How to Perform a Skills Gap Analysis: An Actionable Step-by-Step Guide (+ Template)

Conducting a skills gap analysis helps organizations identify the skills employees need to meet business goals and pinpoint where gaps exist in their current workforce.

Following a systematic approach can enhance your team’s capabilities, drive organizational growth, and stay competitive in your industry. Here are seven actionable steps to execute a comprehensive skills gap analysis and elevate your workforce’s skills.

Lay the foundation for the process

Before you begin, plan out the goals of your skills gap analysis. Careful decision-making is crucial in this phase.

Consider the following elements and questions:

Scope of your skills gap audit: Will you assess a specific team or the entire organization?

• Example for a department-based process: Assess the IT department’s skills in cybersecurity, coding languages, and software development
• Example for an organizational skills gap analysis: Identify company-wide gaps in leadership, project management, and digital literacy

Strategic goals: Identify your organization’s overarching business objectives to align skills requirements with strategic goals. This is the most important element in this step. It will help you align the skill gap analysis with the broader business needs and ensure that the identified skills will contribute to achieving these goals.

Example: If the goal is to expand into new markets, focus on skills like international marketing, cultural competence, and global sales strategies.

Assign responsibilities and ownership of the process: Decide who will conduct the analysis. Base your decision on time and resource allocation.

Examples:

• The human resources team takes the lead for company-wide assessments
• Team leaders lead departmental evaluations

Timing of the analysis: Schedule the analysis during a period that allows for thorough assessment without disrupting daily operations. Remember that your results may not be valid for long due to further industry developments.

Example: Conduct the analysis during a slower business season or integrate it into regular performance review cycles.

Prepare for communication: Develop a communication plan to explain the purpose and process of the skills gap analysis to employees.

Example: Use emails, team meetings, or intranet posts to inform employees about the upcoming assessments and reassure them about the positive outcomes.

Select the method for conducting the analysis

There is no set path to performing a comprehensive skills gap analysis. Instead, incorporate one or more of the methods below into your process.

1. Skill and competency assessments

Skills assessments evaluate an individual’s abilities, knowledge, and competencies in a particular area, such as technical skills or industry-specific knowledge. They might involve written aptitude tests, multiple-choice questions, hands-on demonstrations, or job-specific work samples. These assessments help identify an individual’s current proficiency level and compare it with the skills required for their role or industry standards.

Example: For a sales team, you might conduct assessments that measure negotiation skills, product knowledge, and customer interaction techniques to ensure they meet the required proficiency levels.

2. Behavioral assessments

Behavioral assessments evaluate how employees respond to specific situations on the job, focusing on skills like critical thinking, reasoning, memory, decision-making, and problem-solving. These assessments often involve completing puzzles, solving mathematical problems, or answering questions about real-life scenarios.

Example: To assess a customer service representative’s problem-solving abilities, you might present them with various customer scenarios and evaluate their responses to identify strengths and areas for improvement.

3. Focus groups and interviews

Human interaction through focus groups and interviews can provide valuable insights into individual and team skills gaps that data-driven methods might miss. These discussions should involve employees, management, and stakeholders from various business areas to comprehensively understand skill needs and gaps.

4. Role competency analysis

Role competency analysis involves reviewing a particular job role’s specific tasks and responsibilities and creating clear, meaningful role descriptions. This helps to understand the exact skills required for an employee to perform their role effectively.

Example: Analyze the role of a project manager to identify essential competencies such as project planning, risk management, and team leadership, ensuring these skills are clearly defined in the job description.

5. 360 feedback

A 360-degree feedback process gathers feedback from peers, managers, direct reports, self-evaluations, and business partners to provide a well-rounded view of an employee’s skills and performance. This multi-source feedback helps identify improvement areas and facilitates personalized development plans.

Example: Implement 360 feedback for a team leader to gain insights from team members and peers about their leadership style, communication skills, and ability to manage conflicts.

6. Performance reviews

Performance reviews provide an opportunity to explore individual strengths and identify skills gaps. They should be integrated with skills audits and matrices to align with long-term organizational and individual employee career goals.

Example: During annual performance reviews, managers can assess employees’ current skills against their role requirements and career aspirations, helping to identify areas for development and training needs.

Define your organization’s future goals and required skills

List the company’s short-term and long-term strategic objectives.

Example: Expand market share, improve customer satisfaction, innovate product offerings.

List the critical job roles within your organization and the skills necessary for each role. This includes both soft and hard skills. Ensure that job descriptions are up-to-date and accurately reflect the current requirements.

Example: Focus on skills like market research, international sales, and cultural competence for market expansion.

Example: Use a scale from 1 to 5 to indicate the criticality of skills like leadership, technical expertise, and customer service.

Assess current employee skills inventory

Evaluate your employees’ current skills using the methods you defined in step two. As shown, you can collect skills data through skill and competency assessments, performance reviews, and 360 feedback.

For instance, a software developer has ‘Excellent’ Python skills and ‘Intermediate’ Java skills.

Using a software tool or a spreadsheet with automatic calculations and formulas will help you compile your data with no additional effort.

Analyze your skills gap data

An effective skills gap analysis consists of the following:

• An x-ray of your team’s/department’s/organization’s current skills
• The skills you require to be competitive in your industry and achieve your business goals

Identify discrepancies between existing skills and those needed to meet organizational goals.

Example: If a marketing team lacks digital marketing expertise, highlight this gap.

Spot critical gaps for individual and team development focus and consider the average scores per individual and skill to identify broader trends and needs.

Example: Prioritize cybersecurity skills training if the company faces increasing cyber threats.

Use color-coded results and importance-weighted scores to intuitively and immediately understand skill sets that require attention, facilitating quick and effective decision-making.

Example: Use red for critical gaps, yellow for moderate gaps, and green for areas with adequate skills.

Start bridging the gaps

Develop clear strategies for closing any skills gaps you encounter. Focus on the critical skills that influence your organization’s strategic objectives.

• Implement training and development programs: Launch the training programs and monitor participation—for example, track completion rates and gather feedback on training effectiveness.
• Recruit to fill critical gaps: You can bridge critical gaps faster through a hiring process as compared to internal development programs that would require more time—for example, recruit experts in emerging technologies to bolster the IT team

Use 1:1 meetings, check-ins, and performance reviews to communicate your results to employees and discuss how you plan to use your skills analysis to further their growth.

Example: For digital marketing skill gaps, plan training sessions on SEO, social media strategies, and content marketing. Consider online courses from platforms like Coursera or LinkedIn Learning.

Monitor and evaluate the results

Track the results of your interventions, measure their effectiveness, and make any necessary adjustments for future skills gap analysis. Set key performance indicators (KPIs) to measure the effectiveness of interventions.

Example: Set KPIs, such as increased website traffic from organic search, to measure the effectiveness of the SEO training. Gather feedback from employees on the training programs to identify areas for improvement.

Conduct regular reviews to ensure that staff members remain on track. Schedule monthly meetings to discuss development plans and achievements.

Conduct comprehensive skills gap analyses annually to align with industry trends and organizational goals.

By following these detailed steps, your HR team can conduct an effective and actionable skills gap analysis, ensuring your organization remains competitive and your workforce is continuously developing.

Best practices for conducting a skill gap analysis

Follow the recommendations below to ensure a successful skill gap analysis exercise.

1. Align your skills gap analysis with business goals and company needs

Link your skills gap analysis to the core objectives of your business. Perhaps you’re expanding into a new business domain, are planning an upcoming project, or have noticed a specific skill on the rise in your industry. Whatever your motivation, keep your analysis in the same lane as your business goals.

Key steps to streamline this process:

• Define key goals: Understand your business’s immediate and future aims
• Identify relevant skills: Pinpoint skills essential for achieving these goals, like digital competencies for a tech-focused expansion
• Focus on strategic skills: Prioritize the development of skills that directly contribute to your strategic targets
• Integrate analysis outcomes: Apply the insights from your analysis to refine your business strategy, ensuring workforce development aligns with business ambitions

2. Stay abreast of industry trends

• Consult industry reports: Regularly access insights from authorities like Gartner and the World Economic Forum to stay informed about new technology, such as generative AI is influencing your sector
• Engage in industry networks: Use platforms like LinkedIn for real-time discussions on technological trends and skill needs
• Observe competitors: Monitoring how peers respond to technological advancements can guide your training focus areas

3. Prioritize your list of skills

Few organizations have bottomless budgets, so you’ll need to prioritize investment in specific skills over others.

4. Achieve buy-in from key stakeholders

Always consult with company stakeholders before, during, and after your skills gap analysis. The list of stakeholders will look different for each company but may include:

• Team leaders
• Domain experts
• Executive leadership
• Recruitment leads
• HR professionals specializing in L&D

5. Implement a phased approach

Instead of immediately conducting a comprehensive analysis across all areas, consider a phased approach. Begin with a specific department or team with the most significant impact on your organization and gradually expand the analysis.

This structured approach ensures a more efficient and effective skills gap analysis, providing valuable lessons and insights you can apply as you expand the initiative.

Bridge your organization's skill gaps with Deel Engage

Deel Engage’s suite of employee enablement tools will be integral to your skills gap analysis. We’ve handpicked these solutions to slide into your process:

• 360 feedback software: Incorporate skills development conversations into performance reviews and regular check-ins—use 360 review cycles to gather feedback from multiple perspectives to assist with ongoing skills gap analyses
• Career frameworks: Give your employees reason to commit to addressing skills shortages by mapping out the roles in your organizations and clear career pathways between them
• Learning management system: Build and run engaging training programs for your team using science-backed methods like spaced repetition, microlearning, and social learning
• Deel HR, our truly global HRIS solution, is always included for free

All these modules offer:

• Automated data collection, making the process more efficient and accurate
• Analytics and reporting tools that provide deeper insights into skill gaps
• Real-time tracking of employee training progress
• AI assistant to help create personalized training programs

Book a demo to see how our solutions will help you build a high-performance workforce.