Skill gap analysis: A step-by-step guide

August 12, 2022


A skill gap analysis helps measure the skill gaps for various job roles across the organisation. The insights from this report helps with doing a competency mapping at a time when skills in the IT sector are required to be updated rapidly. Skill gap analysis begins with identifying the skill sets which will be necessary in the near future and can be best determined with the help of assessments. The report from a skill gap analysis can determine the learning and development pathways for the employees and also help with the recruitment process.

What is a skill gap analysis?

Skill gap analysis, with respect to the HR and L&D sector, is a tool that is used to measure the difference between the actual skills of employees versus the skills that are required for a particular job role. So it’s essentially the difference between the skill that an employee has as opposed to the skills needed for the job role. It helps to identify skills needed to meet your business goals. Doing a skill gap analysis will help you ensure that you are setting the right priorities for your business and will help you to see the business from the skills lens.

Why is a skill gap analysis useful?

A whopping 87% of companies say they have skill gaps or expect to within a few years. Rapid technological developments and digitisation are changing the skill requirements across the industry. The workforce has to adapt and align themselves to the new job roles in order to keep up. This is where the skill gap analysis comes in. It serves various purposes:

  • Gives insights into the workforce: A skill gap analysis will help organisations do competency mapping of its workforce. You will get a clear picture of skill sets of employees, in particular the technical skills. The skills gaps can help determine the direction in which to target the learning resources.
  • Boosts learning and development: Employees will be able to measure their competency in various skills as per the skill sets of their job role. Accordingly, they can be assigned to a training program that will help them cover the skill gaps. Overall, this learning and development exercise will increase the productivity of the workforce.
  • Helps with strategic workforce planning: For better workforce planning, you need to have the right employees with the right skill sets for the right role. To plan for the future, these strategies have to be in place.
  • Improves recruitment efforts: Skill gap analysis can help build the skill matrix of the employees. So if the need arises, you know which skills to hire for. Whether the hiring is external or internal is a call that has to be taken. You can decide if to train the existing workforce or hire skilled employees, whichever is more beneficial.
  • Creates competitive advantage: Running a skill gap analysis helps to do competency mapping of the organisation. This will give a clear view of the overall skill sets of the workforce and highlight the gaps. Accordingly learning and development can be leveraged to cover the skill gaps and get an edge over others in the industry.

When should you run a skill gap analysis?

A skill gap analysis isn’t a one-and-done activity. Technology keeps evolving and consequently so do the skills requirements. This means that you’ll have to conduct a skill gap analysis on a regular basis. This is especially important when organisations need to assess the skill gaps for their upcoming projects in order to align with the industry standards.

How do you conduct a skill gap analysis?

1. Identify

It is imperative to understand the key trends in the industry before you run a skill gap analysis. You should also study the future industry projections to know what the competitive landscape will look like and the kind of skills which will be in demand a few years down the line.

There are a few skills identification software that can provide standardised models of the skills required as per industry and function. The software models will give you a starting point to figure out the relevant target skills.

Further, you can reach out to hiring managers and talent acquisition experts for on-the-ground knowledge related to the skills they are trying to find in candidates. They can help you validate the key trends which you find through your research.

2. Measure

Now that you know the target skills for job roles in your organisations, it will be easy to measure the gaps between the required skills and the actual skills. You have to essentially build a competency matrix for your organisation.

Below is an example of a simplified skill (or competency) matrix.

While there are many ways of doing this, you can go for technical assessments to measure current skills. Platforms like Yaksha can help you build customised technical assessments specific to job roles.

These skill gaps can be verified on an individual level with the managers. You can also take information from the employees’ performance reviews. You can get even better clarity by having personal interviews with the employees.

3. Upskill

The end result of measuring the skill gaps is a skill matrix. While there are two ways you can take action – hire or upskill. In a lot of cases, it makes sense to upskill rather than hire as hiring costs are much higher as compared to a training program. Basically, why replace when you can repair?

This report will help you determine which employees need to be upskilled and the technologies they need to be upskilled in. The skill gap analysis empowers the Learning and Development team to decide topics for training and development exercises keeping in mind the business objectives.

A skill gap analysis is not a once-in-a-blue moon task. It needs to be done regularly if you want to stay aligned with your business goals. It might be tedious but it has its benefits. Yaksha Assessment Platform can help you determine skill gaps of your employees with its customised and role-specific technical assessments.

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