What Is Skills Gap Analysis? (Definition And Types)

By Indeed Editorial Team

Updated 29 September 2022

Published 5 May 2022

The Indeed Editorial Team comprises a diverse and talented team of writers, researchers and subject matter experts equipped with Indeed's data and insights to deliver useful tips to help guide your career journey.

Human resource professionals employ a variety of strategies to determine the skill level of employees in a department or firm. A skills gap analysis, which identifies opportunities for development in a person or team, is a technique to assess performance. Learning how to do a skills gap analysis can help you establish successful professional development programmes for individuals and groups if you are involved in management or human resources. In this article, we examine skills gap analysis, identify the components of these processes and explain how to develop and implement them in a company.

What Is Skills Gap Analysis?

The answer to the question, 'What is a skills gap analysis?' is that it is a tool that a human resource or other management professional may implement to discover skill gaps in people or teams. A skill gap emerges when a task or duty necessitates more advanced skills than the employee or team currently has. A logistics company's leadership, for example, might decide to employ a supply chain management software platform. If the company's present employees manually control the inventory and transportation, the company's leaders may conduct a skills gap study to determine whether their team has the technological expertise required to properly utilise the new software.

Related: Human Resource Planning: Meaning, Importance And Key Steps

Types Of Skills Gap Analysis

The following are the key types of skills gap analysis:

1. Qualitative analysis

The evaluator can assess an employee's skills using phrases like “Exceeds expectations” or “Performs satisfactorily” in qualitative skills gap analysis. The evaluator usually assigns each skill a single label. Many skills gap evaluations contain questions and prompts for comments besides the labels. The evaluator can explain why they assign a given value to an employee's performance by following the prompts.

In many qualitative skill analyses, a score below a given label in a category denotes a skill gap. The HR department usually provides managers with guidelines that explain the various scores. A skills gap analysis form, for example, can say that any abilities that present as Needs improvement or Does not meet requirements require the employee to develop a formal improvement plan.

2. Quantitative analysis

A management team or HR department may assign numbers to each skill in a quantitative skills gap analysis. For example, they may use a scale of one to five in a skills gap analysis, with one showing low proficiency and five showing outstanding mastery. The numerical scale may also determine how frequently an employee executes a skill. Managers at certain firms may combine a quantitative scale with comment sections, allowing them to offer both quantitative and qualitative assessments.

Quantitative skill gap analysis can be a useful data-gathering technique for businesses. If every department in a firm utilises the same quantitative skills gap analysis form to evaluate individuals, the leadership team may look for trends in the data using an HR or talent management software system. For example, if a company-wide analysis reveals that a particular skill, such as project management, has a weaker average score than other skills, the company's leadership team may opt to focus on project management in the next training programme.

3. Team analysis

While an individual's skills gap analysis may focus on the quality of skills they already possess, a team's skills gap analysis often focuses on whether the team has the skills necessary for a project or task. If a marketing team is planning a new landing page for a project, for example, the marketing manager may do a skills gap analysis to see if the team they have hired can code, write content and produce graphics. If the analysis reveals that the team is lacking a skill, the manager may decide to employ a freelancer or add a new team member.

Related: Analytical Skills: Definition, Tips And Examples

Elements Of A Skills Gap Analysis

Some components of an effective skills gap analysis include:

List of skills

A skills gap analysis often assesses both company-wide skills and specialised skills for a given position or department. Since various corporate goals involve unique skills, customising skills in each department can help managers accurately evaluate the most critical skills for their strategic business goals. For example, in a software firm, the sales and engineering teams may share some essential skills, such as communication and responsibility, while simultaneously having their own set of unique abilities to achieve their objectives. The skills gap analysis form may additionally include definitions or examples of skills that can aid the evaluator in completing the evaluation.

Employee assessment

Employee evaluation is the most important aspect of a skills gap analysis, in which a manager or HR expert evaluates how well an employee performs in the specified skills. This might include remarks about the employee's strengths, successful projects or areas of challenges. In a quantitative approach, the evaluator can use a scale to rate the employee's skill competency. Some employers enable employees to do a self-evaluation before meeting with the evaluator, in which they rank and remark on their own abilities. During a performance review, this activity might effectively guide the conversation.

Recommendations or goals

Most skills gap analyses include a segment after the evaluation in which an employee's manager or another evaluator offers an improvement plan or sets targets for the next evaluation. This segment allows the employee and their manager to explore how seminars, a peer mentoring programme, or other professional development activities might help close the skills gap. This component of a team skills analysis could contain the team manager's hiring or contracting proposals.

How To Create And Implement A Skills Gap Analysis

Here are six steps you can take to create and use a skills gap analysis for employee development:

1. Identify company values and goals

Analysing a company's mission statement, growth goals or brand values is one technique to come up with a list of key skills. These notions may propose key skills to measure in employees since they are significant to the company's stakeholders and executives. For example, if a technology company's core values are customer service and development, evaluators may include skills related to those values in their skill gap analyses.

2. Select vital skills for each employee or team

While you may include a long list of skills while developing a skills gap analysis, these exercises can be more successful when they focus on a few essential skills over a review period. During this review period, you may pick five to seven skills to assess, allowing you to create improvement plans with attainable objectives. You may assess how far the individual or team has progressed and replace mastered skills with new ones during the following evaluation period.

3. Decide how to measure employee performance

You might use a quantitative or qualitative strategy to examine employee skills for a skills gap analysis. You might also utilise a hybrid approach to collect data and deliver relevant feedback to an employee, which uses numerical rankings and additional comments. If the skills gap analysis is part of a regular performance review, an employee and their manager or team lead may conduct separate evaluations. They can then compare their findings and discuss any discrepancies in their evaluations.

An HR department could create a set of skills gap analysis forms for a company, allowing managers from various departments to provide feedback and customise forms as required. These forms could be on paper or digital, depending on the technological integration of the company. HR teams may find that digital forms make it easier to upload quantitative data, making them beneficial for companies with a remote or hybrid workforce.

Related: Performance Improvement Plan: Benefits, Process And Examples

4. Conduct analyses

Usually, a manager or team lead evaluates an employee's skills since they are familiar with the employee's work habits and abilities. An employee may ask a manager or HR professional for a second opinion. After analysing an employee's work records, evaluating finished projects and commenting on their contributions to an organisation, the evaluators normally complete their analysis. HR staff may require employees and managers to submit completed forms within a specific deadline during a skills gap analysis review period. For further review, the HR department often keeps a copy of all evaluation documents, including skills gap analyses.

5. Review results

Skills gap analysis exercises often involve two types of review. The first is an employee review, which occurs at the conclusion of a review period for individual skills gap evaluations. The evaluator and the employee usually meet with a third person, who may be an HR administrator or another manager during these reviews. They talk about their analyses and decide which skill gaps to address in the upcoming period. The evaluator and employee usually sign a form outlining their discussion topics and improvement plan.

The second type of review emphasises on a team's or company's recruiting and overall skill development initiatives. A team manager who has noticed skill gaps among their team members may meet with recruiting managers and company leadership to explore the possibility of hiring new employees or outside contractors. An HR administrator may also gather data from individual skills gap evaluations across the organisation to illustrate overall trends.


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