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How to conduct a skills gap analysis in 5 steps

Written by Bedfordshire Chamber of Commerce | 28 Aug 2019

The nation is in the midst of a serious skills shortage, and it’s costing UK businesses an estimated £6.3bn every year, according to a report by The Open University.

With unemployment rates at an all-time low, many companies are finding it harder to hire workers with the requisite skills. 73% of organisations have experienced difficulty in hiring for management and leadership skills. And around half say they are not as agile as they need to be due to a lack of skills.

The reality is that many small businesses are facing a skills gap that is affecting either their productivity or their prospects for growth.

But how do you know if you a skills gap exists in your company?

Here's how you can run your own skills gap analysis to find out.

1. Plan

A skills gap analysis can be performed on two levels - at an individual and team level.

At the individual level, you identify the skills a job requires and compare them to an employee or potential employee’s actual skill level. Here, the team leader or manager should be in charge of the process. They should be thinking about how they may respond to any skills gaps identified, for example through training, mentoring, or succession planning.

At the team level, you identify the skills within the team to assess whether you have the internal skills required to deliver on a project or against business goals. Usually, the team leader or manager, someone from HR, or even an external consultant takes charge of this process. As well as thinking about responding with training or mentoring, you may also need to consider external hiring to fill the skills gap.

2. Identify skills

Once you’ve done the initial planning, your next step is to identify the important skills your business requires. To identify these skills, ask yourself:

  • What skills are valuable to the company?
  • What skills do your employees need to do their jobs well, both now and in the future?

Your company’s job descriptions, business goals and values should give you a good steer in answering these questions. Be sure to look to the future and the skills that may be required in two, three, five years time.

Don't forget to involve your employees too. It will be interesting to get their perspective on what they think the most important skills needed are.

3. Measure current skills

Now you know the important skills your company needs, you need to measure the current skills your company holds internally.

Conducting surveys, assessments and interviews with employees are a good place to start. You can also look to feedback people have received from performance reviews. Or, if you wanted to save time, you could use a skills management software. Some examples are Skills DB Pro and Skills Base.

4. Analyse the data

Now you’ve got all this data, you need to analyse it to see where the gaps exist.

For each employee, set up an Excel spreadsheet with a row for each skill. Add a column to indicate how important that skill is to their job role, e.g. high, moderate, low. Then add columns to indicate their required level and actual level using a numbered scale. For example, for one employee, CRM software skills might be of ‘high’ importance and the required level a rating of 5, but their actual level is only 3. Here you'll see a clear gap, and that's what you should overcome.

Before you go head first in acting on these gaps, think about why they might exist. It could be because you have new employees who aren’t used to using your CRM. If this is the case, on-the-job training is likely to be the best way to close the gap.

5. Develop strategies to close the gap

There are generally two ways to fill skills gaps - training and hiring.

Training employees to strengthen their skills is one of the best ways to fill the skills gap. For example, you might need to offer training in software, digital skills, or social media. Training can be offered in the form of workshops, online training, webinars, or even conferences and events. It might be that you need some people to complete more formal training and certifications too.

If you are unable to fill the skills gap through training, you may need to consider hiring new employees who already have the skills you need. Skills assessments and structured interviews can help you to determine whether they have exactly what you're looking for. You may even choose to reach out to people who aren’t looking for a job, but that you know have the desired skills. LinkedIn and your personal networks will be a good place to start.

It might seem like a long process, and it can be time-consuming. But the benefits for your company of conducting a skills gap analysis can be huge. It can help you to increase productivity, grow your business, and lead to happier employees.

By conducting a skills gap analysis you will:

  • Identify the requisite skills your company needs and how well your company is operating against them
  • Identify the skills of each employee and any gaps that need to be bridged
  • Determine strategies to bridge those gaps - through training or new hires

Bedfordshire Business Manifesto 2019/20

Topics: skills

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