How to Conduct a Skill Gap Analysis in 2024? (+Free Templates)

According to recent findings, 70% of organizations report experiencing a skills gap, with 40% indicating that the situation has worsened over the past year. This marks a significant increase from previous years, reflecting the growing challenge faced by companies in aligning workforce capabilities with evolving job demands. The World Economic Forum estimates that by 2028, 44% of workers' skills will be disrupted, highlighting the urgency for organizations to adapt.

Conducting a skills gap analysis is essential for human resources (HR) and learning and development (L&D) teams. This analysis allows organizations to evaluate employee competencies, identify areas of deficiency, and implement targeted upskilling initiatives. 

In this article, we'll look at the concept of doing a skills gap analysis and developing an action plan to address skill gap difficulties and construct an efficient workforce.

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Skill Gaps Analysis Case Studies

Organizations addressing skills gaps can implement effective strategies to bridge these deficiencies. Here are several case studies illustrating how big  companies have identified and resolved skills gaps:

1. NASA

NASA, the U.S. government’s space exploration agency, recognized a critical need for data scientists within its operations. To address this, the agency conducted an internal review of its workforce's data-related capabilities, which had not been systematically categorized. This led to the creation of a talent-mapping database that identifies essential data skills for various projects. This tool enables the agency to effectively align employees with the appropriate skill sets to projects that require them, ensuring that the right talent is deployed efficiently.

2. Verizon

Verizon, a leader in communications technology, has set an ambitious goal to prepare 500,000 individuals for future roles by 2030 through its Verizon Thrive program. This 12-month apprenticeship initiative focuses on training high-potential individuals in essential skills for technology roles within the company. The program has proven successful, with 95% of the initial group of apprentices accepting full-time job offers upon completion, highlighting the effectiveness of targeted training in filling skills gaps.

3. AI-Driven Healthcare Startup

Miriam Groom, CEO of Mindful Career and Leader Human Capital at KPMG, shared insights from an AI-driven healthcare startup that faced a skills gap in understanding healthcare nuances. Although the engineers excelled at developing advanced algorithms, they lacked knowledge in patient-centric design. To bridge this gap, the company initiated a cross-functional collaboration program called TechMed, pairing engineers with medical professionals. This initiative not only enhanced product efficacy but also increased employee satisfaction by fostering a multidisciplinary learning environment.

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What Is a Skill Gap Analysis?

Skill gap analysis is a method used to determine the disparity between the skills that employees currently possess and those required to fulfill an organization's objectives. This process includes outlining the essential skills and competencies necessary for different positions, evaluating employees' existing skills through various methods such as self-assessments, performance evaluations, and standardized testing, and identifying specific areas that need improvement through training and development.

The primary aim of this analysis is to ensure that the workforce is sufficiently prepared to address both current and future challenges, thereby improving overall organizational effectiveness and supporting the achievement of strategic goals.

To maximize digital transformation ROI, remain competitive, and achieve business outcomes, organizations must identify and close skill gaps to ensure they have the talent and skillsets to succeed. Here are five reasons to conduct an annual skill gap analysis with your workforce:

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Importance of Conducting a Skills Gap Analysis

To maximize digital transformation ROI, remain competitive, and achieve business outcomes, organizations must identify and close skill gaps to ensure they have the talent and skillsets to succeed. Here are five reasons to conduct an annual skill gap analysis with your workforce:

1. Enables investment in employee development and learning
A skills gap analysis highlights the areas where investment in employee development and learning is most needed. Organizations can allocate resources more effectively by identifying specific skill deficiencies and designing targeted employee development plans that enhance employee capabilities, foster career growth, and improve overall organizational performance.

2. Prepares for digital transformation
A skill gap analysis helps identify specific digital skills and competencies employees need to leverage new technologies effectively. This process ensures the workforce is ready to adopt and utilize digital tools and systems, ultimately enhancing productivity, innovation, and competitive advantage in an increasingly digital marketplace.

3. Provides direction for employee hiring and recruitment
A skills gap analysis provides valuable insights into the specific skills and competencies lacking within the organization, guiding hiring and recruitment efforts. This information helps HR teams create precise job descriptions and recruitment strategies that attract candidates with the necessary skills, thereby filling critical gaps and strengthening the talent pool.

4. Helps HR teams understand the needs of their workforce
A skills gap analysis helps HR teams comprehensively understand the current capabilities and developmental needs of their workforce. By pinpointing specific areas where employees lack essential skills, HR teams can tailor training programs, employee development plans, and support mechanisms to address these gaps, enhancing employee satisfaction, retention, and overall performance.

5. Identifies organizational skill gaps
A skills gap analysis identifies critical skill shortages that could impede business operations and growth. This enables leaders to proactively address these deficiencies, ensuring the organization has the necessary talent to meet its strategic objectives and maintain operational efficiency.

By conducting a skills gap analysis, organizations can make informed decisions about employee development, digital transformation, and talent acquisition, ultimately driving business success in an increasingly competitive and technology-driven landscape.

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How to conduct a skill gap analysis?

To effectively conduct a skills gap analysis, organizations can follow a structured process that involves three main steps: scoping and diagnostics, data collection and analysis, and designing interventions. This approach helps identify the skills needed to meet current and future business objectives.

Step 1: Scoping and Diagnostics

The first phase involves defining the scope of the analysis and identifying the necessary skills at various levels—individual, team, or organizational.

Levels of Analysis

• Individual Level: This is relevant when an employee's role is evolving or when performance does not meet expectations.
• Team Level: Useful when a project demands new tasks or technologies that the team must adapt to.
• Organizational Level: Critical when the organization is not meeting its strategic goals or when a shift in strategy requires new capabilities.

Key Questions

To establish the analysis's foundation, consider the following questions:

• What is the organization's mission?
• What specific business goals are in place?
• Which hard and soft skills are prioritized within the organization?
• What critical skills are essential for fulfilling the mission and achieving business objectives?

A skill is deemed critical if an employee cannot complete a task satisfactorily without it. Conversely, a non-critical skill is one that, if absent, does not hinder task completion.

Future Considerations

When forecasting future needs, organizations should ask:

• Which roles might be impacted by automation?
• What emerging skills are gaining importance in the industry?
• What new positions will the organization need to create or expand?

Step 2: Data Collection and Analysis

Once the scope is defined, the next step is to gather and analyze data to assess current capabilities against required skills.

Data Collection Methods

• Job Profiles: Develop detailed job descriptions to identify critical competencies.
• Employee Skill Inventory: Use performance evaluations, competency assessments, and interviews to catalog existing skills.
• Database Management: Compile the data into a searchable database to facilitate easy access and analysis.

Skills Assessment

Evaluate the current skills of employees through various methods, including:

• Performance reviews
• Job specifications
• Focus groups with management and staff

This assessment will highlight discrepancies between current skills and those needed for future success.

Step 3: Designing Interventions

After identifying the skill gaps, organizations must create targeted interventions to bridge these gaps effectively.

Types of Interventions

1. Training and Development: Implement training programs tailored to address specific skill deficiencies. This may involve expanding existing learning and development initiatives.
2. Job Redesign: Reassess roles and responsibilities to align with organizational goals, which may include upskilling or reskilling employees.
3. Recruitment: Adjust hiring criteria to prioritize candidates with the necessary skills. This could involve hiring freelancers or contractors to fill immediate gaps.

Addressing Common Challenges

HR professionals often face challenges such as:

• Overemphasis on Technical Skills: Organizations may focus too heavily on technical abilities, neglecting essential soft skills like communication and leadership.
• Short-Term Solutions: Failing to consider long-term industry trends can lead to quick fixes that soon become obsolete.
• Employee Resistance: Change management strategies are crucial to mitigate resistance from employees who may feel unprepared for new initiatives.

Importance of Regular Reviews

Conducting a skills gap analysis should not be a one-time event. Regular assessments—ideally every 12 to 24 months—are essential, especially in fast-evolving industries. This ongoing process helps organizations proactively identify and address skills gaps before they impact performance and competitiveness.

By integrating these steps into your organizational strategy, you can ensure that your workforce remains equipped to meet current demands and future challenges, ultimately driving business success.

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How to create a Skill Gap Analysis Action Plan?

Once you have conducted a skill gap analysis, the next critical step is to implement an action plan that effectively addresses the identified gaps within your organization. Below are best practices to ensure the successful execution of a skill gap analysis action plan.

1. Continuous Skill Gap Assessment

Recognize that skill gap analysis should not be a one-off event. Instead, it should be integrated into your organization's ongoing processes. Regularly evaluate your workforce's skills and competencies to adapt to evolving business demands and market conditions. Establish a continuous feedback loop that includes periodic assessments, employee feedback, and performance reviews. This proactive approach will help you identify and address skill gaps promptly, ensuring your workforce remains agile and capable of overcoming future challenges.

2. Effective Training Methods

To bridge the skill gaps identified, select appropriate training methods tailored to your organization's specific needs. The choice of training will depend on various factors, including the maturity level of your organization, industry specifics, the nature of the skill gaps, and employee preferences. Common training approaches include:

• On-the-Job Training: Utilizing the 70-20-10 learning model, where 70% of learning occurs through practical experience, 20% through social interactions, and 10% through formal training. This method allows employees to learn by doing, effectively mastering skills through hands-on practice.
• Traditional Classroom Training: Engaging in face-to-face learning led by instructors, which is beneficial for complex topics that require direct interaction.
• Online Training: Leveraging eLearning platforms that allow employees to learn at their own pace through various digital tools.
• Mentorship and Coaching: Pairing less experienced employees with seasoned professionals who can provide guidance and support in specific job tasks.
• Simulation Training: Creating realistic scenarios that mimic actual job tasks, particularly useful in high-stakes fields such as healthcare or aviation.

3. Emphasizing Experiential Learning

While theoretical knowledge is essential, it is crucial to complement it with experiential learning opportunities. Encourage hands-on experiences through job rotations, internships, shadowing, and project-based assignments. This approach not only helps employees apply what they learn in real-world situations but also fosters a culture of continuous improvement and problem-solving within the organization.

4. Evaluating Training Effectiveness

After implementing training programs, it is vital to assess their effectiveness in closing the skill gaps. Utilize various assessment tools such as feedback surveys, performance metrics, and direct observations to gather data. Analyze this information to determine if the training has successfully enhanced skills and competencies. Based on your findings, make necessary adjustments to the training programs to align them with your objectives.

5. Leveraging Technology for Training

Utilize tools like Skills Caravan to provide in-app guidance and on-demand support, enhancing the training experience. Features such as Tours and Task Lists can accelerate onboarding for new hires, while Flows can assist employees in mastering complex workflows. This technology can also offer context-sensitive nudges and tips to guide users through specific tasks, further supporting their learning journey.

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Skill Gap Analysis templates

Here are some templates you can use for skill gap analysis within your organization:

#1. Individual Skill Gap Analysis

Overview

This template helps individuals identify their current skills versus the skills required for their desired role or career advancement.

Instructions

1. List your current skills.
2. Identify the skills required for your target role.
3. Assess the gap between your current skills and the required skills.

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#2. Team Skill Gap Analysis

Overview

This template is designed for teams to evaluate their collective skills against project requirements or organizational goals.

Instructions

1. Define the project or goal.
2. List the skills required for success.
3. Assess the team's current skills and identify gaps.

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#3. Organizational Skill Gap Analysis

Overview

This template is for organizations to assess skill gaps across departments or the entire workforce to align with strategic goals.

Instructions

1. Identify key strategic goals.
2. List the skills needed across departments.
3. Evaluate current skills and identify organizational gaps.

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