What Is a Skills Gap . . . And How Do I Analyze It?

The simplest way to think about a skills gap is to consider the difference between performance and potential within your organization. A gap analysis brings this inequity to the foreground. It’s an effective way of asking questions about productivity within your team—what does your workforce currently offer, how well do they meet targets, and what would they need to perform optimally?

A skills gap can appear in many forms, depending on the type of organization. It might be a question of training—employees requiring more technical expertise or a better understanding of company philosophy. At a larger level, a skills gap may signify the need to acquire more specialized employees. On the other hand, a skills gap might stem from infrastructural inadequacies or a need to develop better communication practices.

A skills gap analysis measures an organization's ability to meet its objectives, so a quantitative measure of performance is required. For the majority of businesses, a financial measure, such as a profit margin, is the best descriptor of performance. But there may be other, more relevant measures depending on the type of organization. Turnaround time, for example, might be a good indicator of service-based performance. Discrepancies between expected and actual performance can then be used to pinpoint areas where training or innovation would help.

Because of their comprehensive nature, skills gap analyses are useful for considering the relationship between a team and their objectives. Conducting regular analysis reveals patterns in attainment and underperformance within an organization, and gives an effective indication of the health and versatility of company processes. In turn, this provides direction for training programs and hiring practices.

What’s the Best Way of Identifying Skills Gaps?

Once a skills gap is identified, it becomes more straightforward to create actionable steps to bring performance in line with potential.

The key to accurately measuring performance and identifying skill gaps is asking specific, astute questions of your organization. Think about the fundamental what and why questions, which help identify the reasons behind your data. Has your organization focused on hiring a specific type of skill, thereby unknowingly neglecting other important skill sets?

Take the difference between hard and soft skills, for example. Hard skills are specific, teachable abilities that can be defined and measured. This is regardless of skill complexity, so covers anything from typing to hedge fund management. Soft skills, on the other hand, are those which aid general performance within an organization. Examples include managing your time, creative thinking, and the ability to lead. Fast-growing companies often fall into the trap of acquiring many employees with excellent hard skills in response to specific problems and requirements. This can cause an overall soft-skill gap within their business.

How Do Skills Gap Analyses Benefit My Employees?

An important detail of skills gap analyses is that they can be performed on two concurrent levels: individual and company-wide. This means that, while aiding the general performance of an organization, gap analysis is also a useful tool for the personal development of individual employees.

You can even initiate two gap analyses for an individual—one self-evaluated by the employee, the other by the employee’s line manager or team leader. The results are then used as the basis for discussion within a performance review. Knowing how employees and managers evaluate differences between performance and future expectations can provide insight into workplace relationships, leading to better communication strategy.