Skills Gap Analysis: Key Steps to Identify the Skills You Need

Published on Nov 14, 2023

Updated on Jan 11, 2024

Written by Elaine Pierson

skills gap analysis

Skills are changing and organizations need to be able to measure how they are keeping up. 

In fact, McKinsey finds that a lack of clarity and transparency about roles is the most pressing challenge organizations face on their mission to understand which skills and roles are most critical in creating organizational value.

Eighty-seven percent of organizations know they have a skills gap or will have one in the next year. However, in order to take a step forward and acquire the skills they need, talent leaders must lead the charge and take a step back by performing a skills gap analysis.

But first, what is a skills gap analysis?

Simply put, a skills gap analysis identifies where an organization’s workforce lacks the skills required to achieve business goals. Teams having identified skills gaps can make plans to close those gaps, whether through training, hiring, or supplemental contract work (build, buy, borrow). This proactive approach ensures that organizations are equipped to respond to changing industry and competitive demands. 

Why should your organization's talent leaders perform a skills gap analysis? 

  • Enhanced Employee Retention: When organizations seek to understand where employees are missing skills or fall short of desired skill levels and support bridging those gaps, employees will take notice and be more inclined to stay with the company. 

  • Keep Pace with (or Surpass) Your Competition: When companies track in-demand skills of their competitors or discover market-driven skills the competition lacks, they can secure a competitive advantage by cultivating those skills themselves. 

  • Achieve Cost Savings: Organizations who address skills gaps by identifying opportunities for upskilling and reskilling within their existing workforce will reduce the need to hire external talent, which often comes with high recruitment and onboarding costs. 

  • Targeted L&D: When you recognize the skills your organization needs, you can allocate resources more effectively to develop focused learning and development as well as inform future training programs. Eighty-nine percent of L&D professionals agree that proactively building employee skills for today and tomorrow will help navigate the evolving future of work. 

So, where do you begin?

skills gap analysis template

Establish your organization’s mission and goals

The basis of an effective skills gap analysis is a clear understanding of your company’s organizational objectives. Stakeholder engagement is crucial to ensure the skills you identify are in areas that will drive business value. Without leadership buy-in, this will feel like a trip without an end destination or goal. Establishing a unified purpose across functions will lay the foundation for a strategic and targeted analysis.

Ensure your job architecture is organized and up-to-date

Job architecture serves as a foundation for maintaining and understanding the skills of your workforce. When your job descriptions and skill profiles are accurate and comprehensive, this facilitates a more precise analysis of the skills required for current and future business initiatives. Connecting internal role data with external labor market insights empowers your organization to anticipate upcoming opportunities and challenges within your workforce and make plans to address them.

Identify and prioritize skills based on gap analysis

Isolate gaps and prioritize workforce capabilities most necessary for your organization to adapt and succeed in a dynamic market. Focus on the skills that most align with the strategic priorities of your organization to allocate resources more effectively and concentrate efforts where they have the most impact. 

Develop plans to address skills gaps

This can come in many forms, whether it be implementing new learning and development programs, adopting targeted recruitment strategies, or refining existing skill development processes. Does your workforce have the capacity to be reskilled or upskilled? Or do you need to hire someone externally who already possesses the skills you’re missing? If it’s the latter, streamline the hiring process to attract those skills and account for the costs associated with acquiring them. 

Monitor progress and regularly reassess skills needs

Continually track the progress of your skills initiatives to adapt and refine your strategy along the way. Returning to the first step of a skills gap analysis, make sure that your initiatives are aligned with the overall mission and goals of the company. This cohesive approach should extend throughout the organization to ensure that you address immediate gaps and also support long-term strategy. As skills continue to change, regularly measuring skills gaps is critical. Organizations who proactively identify emerging gaps and address them will remain agile and more successful in the long run. 

skills gap analysis

Skills gaps aren’t static, they are dynamic and constantly evolving. All talent leaders face challenges understanding which skills and roles are crucial for the future—skills gap analysis provides a structured framework for overcoming those challenges. By bridging gaps, organizations position themselves to navigate change and build a future-ready workforce. 

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