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Skills Gap Analysis: A Blueprint for a Future-Ready Workforce

Talent Assessment | 8 Min Read

Skill Gap Analysis: The Blueprint for a Future-Ready Workforce

What Is a Skills Gap Analysis?

Skills gap analysis is a strategic approach to assessing and bridging the gaps in the skills of your workforce. Skill gap analysis is a planned tool that gauges the difference between the current state of skills level in your organization and the desired state, armoring you with right information to make critical business decisions and win the race to become future-ready.

Skill gap analysis can be done on two levels:

  • Organizational or team level: Skill gap analysis at an organizational level arises in exceptional circumstances. For instance, the pandemic forced organizations to continue their business from home. Many organizations were not ready for this life-altering shift. To ensure it was a smooth move, some organizations conducted an organization-wide skill gap analysis to assess if their workforce had the necessary skills to work efficiently and productively in a remote work setting, like self-direction, stress management, collaboration, etc. Once they found out the gaps, they made efforts to bridge them by providing online training, stress management workshops, etc.
  • Individual/employee level: Skill gap analysis is done at an individual level often when there is a gap in performance or the need to upskill someone for a future job role to not make their role obsolete. You can list down the skills required to perform a job role efficiently, assess the current skill level in the employee, and make a plan to traverse the gap. Skill gap analysis is most required by tech companies and teams because of the rapid pace at which technologies advance, leaving some to become obsolete. For example, Java releases an updated iteration every year. That means products and teams highly dependent on Java need to update their skills annually to stay relevant. With the arrival of advanced technologies like artificial intelligence (AI), machine learning (ML), and the internet of things (IoT), etc., the need for frequent upskilling in tech-driven teams has become a necessity.

The skill gap analysis template can feed into all HRM initiatives and decisions, ranging from recruitment, promotions to reskilling/upskilling, learning and development programs, and even leadership and succession planning.

Skill gap analysis is a critical exercise from a business success standpoint. Whether you are a startup or a multi-national company, a products or services company, the future of work affects everyone alike.

Skill gap analysis is the blueprint of the bridge that takes your organization from the present to the future, ensuring the skills of your employees are updated and relevant.

Skill gap analysis, also referred to as competency gap analysis, ensures that the current competencies of your workforce are broken down at a team, job-role, and individual level and then matched to the future goals of the company. Skill gap analysis not just puts employees under the lens, but also analyses processes, structures, technologies of the organization for a cohesive strategy.

Skill gap analysis is the first step your organization should take towards a future-ready workforce. It lays down the ground for a fail-proof training program that takes into consideration the skills gap and measures to plug them. Skill gap analysis is a forward-looking approach to arm your employees with the right skills to reach their full potential and propel your organization towards the future.

 


Why Is a Competency Gap Analysis Important?

Skills gap analysis or competency gap analysis is important, especially, today when businesses are undergoing tremendous transformation due to automation and changing nature of work. The future of work poses a threat to many jobs that might decline or drastically change. Employees will have to upskill or reskill themselves in the wake of rapid digitization. To accomplish this and still be relevant in the new era of work, organizations can build a bridge with the help of skill gap analysis methods that connect their present to the future.

While the choice is always between recruiting and reskilling, according to Mercer | Mettl’s Talent Assessment Practices report 2020, around 80% of companies prioritize in-house talent development over external hiring or onboarding temporary professionals. That makes skill gap analysis a necessary undertaking.

In the same report, we discovered that 47% of participants favored targeted skilling programs, designed specifically keeping in mind the needs and requirements of the employee(s) in question. Other concerns voiced by the participants were the absence of a skill gap analysis template, lack of an objective skill gap analysis process, and the unavailability of a sure shot way of selecting the right people for reskilling. These very points are fundamental to building an effective reskilling strategy and make skill gap analysis even more important.

Skill gap analysis tool is important because it provides a framework to structurally analyze how best to enhance employee skills, upgrade processes, improve response timings, and prevail in the future.

Skill gap analysis benefits your organization in the following ways:

Workforce Planning

Skills gap analysis is all about looking at the larger picture while making smaller changes that eventually let you enjoy the view. However, you can only plan for the larger things when you have comprehensive insights about your current state of affairs.

You might want to automate your customer invoicing process, but you will first need to know how it is done currently, what software is used, etc. Only then can you objectively find a way to take it to the next level.

Similarly, understanding where your workforce is at, from a skills and competencies point of view, will dictate your next move towards employee promotions, development opportunities, or hiring.

Skill gap identification fortifies workforce planning and helps you take the right people decisions, backed by tangible insights. Skill gap identification gives you an overview of your entire workforce, easily identifying employees that can help you achieve your business objectives and the ones that require the most training.

Individual & Organizational Win-Win

Skill gap analysis fuels your learning and development engine and gives it a kick-start in the right direction. If done with the right experts and attitude, skill gap analysis can boost individual learning and development.

Competency gap analysis can be extremely beneficial for employees as it gives them a chance to hone their skills for a more challenging role or better their performance in the role they already have, by plugging any gaps in their skill set.

Skill gap analysis can help organizations invest in an employee’s career development needs, improving employee engagement, satisfaction, and chances of retention.

Competitive Advantage

The foundational belief of skill gap identification is to stay ahead of the curve and not lose edge in the future of work. Competency gap analysis ensures that your workforce gets access to the right set of futuristic skills that prepares them to work at their optimal capacity even amidst uncertain circumstances. This, in turn, will ascertain that your organization always plans and stays ahead of your competition.

 


How to Conduct a Skill Gap Analysis?

You can identify a skill gap by following a streamlined skill gap analysis process, which is all about asking three significant questions:

  • Where does your organization want to be? 
  • Where is your organization at currently?
  • How can your organization plug the gap?

 

Where do you want to be?

Start with identifying short-term and long-term business vision and goals. This stage is all about scoping and contextualizing. This stage should help you in skill gap identification. You should have a list of skills that your organization needs to accomplish its present and future goals. This stage should also give an idea of how to prioritize the skills listed in the competency gap analysis template.

Other questions to be answered at this stage are – Which jobs are likely to be automated? What skills are most in-demand in the future of work? What skills does your company need to thrive in the future? These can be broken down by job roles and levels, they can be soft-skills relevant for all employees, or they can only limit to a team or department.

Make sure your skills gap analysis template and company goals are in synergy. They will give direction to everything that follows next.

 

Where do you stand presently?

Once you have set eyes on the future, start by finding means on how to pave a path to that future. Collect data about how your workforce performs a certain task, how important are these tasks to the success of your organization, what are their skill sets, and if there is a way to do the job better.

Study each job profile and its function closely, and then assess the skills of your employees. To perform this step better, you will need to take aid of various skill gap analysis methods, like surveys, assessments, interviews, etc.

Skill gap assessments are the quickest and most objective way to understand the current level of skills of your employees. Interviews and surveys can help you understand their personal skill preferences, career aspirations, and any obstacles they might be facing in their job role.

 

How to bridge the gap?

Once you have a list of the current skills and desired skills, you can use a table to identify the gaps between them. Based on this analysis, you can decide the next course of action. This can be training, courses and certifications, mentoring, shadowing, or extended assignments. In the rare case, that a skill is absent in your workforce, some skills or positions also might require a fresh hiring approach.

This skills gap analysis format simplifies the process of skill gap identification and offers the most suitable diagnosis.

Each organization has different requirements thus the intervention and diagnosis will also vary. You may require to redesign jobs in your organization to make them more relevant, you may choose to train or recruit or both. Depending on the capabilities of your workforce and their missing skills, the employee skills gap analysis template will point you to the right direction.

 


Conclusion

Skill gap analysis is indispensable for your organization’s future. It serves as a blueprint for your organization and workforce to not just survive but also thrive in the VUCA (volatile, uncertain, complex, and ambiguous) business environment.

The skills gap analysis template documents the potential of your organization, the existing roadblocks, and the prognosis. The skills gap analysis template serves as a reservoir of data, which can take your organization to the next level, while ensuring employee productivity, engagement, and loyalty.

Most businesses are at a junction where the anticipation of what is next is overwhelming us. It is easy to get derailed when so much lies ahead. But the best way to prepare for the future is to leverage the strategy of skill gap analysis to optimize your reign in the present and the future.

 


How Do You Identify a Skill Gap: The Mercer | Mettl Way

Mercer | Mettl’s Skill Gap Analysis is a comprehensive solution that helps you at every step of the skill gap analysis process:

Identify What to Train – Undertake a competency gap analysis to invest in the right skills for the present and future. 

Identify Who to Train – Mercer | Mettl’s unique library of skill gap assessments help you target the right people for the right kind of training. 

  • Learning Agility assessment to identify agile employees who can learn quickly and effectively.
  • Proximity Index to identify employees closest to the required skills set.

Measure Training Effectiveness – Customized pre and post training assessments to measure effectiveness. 

Individual and Organizational Development Plans to improve performance and business outcomes. 

Mercer | Mettl’s competency frameworks and holistic assessments are customized to the role and level requirements of your organization. Mercer | Mettl’s robust platform makes the skill gap analysis process easily scalable. 

 


FAQs

What should a gap analysis include?

How can we reduce skill gaps?

What is competency gap analysis?

Originally published February 10 2021, Updated June 11 2021

Bhuvi Kathpalia

Written by

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.

About This Topic

Skill gap analysis is a strategy that organizations use to future-proof their workforce. Skill gap analysis involves assessing the current skill levels of your workforce to be able to analyze the gaps and the proper diagnosis for bridging those skill gaps.

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