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Today, emerging technologies such as Artificial Intelligence and automation are rapidly changing the nature of work. As a result, skills that employers value and rely upon are also evolving, resulting in a skills gap in most organizations. 

According to a recent McKinsey survey, 60% of global executives expect that about half of their organization’s workforce will need retraining or replacing within the next five years. In addition, more than a third conceded that their organizations are unprepared to address the anticipated skills gap. Business leaders must, therefore, close this gap to secure their organizations’ future and maintain a competitive edge. 

To do so, they must first conduct a skills gap analysis to identify opportunities for the long-term growth of their people and their organization.  

What is a Skills Gap?

A skills gap is the gap between the skills your employees possess today and the skills they need for your organization to thrive. Because of the ever-changing technological landscape, employees often come into the workforce lacking the required capabilities to be successful at their jobs. The mismatch makes it difficult not only for individuals to find jobs but also for employers to find talent who have the skills their organizations need.

Why Should You Conduct a Skills Gap Analysis?

By conducting a skills gap analysis, executives can get an overview of which departments or teams are currently lacking the requisite resources to meet their KPIs. They can also plan ahead for their recruitment strategy. Rather than reactively bringing in new hires when a need emerges, business leaders can see current skill gaps, predict future ones, and create plans to ensure these gaps will be filled.  

What’s more, conducting the analysis will start the conversation on training employees in skills they need to make them more productive and efficient in their current roles. When business leaders fill in the skills gap accordingly, they will ultimately be able to use their future-ready workforce to accelerate innovation and time-to-market.

Steps to Conduct a Skills Gap Analysis

1. Research workforce trends and explore future skills.

Every organization and industry must adapt to new technologies to sustain growth. For example, PwC predicts that the adoption of Machine Learning and Predictive Analytics in the manufacturing industry will increase by 38% in the next five years.

In order to see where an organization’s skill gaps lie, executives can first determine the skills they need to execute their business strategies. They can consider what key capabilities are required for their employees to be more proficient in their jobs today and in the future.  

They can also examine the current state of workforce transformation and see which technical skills are increasing in demand in their respective industries, or turn to thought leaders and determine what key skills other successful companies have leveraged to drive business growth.

2. Measure your current workforce’s current skills.

The next step in conducting the skills gap analysis is to determine the skills the organization’s current workforce possesses. Executives can examine individual and team KPIs to discover how individuals and teams contribute to the business and where their weaknesses lie.

Employees’ current skill sets can also be measured through surveys, skill assessments, or feedback processes. In particular, the 360-degree feedback process–where feedback is solicited from an employee’s subordinates, colleagues, and supervisors, and a self-evaluation by the employee themselves is gathered–can be used to get a complete picture of the strengths of different employees.

3. Identify skills gaps.

After defining the skills the organization needs and measuring the employees’ current skill sets, executives can then identify where the skill gaps lie. Whether these may be current gaps that need to be filled to accelerate productivity today or gaps to set the organization up for success in the future, they must be filled in order to keep pace with the rapid technological advancements and to stay ahead of the competition.  

4. Reskill or upskill employees.

The most efficient and effective way for organizations to fill in their skills gaps is to upskill or reskill their teams. As noted HR industry analyst Josh Bersin recently put it, companies have to move beyond sourcing job candidates to “creating candidates” internally.

Ideally, companies should train their employees in these essential skills by investing in training programs with customized learning paths, so that individual employees can build the skills that are most relevant to them. These programs must also present employees with real-world projects and other hands-on exercises that lead to real skills mastery rather than simple exposure. Only then can they emerge fully equipped to solve real-world business problems and challenges. 

5. Streamline the application of new skills.

As employees gain new skills and knowledge through corporate training programs, managers can stay updated on their learning journey. Managers can discuss the skills the employees will learn, the projects they will complete, and help create opportunities for them to apply and transfer their knowledge to their current roles.

In a time where more organizations are preparing their employees and organizations for the future, knowing what skills your workforce possesses and needs is an important first step. By conducting a skills gap analysis, executives can gain valuable insights into their workforce, upskill their employees, fill these gaps, and ultimately build an agile workforce that can drive positive business outcomes and thrive in the evolving technological landscape. 

Dive deep and learn more about business leaders’ top priorities for workforce development in 2020 in our  State of Workforce Transformation Survey Report. 

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