What is a skills gap in your company? (plus gap analysis template)

July 6, 2021 - 14 min read

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What is a skills gap: a skills gap definition

The importance of analyzing skills gaps in your company

How employers reduce the skills gap

How to address the skills gap

3 examples of employers addressing the skills gap

Decrease your skills gap with coaching from BetterUp

Building a strong workforce can feel daunting.

While your current teams have the skills they need to do their jobs, are you sure your teams are ready for the future?

Big technology changes are constantly happening. If you aren’t teaching your employees new skills, your company can develop a growing skills gap.

But what is a skills gap, and how do you know if there’s one at your company?

Here’s everything you need to know about identifying skill gaps and helping your employees develop the right skills.

What is a skills gap: a skills gap definition

The future of work is changing.

As many jobs become automated or obsolete, there are just as many roles opening up that call for new skills. To continue growing, employers need to address the skills gap in their organizations. Otherwise, they may risk losing their teams.

A skills gap is when your current workforce’s skill set doesn't align with the skills they need to do their jobs.

when do skill gaps happen what is a skills gap

Many companies assume that hard technology skills are their primary skills gap. But, employees may also be lacking in soft skills that they need to do their jobs well.

COVID-19 made leaders even more aware of how important it is to build capacity in their employees. Now, 78% of leaders say that skill-building is crucial to long-term growth. Only 59% of leaders said the same thing before the pandemic.

Now more than ever, leaders see a widening skill gap in their organizations. 43% of industry leaders see that their company needs to address a skills gap immediately to keep up.

Recognizing the gaps in your employees’ skill sets can help you prepare for the future. Building those skills in your workforce positions your company for innovation and agility.

Many companies see even more benefits to building current employee skills.

Addressing your skills gap makes your company more likely to deliver on its strategy. Plus, investing in skill development increases employee performance and satisfaction.

The importance of analyzing skills gaps in your company

For years, employers have preferred to hire new people to close their skills gaps. But, it’s becoming difficult to find new employees with the skills companies need.

By the time many companies realize they have a skills gap, they could be in dire need of support. Assessing your skills gap helps you recognize the capabilities your teams need to thrive.

business area with high skills gaps

A skills gap analysis template lets you see where you need to expand your team’s skills right away.

Often, it can be more affordable and profitable to train people in-house than it is to hire new people. Your employees will appreciate you investing in their capabilities and empowering their growth.

Even if you don’t see glaring skill gaps, a skills gap analysis can reveal new growth opportunities. Soft skills like good communication can play a major role in team performance.

A gap analysis template can make it easier to assess soft skills.

Even though 93% of HR professionals say soft skills are as or more important than hard skills, we often overlook them when analyzing skill gaps.

Improving your teams’ soft skills primes them for leadership. Then, you don’t have to hire managers who don’t know your business to manage employees who do.

How employers reduce the skills gap

If you aren’t looking at your skills gap already, there’s a good chance you aren’t fully using your talent.

close skills gap

Over 50% of employees say their employer doesn’t understand their current capabilities. This leads employers to offer the wrong kinds of training. When that happens, employees may disengage at work and feel undervalued.

In some cases, employees have skills they don’t use because they don't need them for their current job. Other times, employees can fail to see their skill gaps. Looking at your teams’ gap in skills helps you offer development opportunities employees value.

Often, employers assume that it’s an employee’s job to expand their skills. In reality, it pays for employers to invest in their employees’ development. Upgrading employees' skills and keeping them interested and growing should be seen as a collaborative effort, every day, not just in one-off training programs. 

Reskilling programs and training are great ways to expand your teams’ capabilities. These programs let employees repurpose their skills and apply their expertise in new ways.

According to McKinsey, nearly 70% of businesses see direct ROI from investing in reskilling problems. Often, companies also see benefits beyond bottom-line growth.

Top performers often seek out organizations with development opportunities. Plus, skill-building can have a strong impact on company culture.

How to address the skills gap

Training and development are essential to fill the ever-increasing skill gap. But how do you know if your organization has a skills gap?

A skills gap analysis template helps you see which skills your team needs to master. Reviewing their current skills helps you find the best training to close the gap.

skills gap analysis template

Evaluating both hard and soft skills can show the best ways to address your teams’ need for growth.

Start by defining the skills that are most valuable to your organization now and in the near term.

Next, consider what skills your company may need in the next 5-10 years. This can be incredibly hard to predict. Don't try to be too precise but look for general areas or categories of skills, such as data literacy or geriatric needs, that are relevant to the company's long-term strategy and align with broader external trends. Talk to managers and talent professionals to see what skills they look for in a new hire and what trends they are seeing.

Use these skills to fill your gap analysis template. Then, work with HR to create 360-degree assessments that measure the abilities of your employees.

Once you've evaluated your teams, you can find support or development opportunities that benefit the most people.

Managing the skill gap is about more than creating one online course and requiring employees to take it. Using a variety of different types of training is more effective than solely focusing on one. Even more important is designing work and the work environment to enable employees to grow and develop themselves every day. Consider alternative forms of development and support. According to Deloitte, valuable soft skills or capabilities may be best cultivated through a culture of coaching at the team level.  

For example, McKinsey found that 46% of businesses say expert coaching is an impactful way to train their teams. Coaching is a powerful tool to strengthen soft skills and encourage self-improvement. Plus, a coach can provide daily accountability and support while employees learn hard skills.

skill building formats

Bite-sized online training sessions are another way to address your company’s skills gap.

Delivering relevant training in small increments can help employees gradually learn new skills. Plus, modular micro-training delivers almost twice the ROI of longer sessions, with a 30% lower price tag.

Once an employee learns a new skill, let them practice their skills with a new project. Pairing them up with someone who has the skill already can help them learn and develop faster.

Keep in mind that this is a new skill for them, and remember to review their performance fairly to encourage development.

3 examples of employers addressing the skills gap

Companies successfully fill their skills gaps in many different ways. But, they all focus on offering strong training support and opportunities for workers to learn the skills the business needs.

Different skills require different types of learning. Finding the best way to teach new skills can increase the success of your learning and development programs.

Here are 3 examples of companies that developed innovative ways to train their workforce.

Tesco

When COVID-19 hit the UK, supermarket chain Tesco needed new staff to manage the uptick in online orders. So, they developed a great way to train new employees and put more people to work.

From March to April 2020, Tesco reskilled 45,000 furloughed workers to process online orders. They ultimately hired 16,000 of those trained workers full-time.

By offering a training program, Tesco expanded its hiring pool while helping workers develop new skills.

Abbott

Many companies search for candidates with experience in a specific role. Abbott aims to create well-rounded employees, so they train new hires in every central area of their business instead.

Abbott designed a development program for recent graduates that shows them how the business operates. Abbott employees work in six different departments over 2 to 3 years.

These short-term assignments give new employees a more informed view of what happens across the business. This program improves collaboration skills and shows employees skills they may want to develop.

Milwaukee Tool

Milwaukee Tool developed programs that help employees move into new positions. These upskilling opportunities help build employee capabilities. Meanwhile, Milwaukee Tools can engage high-performing employees in new ways.

The Engineering Leadership Development Program helps employees learn hard and soft skills for a new job role. It also pairs them with a mentor to help them expand their capabilities.

The Sales and Marketing Leadership Program prepares team members for leadership positions. This program teaches key management skills and empowers employees to step into new opportunities.

Decrease your skills gap with coaching from BetterUp

More and more companies will experience a widening skills gap in the next five years. While reading this article, you may have discovered that your company is one of them.

But, there’s no need to worry. Once you discover where your skill gaps are, there are many ways to upskill your current employees.

With the right training and support, your business and employees can thrive.

BetterUp coaching can help your employees develop a growth mindset and expand their skills. Request a demo today to see how coaching can take your employees’ skills to new heights.

high-performing-teams-cta

Published July 6, 2021

Shonna Waters, PhD

Vice President of Alliance Solutions

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