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How to Identify Skill Gaps in Your Company? A 5-Step Process

We are seeing the emergence of a global skills revolution - where reskilling employees is a new business priority to help them rapidly adapt to the fast-changing economy.

The vast majority of companies globally (87%) are conscious that they have a significant skills gap or will have one within a few years, according to McKinsey & Company.

And more than just being aware of this challenge, companies consider it a priority (nearly all respondents to the McKinsey survey ranked closing potential skills gaps as a priority for their organizations, with about a third saying it is in the top three priorities) and want to take action to close it. The latest LinkedIn Workplace Learning Report also confirms this: 64% of training and development professionals say retraining today's workforce to fill skills gaps is a priority.

So, if in 2022 one of your goals is to create more upskilling and reskilling opportunities for your employees, that means it is time to identify the existing skills gap.

But what exactly is “skill gap,” you ask? As the name implies, it is:  “a significant gap between an organization’s skill needs and the current capabilities of its workforce.”  It’s the moment at which a company realizes it can no longer advance, keep up with previously set goals or be competitive against other companies unless those skills are learned or improved.

It is driven by a combination of factors that create the new world of work including the exponential growth of automation, artificial intelligence technologies, along candidates lacking the necessary skills to interact with these advancements and innovations.

The World Economic Forum said it clearly this year: COVID-19 situation worldwide has made the skills gap bigger and the need to close it more urgent. This calls for new strategies at every level to best prepare workers for the post-pandemic economy.

Identifying these gaps is critical to building effective and focused training programs. Often, companies launch programs without enough understanding of where the skill gaps exist in their workforce. This just produces poor results. It doesn’t make sense to improve your customer service training when what your employees really need is leadership initiatives, right?

There is a multitude of benefits to skill gap analysis and identification, including:

  • Analyzes the organization as a whole.
  • Analyzes existing skills and lets you know if employees can learn these new skills through training or if you may need to hire different workers.
  • Gives you an idea of what training is required first and where you need to spend the most money and time.
  • Keep your company updated and aligned with the new demands of labor markets that are continuously disrupted by technology, demographic change, and the evolving work environment.
  • Motivated employees. Employees are anxious about the growing skills gap, and 46 percent of those surveyed by McKinsey believe their current skills will become irrelevant by 2024. By constantly reskilling and upskilling them, you are feeding their need for growth and improvement.

Get to the heart of your most pressing skills gaps with this simplified 5-step process:

1) Identify your company's objectives

While it might seem nice to have well-rounded employees, ultimately your business probably needs one skill more than another. By identifying your company's goals first, you are better able to identify what training your employees need now and in the future. This is how you will know whether it is more important to focus on technology training, customer service skills, even both, or something else. 

Don't overlook this first step. You need to spend as much time and effort learning about your business objectives as you do on creating their training programs. 

2) What skills are needed to achieve these aims? Break down skills based on individual jobs

Again, it might be nice for all your employees to have customer service skills and be well-rounded, but your IT people probably need far less of this kind of training than your sales staff or call center reps. To make sure you aren’t training your employees in the wrong areas, you need to identify the skills most needed for each job type in your company and then assess what skills your employees already have.

Group Job Titles: Begin this process by making things a little easier on yourself and combining similar jobs. For example, if you have Tech Support Representatives and Customer Service Representatives, they are likely to require some of the same training. However, your Tech Support Reps may also need training similar to your IT specialists so group your Tech Reps with both.

Rank your Skill Priorities: After you’ve figured out how your positions are categorized, you can now move on to prioritizing your skills based on position level. For example, a senior team member or supervisor would likely need expert-level skills, while there will be other skills that just require proficiency while others may only need basic knowledge.

Then, create a list of these skills and make sure managers are aware of what their team members are expected to know and how knowledgeable they are supposed to be.  

3) Identify What Skills Employees Already Have

Now that you have a clear idea of your business priorities and the required skills in each position, you'll need to evaluate if the people in those positions are well equipped to do their jobs. Don’t assume your employees know what they should do. Even long-time employees may have skill gaps due to not needing certain skills on a regular basis or because their job has become specialized.

Assessing the most important skills needed by a person in a particular job will give you what you need to move on to Training Needs Analysis (TNA). With the TNA you measure the skills against the employee’s level of existing knowledge and how much training would be required.

These tools will help you get a better idea of what skills your workforce currently possess:

  • Employees can fill out an online profile or survey telling what skills, certificates and other competencies they have.
  • Group discussions, assessment tests, and personal interviews can also be used depending on the size of your workforce.
  • You can also evaluate your employees through customer feedback to see where gaps may exist.
  • Assessment/specialist software is especially suitable for very large workforce groups. Use this once to get you started or use it periodically to gauge progress and see other gaps.
  • While online or paper testing has benefits, observing how your employees actually work is often an effective way to ensure things are being done the way they should be. Not only is observation critical for you to see what employees can do, but it gives you a chance to let employees know exactly what you want to be done and how, otherwise, how will they know?
  • Knowledge surveys, assessments, and questionnaires can help you find out if your employees do actually know what they need to about your company and its values.

Get more ways to identify skills here: Identify Skills Gap in Your Employees

Before going on to the next step, keep the results separate from those of step 2, so that you have a clear picture of where you are and where you need to be.

4) Gather Data, Analyze and Compare

A Skills Gap Analysis is, very simply, a list of what skills you need (step 2) and what skills employees already have (3). The difference between the two is your skills gap (This step!).

Skills needed – skills possessed = skills gap

Here you'll compile all your data, and compare it to find the gaps. Then, analyze these items in your review process:

  • List of skills your workforce is lacking and what training is necessary to address these gaps.
  • Which skills need to be hired for
  • Training required for different groups or teams
  • Employees who have shown leadership/exceptional skills and could be promoted.
  • Identify who has critical skills and how many of these people there are. What percentage is there and can their skills possibly be used to help train others.
  • What skills will be needed in the future and what can be done to prepare.

5) Start Closing Gaps

Now that you know where the gaps are, it’s time to start closing them. At this point, you can start making an action plan for both training and hiring. Because of the time and expense associated with training, it’s best to start with closing the most crucial gaps so definitely have your priorities in order first before building your training program.

Each plan should include reasons why employees should be improving these skills, the best ways to address the gaps, what support is needed to complete, and a date for when the training needs to be completed.

You have a variety of options for closing the gaps including coaching, mentoring, e-learning programs and more.

Your plan must also be realistic so in order to make sure it is, in fact, workable your plan should also include:

  • Cost plan
  • Content for the training and if it is considered basic, advanced, etc.
  • What type of training it will if it will be in a traditional classroom with an instructor, online, a combination of the two, or something else.
  • Who will be providing the training
  • Key dates include an end date for the training and/or milestones. 




Identifying employee skill gaps



Addressing skills gaps in project management

Identifying skills gaps, training and development 

Skills Gaps in Your Team: Identify, Identify, Identify - and Invest

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