Organizations thrive when their workforce has the skills to meet both present demands and future challenges. However, as industries evolve, so do the competencies required to succeed. Skill gap analysis is pivotal in identifying where employees’ abilities need enhancements to achieve strategic objectives. By taking a proactive approach, businesses can address these gaps before they hinder progress, ensuring their teams remain agile and capable in a competitive landscape.
Beyond merely identifying areas for improvement, skill gap analysis enables organizations to align their talent development strategies with their long-term goals. It allows leaders to prioritize training, reskilling, and upskilling initiatives that yield the most significant impact.
Skills gap analysis is a strategic approach to assessing and bridging gaps in workforce skills. It helps identify the gaps between employees’ current skills and the skills required by an organization to meet its current and future goals.
For example, companies may utilize this solution to determine the skills a particular employee requires to accomplish specific tasks efficiently, but they may not yet have these skills. HR professionals can use these insights to address talent gaps within their organization by employing various methods, such as reskilling, upskilling, and succession planning.
Skill gap analysis can be conducted at either the individual, organizational, or team level. The findings from the skill gap analysis can inform all HRM initiatives and decisions, ranging from recruitment and promotions to reskilling and upskilling, learning and development programs, and even leadership and succession planning. This analysis is a critical exercise for businesses, as it takes the organization from the present to the future, ensuring the employees’ skills are updated and relevant.
Using skills gap analysis ensures that the current competencies of the workforce are broken down at a team, job role, and individual level and then matched to the company’s future goals. It also analyzes the organization’s processes, structures, and technologies to develop a cohesive strategy.
A skills gap analysis is a critical component of any thriving business strategy. It equips organizations with a better understanding of their operational needs, sharpens recruitment processes, and prepares them for the inevitable shifts brought on by digital transformation. Through this analysis, HR teams gain valuable insights into the existing skills of their workforce and the specific areas where development is essential. By pinpointing these skill deficiencies, HR can design and implement tailored training programs that encourage employees to excel and make a significant contribution to the organization’s success.
It highlights the precise digital skills that employees must master to effectively harness new technologies and maximize the benefits of their digital investments. By ensuring their workforce possesses these vital skills, companies can establish a robust competitive edge in today’s fast-paced, technology-driven marketplace. This proactive and strategic approach elevates employee satisfaction and retention while boosting overall performance, resulting in an engaged and skilled workforce. It uncovers critical skill shortages that could disrupt business operations, enabling leaders to act decisively in addressing these gaps and ensuring their organization is well-equipped with the talent needed to accomplish its ambitious goals. Embracing skill gap analysis is a powerful and necessary strategy for securing a successful and sustainable future.
The first step of an effective skill gap analysis is to identify short-term and long-term business vision and goals. Clearly defined objectives can be placed within an organizational strategy, determining the expectations and outcomes to achieve through this initiative. Business objectives can give direction to the skill gaps analysis process. Then, considering the end outcome, every aspect of the process can be defined.
Once the business objectives are defined, one should understand the skills required to achieve this goal and future-proof the organization. Mercer | Mettl offers detailed competency analysis that helps build targeted reskilling plans that align with each employee’s vision and ensure better returns on the training efforts by considering present and future skills.
The next step is to find the employees’ existing skill levels. It can be achieved through tools such as training needs assessments, 360-degree survey feedback, etc.
Mercer | Mettl’s assessments range from psychometric assessments, technical assessments, and coding simulators, to assessment centers, 360-degree feedback, and behavioral tests, among others. Whether one needs to develop leadership in the organization and gauge employees’ leadership abilities or wants to upskill the team with the latest tech advancements, Mercer | Mettl provides customizable competency-wise assessments that suit the organizational context.
Organizations can combine assessments with 360-degree feedback for a holistic view of the current skill sets. Some organizations prefer to test their employees’ hands-on skills in a simulated environment. Mercer | Mettl’s solutions are instrumental in assessing employees’ skill levels across departments.
Based on the results of the previous step, the next stage involves shortlisting the employees who need training. It is essential to prioritize training needs. Mercer | Mettl offers a scientific approach to ‘who to train’ by finding the most agile candidates or those whose skills are closest to the required skill set. Mercer | Mettl’s Learning Agility Assessment helps identify employees’ learning preferences.
After the training needs analysis is almost done, all the fundamental questions have been answered; one must use the insights to design the training modules and set a time frame. It can be followed by conducting a cost-benefit analysis to validate and implement it.
Mercer | Mettl aids the organization through the entire training lifecycle and helps measure the training effectiveness. Skill gap analysis is an ongoing process and imperative for a future-ready workforce. The business environment, business goals, and employees change every year. If upskilling is a continuous cycle, so is skill gap analysis.
Selecting training methods that align directly with the organization’s needs and employee preferences is essential. A tailored approach ensures the training’s relevance and impact on its workforce. Options such as on-the-job training, mentorship, etc., are all effective choices for professional development.
It is essential to confidently evaluate training effectiveness using measures such as assessments, surveys, and performance metrics after completion. Leveraging this information drives improvements in the training programs, ensuring that training objectives are met and that any skill gaps are addressed promptly.
Providing employees with the chance to apply their knowledge in real-world situations significantly enhances retention and builds confidence in their skills.
Consistently reviewing employee skills and implementing a holistic feedback system identifies and addresses skill gaps, building a culture of adaptability within the organization.
Skill gap analysis varies from case to case, depending on the organization’s specific requirements. For example, the following illustrates a cybersecurity skills gap analysis.
Objective: Enhancing an employee’s cybersecurity skills to ensure compliance requirements and protect against threats.
The skills gap analysis is composed of the following steps:
In the first step of the skill gap analysis, the organization identifies the key cybersecurity skills for its workforce. These skills include threat detection and response, security risk assessment, incident management, recovery, etc. After identifying the required skills, the organization evaluates the current skill levels of its employees. This evaluation reveals the current level of employees, whether they are at a beginner or intermediate level, indicating a need for improvement.
After assessing current skill levels, the organization analyzes the gaps between existing skills and the desired levels. The goal is to achieve a higher proficiency rate of approximately seventy percent in key areas. The analysis identifies specific gaps in the aforementioned areas. This understanding of skill gaps helps the organization focus its upskilling efforts.
In the final step, the organization creates a targeted upskilling plan to address the identified gaps. This plan includes cybersecurity certifications, workshops, and specialized training courses. To measure the success of the upskilling efforts, the organization conducts performance reviews and skills assessments and collects employee feedback. Finally, by reviewing skills annually, the organization can adjust the upskilling plan as needed, ensuring ongoing development and alignment with evolving needs.
Skill gap analysis has become indispensable for an organization’s future success. It serves as a blueprint for the organization and its workforce to survive and thrive in today’s business environment. The skills gap analysis process documents an organization’s potential, identifies existing roadblocks, and provides a prognosis for future growth opportunities. Additionally, the process reveals valuable insights that can help an organization enhance employee productivity, engagement, and loyalty. One of the best ways to prepare for the future is to leverage the skill gap analysis strategy to optimize business growth.
Originally published December 6 2019, Updated July 22 2025
Bhuvi is a content marketer at Mercer | Mettl. She's helped various brands find their voice through insightful thought pieces and engaging content. When not scandalizing people with her stories, you’ll find her challenging gender norms, dancing to her own tune, and crusading through life, laughing.
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