How do you know if the people working in your organisation have the skills to meet the daily demands of the modern business world? How do you measure if someone can develop or has the skills to develop? With over 300 million people set to be changing jobs and even career paths in the next decade, these are the questions that need to be asked by industries and organisations alike.
A skills gap analysis is the best way to ask that question, and understanding what is needed by your workforce and planning ahead for seismic changes in your industry is the best place to start.
From developing your workforce to creating individual learning and development, promoting strategic workforce planning and improving recruitment efforts, a skills gap analysis creates a competitive advantage for your organisation.
In this guide we are going to investigate the ideas behind a skills gap analysis, why they are important, how to conduct one - from identifying skills to measuring existing ones and give you an overall better understanding of this highly strategic tool that is used by organisations in every industry around the world.
What is a skills gap analysis?
A skills gap analysis is understanding what the gap between the set of talent required for a job and the set of skills that a person actually possesses. A skills gap analysis is understanding what your organisation needs from a skill based level in order to strategically execute their plans for the future.
For employers, a skills gap analysis is to help provide a greater understanding of where there is a skills shortfall in order to achieve the defined goals of the organisation.
For employees a skills gap analysis means developing an understanding of what specific knowledge and skills are currently lacking in order to carry out their job to the best of their abilities.
The resulting outcome from this kind of gap analysis is that an organisation can identify where there are gaps in the current workforce and either recruit new employees to fill some of the more urgent requirements and skill levels or, invest in their current employees to upgrade their skills and capabilities.
Because skills gaps develop and evolve over time - or in some cases become more apparent over a longer period, there is a constant need to repeat a skills gap analysis - especially for organisations where strategic development of the workforce is required to stay ahead of the game.
Why is skills gap analysis important
Being able to understand where you are lacking skills in your current organisation is of course a benefit but that’s not all. There are other benefits which must be considered including:
- Aiding the recruitment process
You know what you require, and what is going to be important to recruit for in the coming future.
- Enhances capabilities of existing employees
You develop your existing employees, reducing the need to recruit and costs saved in that area.
- Ensures an organisation has the skills / knowledge resources necessary to achieve goals
You are future proofing your ability to understand the market and deliver a product/service that matches your future goals.
- It creates a competitive advantage
If you can understand what skills are required to the changing marketplace, and then develop a team that can deliver in that field, you are creating the necessary advantages over your competitors in order to succeed.
How to conduct a skills gap analysis
Firstly, you need to understand that a skills gap analysis is not something that is either done once and left alone or done every 10 years. It needs to be a constant process that is repeated whenever the objectives of the business are developed or changed.
You may need to perform a skills gap analysis when:
- Business objectives not being achieved
- Newly defined business objectives or goals
- Staff changes (people leaving)
- There is a change in market practices
- New legislation is implemented
- When new technologies are introduced
The skills gap analysis can fundamentally be broken down into three phases.
1. Identify skills requirements
The process starts by identifying what skills are actually required. What do you really need in order to execute your business strategy for the present and future. These need to then match what your business needs, goals and objectives are.
Top tip; list out your business objectives and map competencies to each of the objectives.
Secondly, you want to understand what technological developments for which skills and knowledge are likely to be required. For example, if you worked in business security in the early 2000s, it would have been likely unnecessary to know anything about cybersecurity but now, it is a fundamental skill that is required to do the job today.
Finally, you need to define what level of skill is required in order to carry out the job required - as identified. Do you need accreditations or would an online course of several hours be sufficient?
2. Measure existing skills
In order to successfully complete a skills gap analysis, you want to be able to understand what level of existing skills are present in your workforce. There are several tools that can give you a lot of information in this area including:
One to one performance reviews
Sitting down with managers and HR to understand where the base level of skill is per job is a good starting point. Someone may not realise that they’ve acquired new skills as well - this can be pointed out and developed in a training plan.
Skills assessments
Skills assessments can take many different forms but in essence they identify the skills you have in relation to the job that is either being filled or has been filled and you are trying to understand what skills gaps there may be.
The most commonly used talent assessment tests:
- Skill assessment tests
- Psychometric tests
- Personality tests
- General mental ability assessments
- Integrity assessments
- Job knowledge tests
- Situational judgment tests
Behavioural assessments
Behavioural assessments help organisations and recruiting managers understand the level of interpersonal skills that a person has and help predict how they might respond to new & different scenarios.
Behavioural assessments help us to understand and explain what is happening to a person, why it is happening and help to predict when a behaviour might happen again.
360 feedback
The 360 feedback system is a process where employees are engaged to provide anonymous feedback on an individual in a business and give them rounded evaluations as to strengths and weaknesses and what can be further improved over a period of time following a development plan.
A series of different information points are presented in a report that is used to help the manager go through with the employee and create a tailored plan to get key skills, strengths and weaknesses aligned with the organisation and what can be improved moving forwards.
3. Fill identified skills gaps
Once the skill shortages have been identified, you need to fill the identified gaps. The information that has been collected can be used to help provide valuable insights into the current skills of the workforce and then equally, provide the right point of focus for your recruitment strategies.
I.e. you need more staff with SAP skills. You target your recruitment drive in areas where SAP is regularly recruited - be it on a temporary or permanent basis.
This developed insight also helps to support the need to develop skills within your current workforce. One major advantage of developing your team is that you save on recruitment costs whilst also showing the value that they have in your organisation. This will help with retention rates and provide a good opportunity for them and the organisation alike to grow focused on the same goals.
Developing your own team can take three main forms:
- Training
This could be done internally by someone who has a much deeper understanding of the subject and can create a learning environment for your team members who need upskilling to thrive or, if you had the budget to succeed, you may be able to hire a team to come in from the outside and train your teams. For example, many sales-based organisations will have regular training sessions with third party trainers and seasoned experts who teach this type of content for a living.
- Mentoring/coaching
As with training, mentoring and coaching can be a powerful tool and can be more targeted to smaller groups or individuals who need to upskill quickly. With many businesses having more seasoned staff in roles around the organisation, this could take a little more time to implement but it also helps provide a way to constantly motivate staff members and tap into knowledge of other team members at the same time.
- Outsourcing/contracting
Sometimes, your business needs to move faster and training is a solution that takes longer to implement. That's where outsourcing/contracting comes into play. Think of that example above about an SAP engineer - it could be for a short term contract and someone with experience in this field is easier to recruit for on a short term basis than having to train up staff - especially if the training costs too much or you won’t require that skill in the business strategy moving forwards.
In summary
A skills gap analysis is understanding what your organisation needs from a skill based level in order to strategically execute their plans for the future. From developing your workforce to creating individual learning and development, promoting strategic workforce planning and improving recruitment efforts, a skills gap analysis creates a competitive advantage for your organisation.
The Thomas talent assessment platform can help you with a plethora of development needs including identifying and nurturing future leaders, improving employee engagement, leading through change and managing conflict effectively to keep people development at the heart of your business success.
If you would like to find out more, please speak to one of our team.
