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How to conduct a skills gap analysis

“An investment in knowledge pays the best interest.” – Benjamin Franklin

Learning and development along with a focus on employee engagement has been gaining in popularity in recent years. 

Employees are much more vocal about their expectations for learning development and for employers to invest in their learning. Employers have also become much more aware of the benefits of providing learning initiatives in the workplace. 

Did you know that productivity increased by 12% for employees who received soft skills training. (Adhvaryu, 2022) Learn more about how soft skills can impact productivity in the workplace

But learning within an organisation cannot simply be for the sake of learning as it can be costly and time-consuming. Learning needs to be profitable. It needs to catapult the organisation and employees in their career aspirations and growth pursuits. 

Which is where a skills gap analysis comes in handy. In this blog, we explore:

What is a skills gap analysis

A skills gap analysis is an assessment or analysis, usually conducted by HR or learning and development professionals, with the aim of identifying growth requirements in terms of trainable skills. The analysis provides information on:

  1. The current skills of employees within the organisation
  2. The skills required for the purpose of meeting organisational targets
  3. The development of these particular skills

The main objective of the skills gap analysis is to identify the skills gap or training needs. A skills gap occurs when an employee lacks the skills needed to complete their job effectively. 

For example, where a task requires the use of MS Word but the employee appointed to complete the task does not know how to operate MS Word, a skills gap exists and must be addressed. 

A skills gap can also incur in respect of future plans.

For example, an English company hoping to expand its business into France would need to address the skills gap by appointing individuals who speak French.  

A skills gap analysis can be used to identify skills gaps within teams, departments or of a single employee.

How to carry out a skills gap analysis

There are essentially three phases to completing a skills gap analysis.

Step one: Prepare

The first and most important step of completing a skills gap analysis is to prepare. This will take time and attention to detail. 

In the preparation phase, the aim is to identify the skills required per position.

Consider each job description and identify the skills that an employee would need to be able complete each task successfully.

A manager’s job description may include the following tasks, and will require the aligned skills: 

Task:

Skill:

Set goals

Organisation, planning, goal setting

Arrange and facilitate meetings

Organisation, communication, networking

Next, we need to quantify the identified skills by creating a skills analysis template. A skills analysis template is in essence a form used to rate employee performance. When creating a template it is essential to quantify the skills by setting achievable goals.

An unquantifiable analysis would be as follow:

Skill

Rate

Rate the employees ability set goals:

Poor

Below average

Average

Good 

Great

 

This question is subjective and easily skewed by the person responsible for the rating’s ability to communicate, their relationship with the employee or even their frame of mind at the time of the rating.

A quantifiable analysis requires clear alignment with what is expected in terms of their job description.

For example:

Skill

Rate

In respect of setting goals, the employee:

Does not set goals in general

Sets goals but does not usually achieve them

Sets goals and achieves them more often than not

Sets goals and mostly achieves them

In this way the person responsible for conducting the analysis needs to consider facts surrounding the person’s ability to set goals. 

The final step in the preparation phase is to rate the importance of the skill and set the expected standard.

In our scenario, goal-setting would be regarded as an essential skill and the expected level of performance would be for the employee to ‘set goals and achieve them more often than not.’ The expected rate is of course kept separately and not visible or known to the person responsible for the rating at the time. This is to reduce the possibility of unconscious bias.

Skill

Rate

In respect of setting goals, the employee:

Does not set goals in general

Sets goals but does not usually achieve them

Sets goals and achieves them more often than not

Sets goals and mostly achieves them

The analysis can go one step deeper to identify the cause and related sub-skill. For example:

Skill

Rate

Which of the following contributed to the employee’s goals not being met:

(Choose all relevant options)

Ineffective teamwork

Incorrectly prioritising tasks

Poor communication or miscommunication

Incorrectly defined goals

By adding a second layer to the question, we can target specific skills. Rather than assuming that goal setting should be rectified through project management training, we are open to the possibility that poor communication or the inability to collaborate is perhaps the point of failure.

Conducting a skills gap analysis is all about planning and accuracy. Conducting a soft skills gap analysis is all about defining expectations. Soft skills are difficult to assess and to a great extent subjective. For this reason, if your skill and required level is not clearly defined, your skills gap analysis may do more harm than good by:

 Aggravating employees with unfair ratings

 Allocating funds to incorrectly identified skills gaps

Step two: Conduct an analysis

Our next step is to analyse the actual skills of the employee and compare them to the identified standard.

An employee’s performance and skills can be assessed in many ways. This requires research on the employee’s performance, tasks completed, goals met and even feedback and reviews from co-workers.

Popular ways to conduct the actual assessments include:

  • Reviewing data on past performance
  • Interviewing the employee
  • Interviewing co-workers and the employee’s managers
  • Incorporating peer reviews
  • Consideration of performance appraisals

Popular tools that can aid the assessment, include:

  • Questionnaires
  • Observation checklists
  • Assessments
  • Discussions points

If an employee’s rating is below the identified standard, you’ve identified a skills gap that can and should be addressed.

Step three: Report and correct

Finally, once the analysis is completed, it’s time to act and address the identified skills gap. This can be through mentoring, training, hiring new staff or outsourcing the task.

An important key here is to group and prioritise the gaps identified and address the gaps in order of importance.

Major skills gaps should be addressed first. This includes any gaps in skills that are essential to the productivity and profitability of an organisation, as well as gaps in skills that are scarce. For example, where a department’s success rests on the ability of a single employee it is an indication of a scarce skill, and a contingency plan, such as developing the skills of a second employee, should be put in motion.

Why is conducting a skill gap analysis important

A survey conducted in 2016, involving 1500 managers across 50 organisations revealed the following:

    • 70% of managers were dissatisfied with their company’s learning and development function
    • 70% of employees reported that they did not have mastery of the skills needed to do their jobs
    • Only 12% of employees applied the new skills learned through learning and development interventions
    • Only 25% of respondents believed that training measurably improved performance.

 

Considering that organisations globally spent $359 billion on training in 2016, these outcomes are less than favorable and reveal the danger of a poor learning and development strategy. (Glaveski, 2019)

Conducting a proper in-depth skills gap analysis, allows the learning and development strategy to be aligned with actual company and employee needs. 

For this reason, it is of utmost importance to conduct a skills gap analysis with the end goal in mind. The goal is to identify gaps that are standing in the way of career and organisational growth. 

Investing to address the wrong skills will lead to expenses that do not show a return on investment and an overall failure of the learning and development strategy.

When should you conduct a skills gap analysis?

A good start to improving a learning and development strategy is to implement the need for a skills gap analysis at key moments, including:

  • When business objectives are not reached
  • When business objectives change
  • When introducing new technologies
  • When employee performance is below expectation

Where ad hoc analysis ensures that skills gaps are identified and addressed with minimal impact and damage to the department or organisation.

It’s also wise to implement a routine skills gap analysis once or twice a year, to incorporate planning for new ventures and meeting business objectives.

Conclusion

A great learning and development strategy is attractive to employees. Not only does it increase employee retention and engagement it also improves employee satisfaction. 

Statistically, 30% of employees resign within the first 180 days of starting their employment, however, 95% indicated they would stay if the company invested in their learning.  (ApolloTechnical, 2022) 

But most importantly learning and development strategies should support the purpose and growth of an organisation. 

As the CFO said to the CEO ‘what if we train our employees and they go?’, to which the CEO responded ‘what if we don’t train them and they stay?’

By implementing a routine and ad-hoc skills gap analysis, organisations can fully experience the benefit of strategic learning and development.

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