Skills Gap Analysis: What It Is and How to Conduct One

According to the World Economic Forum, 39% of global workers will need re-skilling by 2030, due to developments in technology, society, and education. By closing this skills gap, experts estimate that global GDP could increase by $6.5 trillion by 2030.

When looking at closing this gap, every business has a part to play. Whether that’s through constantly refining employee training, staying up to date on shifts in the landscape, or conducting valuable skills gap analysis to identify where they’re falling short.

A skills gap analysis can help you stay on top of employee progression, retention, and organizational goals. Without it, you and your employees could end up falling behind, both internally and in the wider market.

In this guide, we’ll explore how to conduct a skills gap analysis, along with exploring upskilling strategies and techniques to help you maintain a skilled workforce.

What is a skills gap?

A skills gap refers to the disparity between the skills an employer expects their employees to have, and the actual skills employees possess. This mismatch makes it challenging for employers to fill open positions.

It may also result in workers falling behind in their role, affecting overall business productivity and success. What began as an individual or team skills gap can snowball into wider organizational issues.

The US is in the middle of a significant skills gap. Research from Georgetown University found that the national economy needs at least 5.2 million more workers with training beyond high school.

Without working on closing the skills gap, around 30% of the jobs surveyed will face skills shortages.

What is a skills gap analysis?

A skills gap analysis helps employers identify skills gaps in their workplace. The analysis compares the skills a business needs its employees to possess to meet organizational goals to the skills they currently have.

HR departments can use this information to uncover which skills are lacking within certain departments and organize training to compensate for those shortcomings. The aim is to develop effective upskilling strategies and ways to bridge the skills gap to improve processes and productivity.

Benefits of conducting a skills gap analysis

The purpose of a skills gap analysis is to align your employees and their development with wider business goals. You want to make sure their skills align with the job expected of them, and the trajectory of your business. Besides this, some of the key benefits of conducting a skills gap assessment are:

• Identifying specific areas for improvement: A skills gap analysis can help you pinpoint specific areas of improvement and development, so you can better tailor training and support
• Increasing productivity and performance: Closing the skills gap can help improve employee productivity, which ultimately boosts overall performance
• Improving employee morale: More skilled and productive employees mean more fulfilled employees. Plus, by actively investing in their development, people are likely to feel more valued
• Improving hiring and retention: A skills gap analysis can help you build a clear picture of skills required. This helps to streamline recruitment and, in the long run, retain employees that are perfect for their role
• Meeting organizational objectives: When you and your team are better optimized for the skills required to progress, you can move forward as a unit to meet wider business goals

What causes a skills gap?

A few variables, ranging from poor education to an evolving workforce, contribute to the national skills gap. Three major factors in the current skills gap are a lack of tech training, retiring Baby Boomers, and a lack of soft-skills development.

By bridging the societal skills gap that these issues create, it means your business can move forward, without falling behind.

Lack of tech training

Automated tech continues to create more job opportunities for mechanical, electrical, and software engineers. However, educational opportunities fail to keep up—while 67% of new jobs in STEM are in computing, computer science degrees only account for 11% of STEM bachelor’s degrees.

Additionally, many companies fail to offer adequate training for this new tech. A survey from McKinsey found that one third of tech leaders say that a lack of industry and company-specific knowledge is one of the biggest skill gaps in their business. Furthermore, they also found that less than half of the candidates across 4.3 million recruitment ads had the tech skills listed in the job descriptions.

Retiring baby boomers

About 11,000 Baby Boomers reach retirement age every day. That means droves of highly skilled workers will soon leave the workforce, taking three decades-worth of industry knowledge with them.

New hires, through no fault of their own, will not have as much experience, highlighting the need for identifying general skills gap solutions.

Lack of soft-skills development

Soft skills are non-technical interpersonal skills such as communication. They are often just as desirable as hard skills across many industries, as they can majorly impact how you interact and work with others.

However, according to the Bureau of Labor Statistics (BLS), the number of employed young people (16–24) has declined by 54.5% since 2024. This means there’s less opportunity for younger workers to develop soft skills like teamwork and problem solving.

While, of course, these skills can be developed outside of employment, this lack of experience puts them at a disadvantage for finding a job.

How to conduct a skills gap analysis

You may feel your employees and wider teams are working as effectively and productively as possible, which is great. However, conducting regular skills gap analysis can help you identify issues that may otherwise slip under your radar. It also illustrates that, as an employer, you’re actively and consistently looking for ways to invest in your workforce.

Conducting a skills gap analysis should ideally become part of your yearly business operations. Here’s how to begin:

1. Identify your company’s goals and objectives

Begin by identifying what your business is looking to achieve—this could be in the short- or long-term. For example, you may be launching a new product, incorporating a new system or technology, or looking to grow internationally.

From here, you’ll be able to create a clear picture of where you want to be and work backwards from there.

2. Consider what skills are required to complete those objectives

Once you know what you're working towards, you’ll need to create a list of both the soft and hard skills required to reach your goals and bridge the skills gap. As a starting point, review your current job descriptions, speak to other team and department leaders, and analyze industry trends and expectations to gain a more holistic understanding.

During this process, you may find that some skill gaps feel more ‘urgent’ than others. It’s good to prioritize these required skills and candidate qualities, so you can determine where to begin, and which gaps to close first.

3. Decide which jobs are directly responsible for achieving each goal

It may be that you need to focus on a few roles or specific teams when you initially start bridging your internal skills gap. Different goals require different skills, and different skills are relevant to different teams.

For example, sales reps need customer service skills more than the IT department, so they would probably be a key focus during a product launch, when you’re likely to get an influx of questions and feedback. However, your IT department will likely be responsible for the adoption and management of a new digital system, so ensuring they have the necessary technical skills before launch is vital.

4. Identify what skills your employees already possess

There are a number of ways you can collect and evaluate your employees’ existing skills. For example, you could conduct:

• Employee surveys: Ask people directly for a self-assessment to see what skills they think they’re lacking.
• Performance reviews: Regular performance reviews are a great way to evaluate employee progression, successes, and shortcomings.
• General manager observations: Being active in knowing and understanding how your employees work and where they excel is a good way to identify any everyday gaps.

5. Compare your employees’ current skills to your desired skills

See how your employees’ current skills match the skills they need to complete your company’s goals and objectives. Directly compare them to the list you made and identify any immediate and significant gaps. It may be that these align with your priorities, but you still may need to be flexible with your plan of action.

From there, start planning who’ll need to undergo training and what that might look like. For example, you may need to organize workshops, mentorships, or even paid development courses.

How can employers address the skills gap?

Conducting regular internal skills gap analysis can help your workforce evolve with today’s ever-changing needs and industry shifts. Internally, when employers can’t find the right candidates, or existing employees aren’t meeting objectives, this can directly impact your bottom line.

With this in mind, you may want to consider some of these skills gap solution examples to help develop your upskilling strategies.

• Regular training and workshops: Regular training opportunities demonstrate that you’re actively invested in upskilling your employees and seeing them progress.
• Development programs: Not only can targeted development plans upskill employees, but they can also boost engagement and morale.
• Targeted recruitment drives: When you know who you’re looking for, you can target and streamline the recruitment process to ensure you’re hiring the right people.
• Mentorship and knowledge-sharing programs: Upskilling doesn’t always have to take the form of training, having peer mentorship programs encourages skill sharing and collaboration.
• Fostering a culture of continuous learning: Hosting one-off training sessions isn’t enough. Your skills gap analysis should help you reinvent your business’ overall approach to upskilling and development.

Conducting a skills gap analysis doesn’t just ensure your employees aren’t left behind within their team but helps your business to achieve its wider goals. By identifying areas for improvement, you can actively work towards closing the skills gap.

Plus, by encouraging an environment of continuous learning, you and your employees can move forward together and ensure organizational success.