Skills Gap Analysis: How to Measure Your Employees’ Skills

As your company grows, the skills required to grow your business also evolve. You may need to automate workflows, such as your candidate screening process. The problem? There aren’t enough skilled professionals to handle these tasks. 

This talent gap or shortage isn’t new. Many companies struggled with skill gaps even before COVID-19 hit, but the global pandemic worsened the talent shortage. As such, 69% of companies invested more in skill building after COVID-19 due to the rapid technological advancements during the pandemic. 

A skills gap analysis is necessary to understand what new expertise or knowledge your company needs to keep growing. This article will discuss what a skills gap analysis is and guide you on how to conduct one for your workforce.

What is a Skills Gap Analysis?

A skills gap analysis is the practice of identifying what your workforce is capable of and what your company needs to achieve its goals. The “gap” refers to the specific skills your business lacks that delay your organizational growth. 

For instance, you may have not realized that excellent knowledge of warehouse operations is a level of experience that many people have, though it may be missing in your organization. This is one of the many examples of skill gaps in the workplace you can encounter.

Closing the workforce skills gap in your company allows you to keep up with your competitors and continue satisfying your customers’ evolving expectations. It’s important to address the lack of skills in business immediately. Otherwise, your customers might leave in favor of competitors who offer more innovative tools, products, and services. 

How to Conduct a Skills Gap Analysis

Skills gap analyses don’t need to be stressful or lengthy to be effective. Follow the few simple steps below to conduct your own.

1. Understand current and future workforce trends

What skills are your competitors investing in? If you’re not sure, monitor their job postings to see how they are ensuring the future of their business.

Take automation, for example. There’s been a trend of businesses adopting artificial intelligence (AI) for their operations. According to the World Economic Forum, clerical and secretarial roles are becoming less important because of digitalization and automation. 

Plus, 44% of core skills won’t stay the same in the next five years. Analytical and creative thinking are in demand now. This gives you insight into what your company may need to become future-proof.

2. Determine skills necessary for business goals

There are two skills categories you need to be aware of in a company: noncritical and critical. Noncritical skills don’t directly contribute to your company’s core functions and objectives, while critical skills are the ones that do. Your company’s goals will determine what is and isn’t a critical skill. 

Where does your company want to go? What do you want to achieve? 

An example might be a law firm needing to scale up automation of their workflows to accommodate more clients. Exploring skills related to automation will point you in the right direction.

3. Measure your current skills

Your workforce’s current skills provide the baseline of your skills gap analysis. From this step, you can determine what skills you need to add or improve to propel your business forward. 

You can measure your employees’ skills in different ways. Using more than one can help you better understand how your skill set meets your goals, industry standards, and future labor trends. 

Here are a few skill measurement approaches to consider trying:

Employee surveys

Employee surveys gather information about your staff’s perceptions of their capabilities. In these surveys, employees rate how proficient they believe they are in certain skills, what else they lack, what they want to work on, and how they best learn.

Employee skills tests

Testing your employees’ skills reveals gaps and areas for improvement. Through employee skills assessments, you can evaluate which profession-specific skills each worker and department needs additional training in. 

Make sure to include your management team in your skills tests. Management assessments allow you to identify if your leaders are effective at their jobs and whether a person is fit to take the next step and move into a management role. These are also useful in determining what skills they lack to take on more critical responsibilities.

Performance reviews

Performance reviews are a more collaborative way of measuring skills, enabling you and employees to identify their strengths and points of improvement. Everyone talks about performance reviews, but does your company have a systematic way of evaluating job performance?

360-degree reviews

Employees may not recognize their shortcomings and weaknesses or that they lack skills, which is where 360-degree reviews come in. These combine assessments from those employees they report to, work with, and manage or lead. Through these reviews, you get a clear picture of an employee’s performance based on their work relationships.

4. Close the employee skills gap

Generally, there are three popular approaches to closing the skills gap: upskilling, hiring, or outsourcing. How do you know which is best for you? 

Upskilling allows employees to learn new skills and be more effective in their current roles. For instance, managers-in-training can work on their leadership, people management, and public speaking skills to become effective leaders.

On the other hand, hiring new team members is ideal if you’ve identified new critical skills your workforce doesn’t have. If you want to establish a dedicated customer service team separate from your sales agents, you’ll need to hire employees who excel at speaking to different types of people and can handle irate customers. Ensuring potential candidates take a skills assessment test for employment is beneficial in determining if they are right for the role.

Meanwhile, outsourcing is a cost-effective method of expanding your workforce without needing basic skills training for employees. Outsourcing companies have a pool of experts from different industries that you can tap to shrink your skills gap.

5. Monitor the results

Whether you upskill, hire, or outsource, you need to regularly monitor the results of your strategy to know if you’ve successfully closed your skills gap and continue to stay on track. 

But when is the best time to conduct your next skills gap analysis? It depends on your company’s needs and goals. It’s helpful to perform one when there’s a significant internal change, such as department reorganizations or leadership transitions. If your company has set new goals or fallen short of one, conducting a skills gap analysis will guide your path toward achieving business success.

You can start with an annual analysis to measure your year-over-year growth, if it’s your first time conducting this evaluation. Moving forward, an every-other-year approach may be good enough.

Bridging Gaps, Boosting Success

Bridging your company’s skills gap doesn’t happen overnight. It requires careful research and analysis of what skills will make your company more competitive. 

Assessment data is critical in skills gap analysis and can help you find the right people for your organization. EmployTest has several skills assessments and other employment tests to evaluate your workers’ expertise. These tests let you measure your employees’ current levels of competency and can reveal weaknesses in your workforce. You can use the result of your skills gap analysis to strengthen and maximize productivity.

Try a free sample employment test now to discover how it can help improve employee performance.