How to Identify Skill Gaps in the Workplace?

How to Identify Skill Gaps in the Workplace?

As technologies and business models continue to evolve, many companies face a shortage of workforce skills. Digitalisation is re-inventing businesses, and CEOs are turning to HR leaders to develop and recruit new talents for achieving company goals.

Given these trends, nearly 9 out of 10 executives and managers say that their organisation is already facing gaps in skills or expects gaps to appear in the next 5 years. The talent shortage is one of the greatest threats organisations face today, and it needs to be actively dealt with.

One way for companies to stay ahead of the curve is to incorporate a skills gap analysis into their standard operating procedures. This will fill skills gaps that arise and make sure that all employees are productive, performing well, and staying competitive in an ever-changing environment.

What is a skill gap?

A “skill gap” is the difference between the skills that an employee currently has and what they should have to perform their job well. Do not confuse this with “competency gaps” or “capability gaps,” since it only looks at skills and not abilities, knowledge, or behavior that contribute to individual performance.

The employee skills gap can increase average labour costs as organisations hire more employees to get their job done. Today, businesses are facing intense competition to fill just a handful of critical roles. In 2018, 90% of or more S&P organisations recruited for the same 39 roles, which made up almost half (49%) of all job postings. These critical roles include data scientists, software developers, marketing managers, and computer system engineers.

skills gap and shortages for roles

Next read: Find out about other benefits of a work-based learning approach.

It shows that the current workforce lacks the skills required to fill critical roles, and the competition in the market makes it extremely challenging for HR managers to hire good talent. That’s why businesses need to quickly close skills gaps through training and development as well as fill staff shortages to boost sales and revenue.

Common Examples of Skill Gaps in the Workplace

Technological Proficiency

Among employee skill gaps observed across multiple sectors, the insufficient technological literacy is one of the most common. Technological literacy means the ability to utilise new tools and software effectively. The gap is particularly notable in industries undergoing rapid digital transformation.

Employees must adapt to evolving tech landscapes. According to the 2023 Future of Jobs Report by the World Economic Forum, technological literacy is considered the sixth most important core skill in companies. In the next five years, more than 60% of companies surveyed also believed that technological literacy will increase in importance even more..

Data Analysis

The inability to analyse data effectively is another significant skill gap based on LinkedIn Learning’s 2023 Most In-Demand Skills List. It affects decision-making and strategic planning processes. It also underscores the need for employees to possess the technical skills to handle data. It also reveals the lack of analytical prowess to derive actionable insights.

Leadership and Management

Leadership and management skill gaps are observed when individuals lack the ability to inspire, guide, and manage teams towards achieving organizational goals. This includes deficiencies in communication, delegation, and conflict resolution.

Emotional Intelligence and Interpersonal Skills

A gap in emotional intelligence and interpersonal skills is evident when employees struggle with empathy, self-awareness, and effectively managing relationships in the workplace. The skill gap impacts teamwork, customer service, and the overall workplace environment.

According to a report by the Harvard Business Review, “The EI Advantage”, organisations with emotionally intelligent employees have seen stronger customer experiences, customer loyalty, and customer advocacy. Emphasising emotional intelligence also led to higher levels of productivity and employee engagement. Companies that invested less or completely ignored emotional intelligence have also seen lower results for the same indicators.

Project Management

The deficiency in project management skills represents a critical skill gap. Project management includes planning, execution, and monitoring projects efficiently. The gap affects an organisation’s ability to deliver projects on time, within budget, and according to specified quality standards.

Based on the “Talent Gap: Ten-Year Employment Trends, Costs, and Global Implications 2021” study for Project Management Institute, the global economy will require 25 million project professionals by 2030. It shows how in-demand and under-supplied project management skills are in the workplace.

project management skills gap

Skills Gap Analysis

A skills gap analysis helps you discover shortcomings in both technical and analytical skills. When done properly, a skill gap analysis gives:

  • A skills matrix or overview of the skills possessed by your entire organisation.
  • HR professionals a clear understanding of what needs improving to close gaps.
  • A reality check of new market trends and skill expectations to plan future recruitment strategy

Note: These skills can also form part of a larger company capability matrix.

The Importance of Analysing Skill Gaps in the Workplace

Understanding and addressing skills gaps is crucial for any organisation striving for success and competitiveness. A workforce skills gap directly impacts a company’s efficiency, productivity, and innovation capabilities. Businesses must then conduct skill gap identification. The process helps companies tailor training and development programs to enhance employee capabilities. Learning ensures that employees are equipped to meet current and future challenges.

Additionally, a skill gap assessment helps in aligning workforce competencies with the company’s strategic goals. It fosters a more dynamic, skilled, and adaptable team. A proactive approach addresses immediate operational needs. It also prepares the organisation for evolving industry demands.

Furthermore, investing in employee development through a workforce skills gap analysis boosts morale and engagement. Employees feel more valued and see opportunities for growth and advancement within the company.

How to identify skill gaps in the workplace?

Now that you know how crucial identifying skill gaps is in your workplace and how they can help you, let’s see how it can be done.

This four-step process can show you how to conduct a skills gap identification in your workplace and unlock your employee’s full potential.

1. Identify your company’s goal

Before employee skill identification, you need to understand your company goals. Start with listing your Business Objectives and Key Results (OKRs) to set ambitious goals for your organisation with measurable results. The objective defines what your business wants to achieve, and the key results set realistic benchmarks to fulfill it.

For instance, if you want to increase sales performance across the team, you need to:

  • Maintain a sales pipeline for qualified leads
  • Increase closing rate by x%
  • Grow average deal size to X

You’ll then distribute your objectives into roles to understand who is responsible for meeting these goals. This way, you can understand the missing roles within your company and begin to identify employees who lack the required skills.

For instance, if you have a customer success team and still have a low renewal rate for the subscription, that could mean they lack the right skills.

2. Define the skills needed to achieve these goals

There are two types of skills needed for a job to be done: the core technical ones, known as hard skills, and power skills or soft skills that contribute equally to achieving your organisational goal.

That’s why it’s increasingly important to define two things:

  • What skills does your employee need to get the job done?
  • What skills do you value as a company?

Keep in mind the job descriptions as well as your company’s objectives and values. To remain competitive, your organisation has to embrace new technologies and consider future work trends. You might also define:

  • Which jobs might become automated?
  • What skills are currently on the rise?
  • Does your company need new roles to adopt new technology?

This way, you will be well-prepared for the skills you are looking for in your employees and for new roles that your company might want to fill to remove skill shortages.

identifying existing skills gap

3. Measure current skills

After you have identified your business objectives and the skills needed to achieve them, it’s time to measure your employee’s current skill level. You can measure your employee’s current skill level in different ways-

  • Key performance indicators

Key performance indicator or KPIs is a benchmark to analyse and judge the contribution of an employee towards business objectives. You can use KPIs to decide on incentives like bonuses and promotions, as well as to find employee training opportunities that will help your employees learn new skills. A good KPI is based on the “SMARTER” framework. It should be Specific, Measurable, Achievable, Relevant, Time-bound, Evaluable, and Readjustable.

  • Employee assessment

Employee assessment is one of the most common ways of addressing skills gaps. These practical assessments require managers to review employees’ skills, productivity, ability to meet deadlines, soft skills, and proven competencies. You can conduct employee assessments through tests and quizzes, self-appraisals, managerial reviews, and peer reviews. In addition, you can give your employees real-world work scenarios and evaluate their responses to understand if they need reskilling.

Tip: They can even be done digitally or online.

  • Performance benchmarking

If you have a good idea of the skills and outcomes you are looking for from your employees, then performance benchmarking will work well. You can give your employees and senior managers a point of reference for the results you expect from them during a certain time frame. This way, you can easily filter the top performers and help other employees achieve optimum productivity through training programs.

  • 360–degree reviews

360-degree reviews assess an employee’s skill, ideal performance, and contribution across all directions in the organisation. The reviewers are co-workers, managers, and even clients. The 360-degree review is based on evaluating the overall experience of working with the employee instead of just focusing on the work accomplished. Make sure the feedback collected is actionable and unbiased. This review process can quickly turn vague and unstructured when not done properly.

4. Identify the skill gap and put your findings into action

In order to identify skills gaps, you will need to interpret the findings of your skill assessments. A common way to do this is to compile the information in a skills matrix. This will allow you to easily compare the skills you want with what your employees currently have.

The difference is identified as a skill gap that you will have to bridge as soon as possible. The most common measures an organisation takes to resolve skill gaps include training and upskilling employees, hiring, contracting, reskilling, redeploying, or releasing.

If it’s possible to upskill your employees, there are a variety of online courses and employee development plans available that you can register for. Otherwise, start planning to hire new skills and create new roles to fill the skill gap.

Start working on minimising the skill gap in your workplace

Knowledge and skill gaps exist in every company and industry. However, identifying and overcoming the skill gap should be your priority. If you take these steps, you’ll not only be able to find and keep good employees, but you’ll also be able to adapt to new trends and technological advances.

Once you’ve identified the skill gaps that your company may have, it’s time to consider workplace learning. To make the most out of your employee training, consider trying a free trial with Cloud Assess learning software.

Deliver Your Skills Training Without Compromise

1255 835 Gianpiero Rusconi