HR Gap Analysis: Everything You Need to Know
Ed Gordon, author of Future Jobs: Solving the Employment and Skill Crisis, said, “You can have all the latest technology you want, but if you don’t have the talent behind it, your business is not sustainable.”
People are a key part of your organization’s growth, so incorporating them into your business plan is vital. What does your organization want to achieve and what people do you need to achieve it? What skills do your people have and what do they lack?
Conducting an HR gap analysis can help you answer these questions and stay ahead of your organization’s hiring, retention, and professional development needs.
What Is an HR Gap Analysis?
An HR gap analysis is a breakdown of your current workforce and the skills they possess compared to the workforce you will need to reach key business goals. Because it identifies upcoming personnel and skill deficiencies within your organization, an HR gap analysis is also sometimes called a skills gap analysis or workforce gap analysis.
This analysis helps your organization plan for growth, project hiring needs for your future workforce, understand the skills and experience in your current workforce, and develop strategies for overcoming the gap between the two.
Planning for Growth
An HR gap analysis can help your organization stay in front of changes in your workforce, both with growth and downsizing. Instead of hiring or firing reactively, you can plan ahead and take careful action at the right time. Operating this way makes it easier to grow responsibly, ensuring that each position is needed and your workforce is meeting your organization’s evolving needs.
Projecting Future Needs
When your organization plans for a big change that falls outside the scope of normal growth, such as a new product, branch, or division, then you need to have a people plan to support it. An HR gap analysis allows you to identify how many workers you’ll need, the skills and experience required, and the timeline for when and how rapidly you should hire them.
Analyzing Current Resources
Creating an HR gap analysis can also give you a clear picture of what value your current employees provide to the organization—it’s like taking people inventory. With this information, you can pinpoint candidates for management succession plans, discover underutilized skill sets, and identify employees who could be trained for another position. You should also include information such as retirement dates and average turnover so you know which employees you may need to replace in the future.
Building a Strategy
Finally, an HR gap analysis can help you develop a plan for filling the gap between the resources you have now and those you will need down the road. Are there current employees who would be well suited to work on the new product line? Internal hiring and retraining may be the best solution. Do you plan to build a new team of customer support reps? Starting on a hiring strategy could be the way to go.
You need a succession plan in your organization. Want to know why?
Typically your analysis will point to one or more of these strategies:
- Adjusting headcount (creating new positions, tweaking job descriptions, etc.)
- Professional development (cross-team training, internal internships, etc.)
- Restructuring (establishing a new team, promoting an employee to supervisor, etc.)
How to Conduct an HR Gap Analysis
You can conduct an HR gap analysis at any point, but it’s especially useful when your organization is struggling to meet its goals or before a big change. We’ve broken down the process into four simple steps:
- Define Your Goals
- Identify Key Skills
- Assess Current Skills
- Create a Plan
Define Your Goals
You need to start by setting up the target. What is your organization trying to achieve? Without a clear objective in mind, it is impossible to know what resources and strategies you need—and thus what gaps you need to fill.
You can define your goals on an organizational level or on a smaller scale, like for individual departments and teams. You may even have a combination of goals.
Identify Key Skills
Once you’ve set the goal posts, think through all the professional skills your team needs in order to hit that mark. This list should include both hard and soft skills so you can build a workforce that fits both your talent and culture needs.
Try mining current job descriptions and your organization’s values for ideas, as well as job ads from other companies that are hiring for positions you want to add. You can also ask your employees what skills they feel they’re lacking or wish they had on their teams. Then, for each of these skills, rate how important it is and the level of expertise your organization needs. Here’s an example of what that might look like:
Assess Current Skills
Using this new list of key skills, you can start taking inventory of what your workforce already offers. If you’re a smaller organization, you can do this by creating a skills list for each employee in which you compare their level of expertise in each skill to the level of expertise needed. Larger organizations may want to lean on performance reviews, manager assessments, and employee surveys to gather this information.
Create a Plan
With a list of key skills needed and an inventory of current skills, you will be able to see where the gaps are in your HR gap analysis. Your next steps are to identify the best solutions to fill these gaps and then act on those plans.
As we mentioned earlier, these solutions will probably take one of three forms: adjust your headcount, develop your people, or restructure your workforce. In all likelihood, you’ll end up with a combination of all three. Here are a few resources to help you with each strategy:
- How to Scale a Team: Vision, Values, and Culture
- How to Find and Hire The Right Employees for Your Team
- You Need a Succession Plan—Here’s Why
- 6 Methods to Improve Management Coaching – HR Experts Weigh In
Building for the Future
Conducting an HR gap analysis can help you set your organization up for long-term, sustainable success. It gives you the information you need to hire more strategically and make the best use of the talented employees you already have. Instead of stepping blindly into an unknown future, you and your people will have a clear idea of where you’re headed and how to get there—and you can all move forward together.