How to Conduct a Skill Gap Analysis in 2023 (+Free Template)
With COVID forcing organizations to implement remote work and driving overall HR digital transformation, L&D teams have implemented skill gap analysis assessments to gauge the abilities of all employees across critical skills.
A recent CareerBuilder survey found that 45% of respondents reported that a gap in skillsets caused a loss in overall productivity, and another 40% reported increased turnover because of large skill gaps.
Skill gaps place more strain on your experienced employees who have to pick up the slack for their coworkers’ inexperience. Since the shift to remote workforce environment brought about by the world pandemic, employees need new technology and communication skills.
For example, an executive with 20 years of industry experience who may have had virtually no skills gaps pre-pandemic may now have a significant and detrimental skills gap in how to use remote technology – and L&D teams must address these gaps with a reskilling and upskilling strategy.
In order to assess how the pandemic (and other factors) affected your employees’ skillsets, you need to conduct a skills gap analysis. This HR analysis will highlight areas where your employees’ knowledge is falling short, allowing you to create a plan to address these gaps.
What Is a Skill Gap Analysis?
A skills gap analysis is an assessment used by HR and L&D teams to determine whether or not their workforce’s current skills meet their company’s needs. A skill gap analysis results in a list of skills your employees already have, where they need to improve, and what they need to develop. From there, organizations are able to address these skill deficiencies using online courses and training programs to build a team of skilled workers that align with your company’s needs.
Why Is Conducting a Skills Gap Analysis Important?
Skills gap analysis is an important employee development tactic for all organizations because technology is rapidly changing. By 2022, over half of all current employees will need to be completely or partially reskilled.
With that in mind, here are five of the biggest reasons why you should be conducting annual skill gap analysis tests with your workforce.
1. Keeps Up with Digital Transformation
As technology evolves, businesses will continue to adopt new digital tools and processes to improve productivity and revenue. When a company begins to adapt to these changes, this is known as digital transformation. Organizational change brings new innovation to companies and allows them to grow and evolve.
An example of digital transformation: Hospitals and patient care providers moving patient records, billing info, appointment scheduling, and appointments themselves into online EHR (electronic health record) systems and virtual appointment apps. This provides a simpler, more streamlined process with better transparency for both health providers and patients, but requires companies to address digital skill gaps among existing workers. A skills gap analysis is a great solution to understand what individual team members need additional support.
When adopting new technology, you must plan an employee onboarding and training plan to successfully implement a new software and find ROI in it. Many times employees fall through the cracks of these transformation efforts – and that is where a skills gap analysis comes in.
Conducting routine skillset tests with your workforce will help identify where your onboarding and training programs failed – and help identify the employees that need more detailed training with your organization’s new processes and tools.
Examples of HR digital transformation include:
- Moving from traditional, face-to-face training to online eLearning.
- Replacing paper-based onboarding with digital onboarding.
- Moving to an employee self-service HR portal for requesting time-off, viewing paystubs, and updating personal records.
2. Helps HR Teams Understand Their Entire Workforce
Skills gap analysis evaluations provide individual insights into your employees – but also provide holistic insights into your overall workforce as well.
At an individual level, it highlights your team members that are most productive, your organization’s high performers that have expert knowledge in particular business areas, and potentially which employees should be considered for promotions and raises. It also allows for HR team to identify which employees are falling behind and need additional support in order to meet the needs of their job duties.
From an entire workforce perspective, it allows companies to create cohorts of employees based on their skillsets and competencies. This allows HR teams to create more personalized reskilling and upskilling learning paths based on the needs of different groups of employees.
3. Identifies Overall Skill Gap Needs
Similar to the last point, competency gap analysis allows HR teams to identify trends and themes in an overall workforce.
For example, an organization may have recently adopted a new CRM system. After a skills gap analysis, it’s revealed that no one in the organization is using the core features of the new, expensive CRM – and many are not using it all. In this scenario, HR teams would be able to take action items from the analysis’s results and provide additional CRM training and onboarding resources to their employees.
4. Invests in Employee Development & Learning
There may be a misconception among your workforce that skill analysis tests are anti-employee, which could stir up fear and anxiety among your employees. This is not the case at all – and it’s crucial to be proactive and educating your organization’s team members on the direct benefits a gap analysis will have on them.
HR teams should plan to create overviews of each employee’s strengths and weaknesses to share with individual team members. This will allow you to create employee development and investment plans to show employees that you’re dedicated to them longterm and want to develop valuable skills and expertise for them. This will provide value for your employees even after they’ve left your organization.
5. Provides Direction for Your Employee Hiring & Recruitment Plan
A crucial point in every company’s growth is deciding what areas of an organization to build out, and what new roles to add. A skills gap analysis will help identify areas of an organization where help is needed.
For example, an analysis may reveal that no one in the company is comfortable using Google Analytics. This will allow for HR teams to adjust their open job descriptions and recruitment plans to add an emphasis for candidates with higher experience levels using Google Analytics.
How to Perform a Skill Gap Analysis
While a skill gap analysis can be daunting for those new to the assessment, here are a few simple steps to get you started:
1. Create a Skill Gap Analysis Plan
If you’ve noticed that your workforce isn’t getting more efficient, or worse, getting less efficient, with newly introduced technology, it’s time to create a skills gap analysis plan.
A skills gap analysis can be conducted on two employee levels: the team level and the individual level. You need to first determine where the skills gap is largest then figure out who you need to talk with to identify which skills your employees are missing.
Decide At What Level The Skill Gap Analysis Will be Conducted
When conducting a skills gap analysis, focus on one employee level at a time—the level suffering the most. It’s inefficient to attempt to solve all skills gaps in your company at the same time. You stand to see the highest return by addressing the level with the largest skills gap.
Figure out which employees need the most help. Look at turnover rates for each role. Look for exit interviews that consistently mention a lack of training. Look for key performance indicators (KPIs) that aren’t consistently being met in a particular employee group. There’s likely a significant skills gap if you’re seeing high turnover, unmet KPIs, and frustrations with lack of training.
Identify Important Skills for Each Job Role
Within your selected employee group, look at each role and determine what skills are critical for success in each position.
A great place to start is with the job descriptions you’re using to recruit new employees. Use the description to create a list of necessary skills a successful employee must-have. Then interview current employees doing well in the role to get feedback on any other critical skills the job description doesn’t cover.
For simplicity’s sake, try keeping your list of critical skills to 5 or less for each role. When possible, ensure they are measurable. For example, “knows how to do graphic design” isn’t as measurable as, “3 years’ professional experience working with the Adobe Creative Suite.” Once you’ve identified the necessary skillsets, you can use that list to identify how many skilled employees you have and how big your skills gap is.
2. Audit Your Workforce’s Current Skill Levels
Once you know what you’re looking for in terms of required skills, test employee’s current levels of expertise and evaluate the results to determine where your workforce’s skills gaps are.
Determine the Best Way to Assess Employees
There are several forms of employee testing, depending on your organization’s size and which skills you’re evaluating.
- Written tests: Great to gauge general knowledge, vocabulary, mathematical skills, etc. Test questions can be multiple-choice, short answers, or fill-in-the-blanks formats. Written tests are best for smaller organizations or teams with fewer employees since they have to be hand-graded.
- Online tests: Great for enterprise companies or large numbers of employees. Online tests can cover a wide range of subjects, and can even have job-specific practical sections. Many of the leading employee training software solutions offer online testing to understand an employee’s skill set.
- Skills-based assessments: Great for gauging soft skills or measuring more subjective competencies. For example, have a customer service rep get on a fake call to assess their skills under pressure or how they handle upset customers. This type of testing is often time and labor-intensive, and may even require paid actors or test proctors, so it should be used in smaller groups of employees only when necessary.
- Employee interviews/evaluations: Great as a supplement to any other type of testing, sit down with employees and have them do a self-evaluation on where they feel their areas of weakness are.
There’s no one-size-fits-all or perfect option for testing. Choose whichever type of evaluation best measures your required skills and is most convenient.
Rubrics provide a common scale to easily evaluate employees’ skillsets for a role.
If you follow the rule of having 5 critical skills, a rubric may consist of:
- Listing critical skills in the far left column
- Creating a 1-5 score in the columns to the right of the critical skills
- Measuring how successful the employee is with each skill
- Calculating the employees’ score for each skill
- Calculating the cumulative score out of 25 for a total competency score
In order to assess where an employee falls for each critical skill in your rubric, make sure your tests clearly tag which skill each question is measuring. In written tests, this may mean 5 questions test for critical skill #1, and if an employee gets all 5 correct, they score a 5/5 in the rubric for that skill.
Skills evaluations are more subjective and require the proctor to give their opinion on a score, while an employee undergoing a self-assessment can simply select where they feel they fall on the rubric.
3. Fill in the Skill Gaps
Once you have your employee data and you’ve identified the skills gaps, determine the right method for improving the gap.
Determine the Best Method of Employee Skill Training
Trying to fix everything at once will be overwhelming for your employees and ineffective for you, so prioritize which skills gap is the most critical and improve that one first. The rubric should have helped you identify where your employees have the right skills and where they need more mentoring.
Once you’ve prioritized skills gaps, determine the best training fit to resolve the issue.
- Microlearning: Microlearning lets your employees learn on-the-job skills in a quick-hit 15-minute format that doesn’t significantly cramp their daily schedules. These bite-sized lessons are focused on solving problems they encounter in their roles on a daily basis, making the content relatable and helpful.
- On-demand employee training: On-demand employee training, like educational video onboarding or click-through PowerPoints with voice-overs are good for bigger multi-lesson concepts that are less urgent, so employees can work at their own pace. On-demand employee training is best conducted with digital tools, such as digital adoption platforms (DAPs), that can gamify your programs, make your courses more accessible, and track your employees’ progress.
- Small team training: Hold in-person small group trainings when the topic is urgent but only relevant to a small, specific group of employees. These can be either hosted by an experienced employee or manager, or outsourced to a training company to host.
- All-staff training: Longer-format, all-staff meetings can be logistically challenging, but are often the most efficient choice when the concept is a skills gap for most of the organization. A contemporary example may be training your whole team on how to use video conferencing software in order to prepare for remote work, or how to speak externally about a large company change or crisis.
Analyze Your Training Effectiveness
Resolving a skills gap doesn’t end with setting up training. You need to check in with your teams regularly throughout and after training to ensure it’s effective and valuable.
In order to measure your training effectiveness, consider repeating the assessment you gave employees at the beginning of the skills gap analysis. This gives you control to compare results with, so you can easily see improvements on an individual and a group level. Make sure to translate their testing scores back onto your rubric for easy comparison. If the critical skill you decided to focus on has significantly improved, consider moving to the second lowest-scoring critical skill.
You should also re-interview your employees to get their feedback on the effectiveness of the training program and how it’s improved their perception of their education. Finding the right training solution may require some trial and error, so be sure you use this feedback to update your strategy, if necessary.
Use Technology to Solve Your Skills Gap Problem
Technology can make solving skills gaps easier than ever before, especially in our newly remote business environments. Since COVID, one of the most common challenges skilled employees face is having to learn how to handle new, digital technology. Instead of pouring hours of time and money into giving employees in-person walkthroughs of new tech, consider using a digital adoption platform (DAP).
Free Skills Gap Analysis Template
To help you address your workforce’s skill gaps,we’ve created free skill gap analysis template.
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DAPs integrate with new technology to show your employees how to use those technologies to produce better business results. When you invest in new technology, if your employees are wasting too much time learning about those new technologies, then you’re getting less return on your investment. Not to mention, employees are resistant to tech when you’ve not created a culture of constant learning and innovation.
DAPs break those barriers by training your employees with interactive walkthroughs, giving them better access to information through Self Help, and guiding them through processes when they need help.
DAPs allow HR and L&D teams to easily create in-app learning content personalized to different cohorts of learners to address skill gap issues, utilizing in-app content such as:
- Guided flows
- Product tours
- Interactive walkthroughs
- Task lists
- Smart tips
- Self-help knowledge bases
With a DAP like Whatfix, organizations are able to collect event analytics on how employees are adopting and using digital applications and processes, and how they’re engaging with their learning flows. This empowers HR teams to identify skill gaps, address learning needs, and improve onboarding and training.