How to Conduct an Effective Skill Gap Analysis

How To Conduct An Effective Skill Gap Analysis

As your business or company grows, two crucial things also change. First, continuous technological advancements directly or indirectly influence how you conduct business and measure success. And second, the skills expected from your workforce evolve rapidly. How do you ensure that your business stays afloat despite these changes?

An assessment tool called skill gap analysis can be your ticket to finding answers. It is the first step towards building a workforce that is ready for the future and has the resources to reach its full potential. This article gives a brief introduction to skill gap analysis, how to conduct it, and actionable steps to address it. It concludes by highlighting the benefits of this approach and a final note on when to perform a skill gap analysis.

What is a Skill Gap Analysis?

illustration of skill gap analysis

Skill gap analysis is a tool or technique that organizational heads and key decision-makers like the human resource department and team managers use to determine the difference between their current employee skill sets and the required skills to take the organization to achieve its goals. Skills refer to soft and hard skills expected to help implement the business plan and keep the company running.

For instance, if your company is changing its business goals such that there’s a need for a more intensive integration of certain technology products, you have to confirm that your current employees can easily handle and adapt to that change. This is one of the scenarios where a skill gap analysis is helpful.

How to Conduct a Skill Gap Analysis in 3 Easy Steps

Conducting a skill gap analysis requires different levels of planning, depending on the organizational structure. For instance, a company that relies more on teams than individuals should assess the skills based on teams rather than individuals. If it’s the other way around, adjust your analysis to suit the existing structure unless the new business goal and strategy would require a change in structure.

After making this decision, these are the three significant steps involved in conducting a skill gap analysis.

3 steps to conduct a skill gap analysis

Step 1: Identify company goals and the required skills to achieve them

Some critical features of your company will guide an effective skill gap analysis process. They include the company mission and vision statement, values, and long and short-term goals. Being familiar with these metrics is essential to proceed to the next step of the analysis. You’ll answer questions like, what metrics are you looking to improve in the next couple of years? What processes of production need fortification or a complete overhaul?

Once you’re familiar with the goals, key performance indicators, and other relevant metrics, the next step is to research and document the skills needed to move the company from its current status to its desired destination. Do the employees have what it takes to drive the company effectively for the expected timeframe? Is there a need for more technical skills? What is the potential for automation in the next five years? Is it possible that a new role would arise from implementing new industry-specific technology?

More tailored questions may arise based on industry. The documentation gives a clearer picture of what to look for at the next stage of the skill gap analysis.

Step 2: Measure the current employee skills

Here, you’re analyzing the employees’ current competencies. You can do this by conducting performance reviews, surveys, assessments, or simply asking those directly in charge of each employee.

Keep in mind that the goal here is not to threaten the employees’ job security but to evaluate. Your approach determines the quality of results you’ll get from this stage.

If you decide to go with the skill assessment approach, which is more efficient in most cases, Lumofy Talent Assessments provides a comprehensive breakdown of the skill gap in your company.

Step 3: Determine and implement a practical approach to address the identified gaps

At this final stage, you know the company’s status and plans for the future, what it needs to get there, and how much employee growth is required. So, how do you proceed with the data you’ve gathered?

There are several ways to approach it. The importance of a missing skill and its perceived life value to the company goals determines how you proceed. Either hire new talents, outsource some one-time or short-term projects, or implement employee skill improvement programs. If all the identified skill gaps have the potential to serve the company for a long time, partnering with a learning and development company to provide professional development courses and training would be the most profitable decision.

At Lumofy, our learning experience platform will help you create a personalized learning path for different competency levels in your company.

An illustration of skill gap analysis

Why is Skill Gap Analysis Important?

An effective skill gap analysis is a data-driven approach to making decisions about your company’s growth. These are some of the many benefits of conducting a skill gap analysis.

Why is Skill Gap Analysis Important?

Workforce planning

Skill gap analysis provides a clear understanding of the current relevant skills and how they will evolve in the future.

Technology is the primary change driver in today’s workplace. After that, there’s the potential that individuals would want to have a say in their job roles and expected workplace culture. Conducting a skill gap analysis at regular predefined intervals helps your company prepare for these changes, advance smoothly into the future of work for your industry, and meet business demands effectively.

Employee development and retention

An effective skill gap analysis ensures that learning and development programs achieve the best employee development experience. Imagine making assumptions about the current skills in the company and the skills for the future. Or worse, organizing a one-size-fits-all kind of training for employees. There’s every possibility that these training efforts would yield low results because only a few people – if any – would benefit from such an approach.

When done right, this competency analysis trains your employees to be leaders that can propel your organization forward. As employees record successes in their roles, they feel a higher sense of belonging and commitment to the organization.

Improved hiring strategy

It improves the hiring strategy of the organization. The data from an effective skill gap analysis informs your decision about hiring new talents. This way, you know exactly what you already have and need and can streamline the job descriptions to best fit into those gaps.

Competitive advantage

At its core, skill gap analysis helps you stay ahead in the game because it focuses on brainstorming and implementing strategies that ensure you get the desired results for your company. It also boosts employee productivity, which in turn gives you an advantage over your competition.


There is no set time to conduct a skill gap analysis. It is handy in different scenarios, such as introducing new technology, tweaking your business goals, advancing your business strategy, or noticing a consistent disappointment in your goal-reaching chart.

Conducting an effective skill gap analysis is the best way to easily identify what you need and design a plan of action that best suits your company’s health. Get started now by redefining your company values and assessing your workforce. Our solution can help you create a learning journey that helps you design the best training, implement it, and measure the progress of your employees.

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