill gaps can also be revealed by implementing assessments and testing tools. Assessments allow you to gather valuable insights about employees in a standardized and objective manner. And quickly, with barely any human effort required. 

Step 3. Find out where the gaps are

After conducting skill gap analysis, you will have a clear picture of what skill gaps existing in your company and how that differs from where you ideally want the organization to be in the future. The next step is to identify the particular challenges your organization is already (or might in the future) face as a result of these skill gaps. To give a few examples:

  • Is it lack of technical experience?
  • Is it lack of flexibility within teams?
  • Or is it something else?

Step 4. Put your findings into action

Reskill or upskilling already existing employees

If you’re not looking to hire, then provide training to minimize existing skill gaps. A report from the World Economic Forum and PwC found that investment in closing the skills gap could boost GDP by $6.5 trillion by 2030. So, it’s needless to say that investing in reskilling programs and reducing skill gaps is definitely worth it. 

For example, if multiple people in your organization find it difficult to independently solve problems – you can provide them with goals and guidance on how to achieve these goals, then give them the space to find the solutions on their own. 

Conducting skills gap analysis can be a time consuming process, I know, however, reskilling to address talent gaps has proven to be a successful strategy. 😉

Let me give you an example of how you could coach someone who is, for example, less flexible.

  • Communicating change.
      • Make sure you make someone feel heard, by letting this person share their concerns. 
      • Focus on the why behind the change. Less flexible people will only accept change if they understand why they will benefit from this change.
      • Change often involves risk, so make sure that your employees know that when they fail, it is seen as a learning opportunity rather than a massive setback. 
  • Motivating.
      • There are always some procedures that you won’t like to see changed. Make someone who’s less flexible the ‘owner’ of this procedure, so that this person feels appreciated for their personality.
      • Find ways to motivate employees to never stop learning new things and to be open-minded, for example, by organizing workshops or facilitating reugarly ‘brainstorm sessions’ in which new ideas or optimizations can be pitched.
  • Giving feedback.
    • As less flexible people might find it more difficult to cope with feedback, make sure to give them some time to process feedback. An absolute no-go is asking for their reaction to your feedback right away.
    • Apply the sandwich method. Start with something that went well, then communicate your feedback, and end with another compliment.
    • When giving feedback on for example someone’s idea on the spot, make sure to summarise what this person has said, to demonstrate that you have actually listened, and for this person to confirm that your summary is right. This will decrease the feeling of not feeling heard.

Hire for skill gaps

If the existing skill gaps are too wide to be effectively solved by employee training, the next rational step is to begin hiring in a way that allows you to minimize the existing skill gaps. By gaining insights in your current team’s skill gaps, you simultaneously reveal your hiring needs. 

When looking for candidates, screen them for skills that your company needs or is lacking to become more successful. 

After all, hiring success is made up of two components: understanding the needs for your hires and collecting the right candidate information to assess whether they fit these needs. 

Why do skill gap analysis?

Now that you know what a skill gap analysis is, let’s talk a bit about why it’s important to measure.

5 Benefits of conducting skill gap analysis

Gives you insights about your entire workforce

Not only will you know what are the weaknesses of your workforce, you will also gain insights into what are the top-performer traits & skills of your team members. 

If a team, for instance your Sales team, consists of 10 people or more, you could separate top-performing team members from less-performing team members to analyse what distinguishes them – and therefore, which skills/personality traits are predictive for top-performance.

Moreover, on an individual-level, you can identify strengths and weaknesses by comparing your team results with those of individuals from these teams. Allowing you to figure out what’s already there and what’s missing.

Point being – the more you know your current workforce, the better hiring decisions you will make in the future. Because for once, instead of blindly guessing what you need (or hiring copy-cats of your current top-performers), you will actually have enough information to back up your hiring decisions with.

Increased productivity over time and improved employee engagement

On top of knowing your entire workforce better, you will also be able to provide current and new employees with all they need to improve and become better at what they do. Eventually, resulting in an increased employee productivity and engagement over time.

Helps you to focus on developing and retaining your people

Having clear insights into what are the strengths and weaknesses of your workforce, means you’ll have a more clear understanding on what areas need improvement. The ability to identify skill gaps present within your teams, or on individual level, will help you decide and target resources on those gaps that require the most attention. 

Improves your recruitment success

Without a doubt, recruiting and hiring people that fit your team can often be a struggle. Once you know what skills your current employees are lacking, you can begin looking for candidates that already master those skills.  After all, as I mentioned before – it’s way easier to recruit and eventually hire good people for your company if you are able to identify candidates whose skills match with those needed to succeed within your company and specific team.

Why, you might ask? 

That brings me to the next point.

Competitive advantage

Hiring people that are copy-cats of your current top-performers can be dangerous. In fact,  copy-paste effect leads to a lack of neurodiversity (in your teams). And teams that lack neurodiversity are more likely to fail. As lack of neurodiversity goes hand in hand with a homogeneous representation of skills and personality traits. 

That’s why a skill gap analysis will allow you to build stronger teams that are better equipped for future business needs. How? Because there will be a variety and wide range of skill sets present within the teams.

The danger of not measuring skill gaps objectively

To conduct an effective skill gap analysis, it is absolutely crucial to collect insights in an objective way, yet doing so can prove to be quite tricky. Why? Because skills are often intangible, and therefore, notoriously hard to assess. So you can imagine the dangers that can arise when you start assessing something that is intangible. 

Many traditional approaches like questionnaires, provide results that are too subjective to be considered useful

Think of it this way:

  • When answering a question about your strength, you’re more likely to overexaggerate what you’re good at (overconfidence effect).
  • When asked what someone else is good at, your answer will likely be different than their own answer (self-report bias).
  • On top of that, most answers will be done in  a socially desirable way – meaning that employees rather than answering honestly, will answer what they think is expected of them (social desirability bias).

 

 

Guide: How to objectively assess skills

Measuring skill gaps objectively does not have to be hard…

Get your guide here!

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