Implementing Skills-Based Hiring? How to Conduct a Skills Gap Analysis

To be successful and remain competitive in today’s business world requires a skilled workforce aligned with the demands of your industry. One that is both adaptable and innovative, and agile enough in their skills base to respond to ever-evolving roles.

How does your workforce measure up on these fronts? If you’re not sure, conducting a skills gap analysis will help. It’s a strategic tool that enables you to dissect your employees’ competencies against the backdrop of your current and future business goals. By identifying lacking skills, you can then tailor your recruitment, training and resource allocation to bridge these gaps.

Undertaking a skills gap analysis is not merely about keeping pace – it’s about setting it. Your ability to pinpoint and cultivate the right skills for your needs, both now and in the future, is the difference between leading the charge or struggling to keep up. To harness the full potential of your human capital, here is your guide to performing a rigorous skills gap analysis.

Why is a skills-gap analysis so important?

A skills gap analysis is an integral part of skills-based hiring, a practice that is fast becoming the recruitment method of choice globally. Skills-based hiring evaluates candidates primarily on their skills, abilities and competencies, rather than on their education and experience (as traditional methods do).

Many large corporations, such as Amazon and IBM, have made the strategic recruitment decision to shift to skills-based hiring. It delivers higher calibre employees – ones who have the competencies the roles require, whilst also enabling them to build an inclusive and diverse workforce by removing some of the unconscious bias associated with traditional recruitment methods.

A skills gap analysis is the first crucial step in the process of ensuring you have a skills-based workforce, both for existing employees and new hires. It helps you to identify the specific competencies you lack, ones you require to fulfil your business objectives – essentially, bridging the gap between current capabilities and future needs.

The data you acquire from your skills gap analysis is supremely useful in informing your hiring strategy, not just to determine who you need, but also how to reach and secure them through your job ads, interviews and assessment.

Additionally, it will inform your training allocation, ensuring it’s specifically targeted to upskill those employees and teams and close those gaps internally. In doing so, you’re likely to see increasingly engaged workers, not to mention a big boost in retention.

How to Conduct a Skills Gap Analysis

A comprehensive, skills gap analysis comprises numerous stages, many which require some intense prep work. But what you spend in time, you will more than reap back in rewards – reduced hiring costs (the right hire, not a bad one), as well as efficiency and productivity gains, each one contributing to securing your success in your market.

Step 1: Background Preparation

All successful projects begin with proper preparation. As such, there are a number of decisions you’ll need to make before embarking on your skills gap analysis:

• Focus: a skills gap analysis can be conducted at several levels, individual, team, department or company-wide. You’ll need to decide which is best for your circumstances.
• Define the goals: review your company goals and strategies. Consider business plans and growth targets and then set specific goals you wish to achieve. For example, you might want to increase your competitive advantage in a rapidly evolving market. Your goal would be to pinpoint the advanced skills and innovative competencies current employees lack, such as expertise in new product development techniques, or modern project management methodologies.

Note: You may find it helpful to engage with other managers/leaders and key personnel during this phase. The same can be said for Step 2 below. For time efficiency, you might like to undertake Step 1 and 2 concurrently.

• Set your KPIs: your recruitment and/training key performance indicators (KPIs) measure the effectiveness of the initiatives you use to close identified skills gaps. For instance, a hiring KPI could be the average time it takes for new hires to reach full proficiency post-onboarding. Similarly, a training KPI might be the percentage of employees who complete up or reskilling programs within a set timeframe.

Step 2: Compile Your Skills Inventory

This phase involves honing in on the skills you need to achieve the goals you’ve set, focusing on both current and future needs. Cover what skills you feel you already have, alongside what is missing.

Aside from discussions with key stakeholders about what skills would make the biggest difference to their teams, leverage your HR data, such as past employee and team assessments and reviews, and training records to help you understand skills gaps.

It’s also crucial to directly engage with your employees in the skills gap analysis process. It’s beneficial in a number of ways. Firstly, asking each one about where their strengths lie and what improvements they’d like to make to develop professionally aids in both customising their training and getting their buy-in. This not only ensures an accurate assessment, but also the subsequent training is relevant, engaging and effective.

Another benefit of asking employees directly is that you’ll likely gain insights about skills you may not have considered, directly from those on the frontline.

There are many employee skills assessment tools available, from tests to surveys or self-assessment scales. Try to choose tools that are fun and easy to administer, while also taking the time to reassure staff that the purpose of these evaluations is not to judge their job performance or their employment status. Instead, the intent is to assist in charting a trajectory for future development, helping you create a personalised progression plan for them. With the assessments, it’s important to ensure the data collected has a high accuracy level, so engaging with an assessment expert can prove valuable here.

Once you’ve identified the skills needed or ones that could benefit from enhancement, organise this data into a usable format, such as a skills inventory or a database. This process might involve categorising skills into various groups, like technical, soft, and leadership skills etc., as well as assigning proficiency levels to each skill.

A useful way of analysing your data and identifying gaps is to compile two separate lists – a current skills inventory and a future skills inventory. Deeply review the skills each role requires, and what each employee currently offers. You can then work towards prioritising the skills gaps based on their potential impact on your goals, as well as considering how to address them with targeted hiring or training.

Step 3: Develop A Skills Gap Action Plan

With an understanding of your critical skills gaps, you can create a plan to address them. This usually involves a combination of hiring new staff, training for current employees, or re-structuring teams to better leverage existing skills.

There are a multitude of training options to get your employees skilled up, from courses to mentorships to job rotations. What you choose will depend on the skills gaps you want to fill, as well as your individual staff and what suits them best when it comes to their training interests and work schedules.

If the skills gaps are too wide for existing staff to fill, then it’s time to turn to hiring. Our latest whitepaper on skills-based hiring offers you a comprehensive rundown of what this involves, alongside how to find the talent you need using this popular methodology.

Step 4: Monitor, Evaluate and Adjust

Set up systems to monitor the progress and impact of your training and hiring initiatives, using your KPIs and regular reporting. Ensure you have participant, manager and candidate feedback mechanisms in place to assist in refining as you move forward.

As your business goals evolve or as new industry trends emerge, revisit your skills gaps analysis and adjust your strategies accordingly. This ensures your approach to closing the gaps remains aligned with your business goals.

Extra Skills Gaps Analysis Support

There’s no doubt about the merits of performing a skills gaps analysis to cultivate a more effective and diverse workforce, especially in these talent-tight times. But it is an involved process that can benefit from an expert’s touch.

Here at Adecco, we have decades of experience in both conducting skills gap analysis and effectively utilising skills-based hiring. As an added advantage, as an external partner, we can ensure these processes are objective, while freeing up your staff to concentrate on their core work. Please connect with one of our specialists to find out more.