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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. The skills gap analysis helps identify the gaps between employees’ current skills and the skills required by an organization to meet its current and future goals. It is a planned tool that helps create the most cost-efficient solutions for bridging an organization’s skills gap. For example, companies may utilize this tool to figure out the skills that a particular employee requires but may not yet have to efficiently execute or accomplish specific tasks.

The skills gap analysis may also come in handy for HR (Human Resource) professionals to determine which competencies are lacking among the company’s employees. They may use the insight to address the talent gaps in their organization by employing various methods such as reskilling, upskilling, succession planning, etc.

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 and assessed if their workforce had the necessary skills to work efficiently and productively in a remote work setting, such as self-direction, stress management, collaboration, etc. Once they found the gaps, they made efforts to bridge them by providing online training, stress management workshops, etc.
  • Individual/employee level: Skill gap analysis is often done at an individual level when there is a gap in performance or the need to upskill someone for a future job role to ensure their skillsets won't become obsolete in the future. 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. Tech companies and teams most require skill gap analysis 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 findings from skill gap analysis can be fed 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 company’s future goals. 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.


A step-by-step approach to conducting a skills gap analysis

You can identify skill gaps by following a streamlined skill gap analysis process, which is all about using automated, cutting-edge tools that will help organizations understand where their workforce stands in terms of competencies.



Clearly define business objectives & outcomes

The first step of an effective skill gap analysis is to identify short-term and long-term business vision and goals. This stage is all about scoping and contextualizing. For example, does your organization want to improve the overall performance metrics, does it want to train people for leadership development, does it want to adopt new technology for employee efficiency, or something else?

Having clearly defined objectives can place them within an organizational strategy and tie the loose ends. It would help determine the expectations and outcomes to achieve through this initiative. Moreover, this would enable easy calculation of the ROI. Undoubtedly, business objectives can give direction to the skill gaps analysis process.

Then every aspect of the process can be defined, considering the end outcome.

Identify skills needed to achieve the objectives

Once the business objectives are defined, you should understand what skills are required to achieve this goal and future-proof your organization. For example, as a business, you’ve decided that you want your IT team to be at the forefront of tech innovations. To achieve this, you identify AI, ML and Blockchain skills that your developers need to familiarize themselves with to make a breakthrough.

Mercer | Mettl, the global assessment technology provider, can undertake a detailed competency analysis, in collaboration with the senior leaders of an organization aiming to conduct a skill gap analysis. This analysis will help build targeted reskilling plans that align with each employee’s vision and ensure better returns on your training efforts by considering present and future skills.





Identify the existing level of skills

Now that you’ve deciphered where your business needs to be, the next step is to find your employees’ existing skill levels. You can do this through training need assessments, observations, 360-degree survey feedback, etc.

Mercer | Mettl’s pre-training assessments and offerings range from psychometric assessments to technical assessments, from coding simulators to assessment centers, and from 360-degree feedback to behavioral tests. Whether you wish to develop leadership in your organization and need to gauge employees’ leadership abilities, or you want to upskill your IT team with the latest tech advancements, Mercer | Mettl understands the competencies specific to your organization and creates bespoke competency-wise assessments that suit your organizational context. Often, organizations combine assessments with 360-degree feedback for a holistic view of current skill sets. Some organizations prefer to test their employees’ hands-on skills in a simulated environment. Mercer | Mettl’s customizable and multifaceted solutions are instrumental in assessing employees’ existing skills levels from all departments.

Identify and prioritize who and how to train

Based on the results of the previous step, shortlist the employees who need training. It is essential to understand that you can’t train everyone concurrently. So, it would be best if you prioritized training needs. For this, you can choose the department that will be the easiest to train or the one that will most easily benefit from the training program.

Mercer | Mettl offers a more scientific approach to ‘who to train’ by finding the most agile  among the lot or the ones whose skills are closest to the required skill set.




Mercer | Mettl’s learning agility assessment and proximity index approach boost the ROI of training programs by identifying employees’ learning preferences. It helps organizations zero in on how they want to train their employees. It can be done through mentoring, on-the-job tasks, classroom training, online training courses, self-learning, etc.



Get, Set, Train

The training needs analysis is almost done! Now that you’ve answered all the fundamental questions, you must use the insights to design your training modules and set a time frame. Then, conduct a cost-benefit analysis to validate your analysis and implement it.

Measure the training effectiveness

The most seasoned experts are often out of words when asked about the ROI of their training programs. But, if you’ve followed these steps, the chances are that you will not be caught off-guard. Some organizations rely simply on ‘before and after’ numbers; others evaluate through pre-and post-training assessments. And some others define it as the increase in employee satisfaction.

Mercer | Mettl firmly believes that quantifying the success of the training programs shouldn’t be arduous. Hence, it aids your organization through the entire training lifecycle and helps you measure the training effectiveness. Mercer | Mettl’s training effectiveness model  is based on the Kirk-Patrick 4 level training evaluation module to make it the best choice for conducting training need analysis.

Skill gap analysis is not a one-time process, whatever your metrics and objectives. It 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.


Why Is the Skill Gap Analysis Useful?

Skills gap analysis is essential, especially today when businesses are undergoing tremendous transformation due to automation and the 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 lack of an objective skill gap analysis process and the unavailability of a fail-safe way of selecting the right people for reskilling. These points are fundamental to building an effective reskilling strategy and making skill gap analysis even more important.

The skill gap analysis tool is crucial 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 about looking at the larger picture while making minor changes that eventually give you more clarity of purpose. However, you can only plan for the more essential things when you have comprehensive insights into your current situation. For example, you might want to automate your customer invoicing process, but you 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, from a skills and competencies point of view, understanding where your workforce is at will dictate your next move towards employee promotions, development opportunities, or hiring.

Skill gap identification fortifies workforce planning and helps you make 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.

Skill gap analysis can be highly beneficial to employees. It gives them a chance to hone their skills for a more challenging role or better their performance in the position 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 the edge in the future of work. Competency gap analysis ensures that your workforce has the right set of futuristic skills that prepare 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.



Skill gap analysis is indispensable for your organization’s future. It serves as a blueprint for your organization and workforce to survive and thrive in the VUCA (volatile, uncertain, complex, and ambiguous) business environment.

The skills gap analysis process documents the potential of your organization, the existing roadblocks, and the prognosis. In addition, the process uncovers valuable insights, 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 comes next seems overwhelming. 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.


What should a gap analysis include?

How can we reduce skill gaps?

What is competency gap analysis?

Originally published February 10 2021, Updated January 7 2022

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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