Is there a gap between the skills your employees possess and the skills that will be needed – even in the future – in your organization? Then you are dealing with a skills gap.
To close a skill gap, you can conduct a skill gap analysis. Because that’s how you keep your organization innovative and successful in the future. Moreover, it will ensure that people can make the best use of their talent. But how do you approach such an analysis? And how do you then bridge the skill gap? You can read about that here.
👉 Getting started with the skill gap? 🎥 Join our online masterclass ‘Understanding the skill gap’ on March 27
When do you speak of a skill gap?
A skill gap or skills gap is the difference between your employees’ current skills and the skills needed to achieve your organization’s goals – including future goals.
The gap in skills or competencies may consist of: 1) soft skills or interpersonal, transferable skills, such as communication and organizational skills; 2) hard skills or job-specific, technical skills, such as knowledge of a particular method, machine or software.
Do employees in your organization do not possess all of the skills required to perform their function now or in the future, you can speak of a skill gap.
A skills gap can occur at multiple levels:
- Individual: when an individual employee does not possess the right skills to perform well
- Organizational: within an entire team, department or organization lack (some) required skills to achieve organizational goals
🎥 Want to know if a skill gap exists in your organization? 📆 Sign up for our online master class on March 27
How a skills gap can occur
Skill gaps can occur in any type of organization and at any job level.
This is simply because of the speed of technological developments right now: the skills needed in certain jobs are changing at an increasingly rapid pace, making it more difficult for employees to keep their skills up-to-date. For example, 44% of employees’ core skills will change in the coming years, according to predictions by the World Economic Forum.
Because of those technological changes, accelerated by AI, we see 2 trends in skill gaps:
- A gap in technical skills, as new technical skills keep emerging;
- Soft skills or interpersonal skills are becoming increasingly important because that’s what makes you stand out in the midst of all this technology.
While technical skills retained half their value in the labor market for about 10-15 years a few years ago, now they only 2.5 years (source: IBM).
And looking at soft skills, some of the most important soft skills for “reskilling” – skills in which employees need to be retrained:
- Analytical and logical thinking
- Problem solving ability
- Learning ability and speed of learning
- Leadership
- Resilience and stress resistance
But regardless of what is going on in the world in terms of technological changes and market developments, there may be a skill gap in your organization (individually or throughout the organization) due to a variety of reasons.
Factors that can contribute to a skills gap:
- Difficulty finding the right people: in a tight labor market, you sometimes have no choice but to hire more junior profiles or look for lateral entrants
- Lack of experience: whether intentionally or due to labor market tightness, sometimes employees do not yet possess the years of relevant work experience to have developed their professional or interpersonal skills. (And that’s totally okay, if you offer them development and evaluates based on their skills.)
- High employee turnover: When the best-performing employees leave quickly, an organizational skill gap can develop.
- Insufficient training, coaching and feedback: When you do not (yet) provide room for development, for example with a Performance Management cycle, employees also do not get the chance to improve their skills.
- Unclear expectations: If it is not clear to employees what skills are required according to their job profile are required of them, they also cannot take concrete action to develop those skills.
Example of a skill gap
These are 2 examples of a skills gap that can occur:
(a) Senior project manager
Mark has over 10 years of experience in project management, but his knowledge of new AI tools lags behind. Thus, he lacks the technical skills to make processes more efficient.
(b) Team of junior developers
An IT agency works with a team of fairly inexperienced software developers who were hired because they were trained and retrained in the latest code languages. But they are still inexperienced when it comes to collaboration, planning and communication: so there is a skills gap when it comes to their soft skills. This is where the developers receive coaching from a senior colleague.
Why you want to address the skills gap
The world of work may look completely different in 5 years. And the only solution is to prepare your organization as well as possible for that.
With the tight labor market and rapidly changing technological skills, only the best-performing organizations can remain productive and profitable. And you as HR can play a key role in that – by addressing the skill gap.
The benefit when you improve skills in your organization is that you can do more with fewer people. You continue to retrain employees in the skills they need to do their jobs as well and efficiently as possible.
More benefits of bridging the skills gap:
- You retain internal knowledge: that makes you more productive, more innovative, increases your profitability and thus gives you a competitive advantage
- You encourage internal mobility, and thus retain more people
- You gather insights on skill levels and performance for strategic workforce planning, as well as for smarter recruiting
- You are more attractive as an employer, because you show that you invest in the development of your employees
👉 Here you can read more about the benefits of improving employee performance
Understanding the gap: here’s how to set up a skill gap analysis
To recap: if you do nothing to improve skills in your organization, you could fall behind competitors, miss out on talent and lose your best performers.
So you want to avoid a skills gap, or if there is a gap, you want to bridge it as quickly as possible.
The first step to getting ahead of the skill gap is to more insight: you get that by doing a skill gap analysis. In short, you then determine:
- The future skills that are going to be needed in your organization
- The difference from the state of the current skills you have in place
- With what actions you will bridge that gap
Here’s how exactly to conduct such an analysis 👇
1. Determine the most important skills for your organization (including future ones)
Addressing the skills gap begins with planning ahead. You can’t predict the future, of course, but you can think strategically about the skills that are going to be crucial in your industry in the next 5 or 10 years.
These are some points to think about:
- What goals do we want to achieve with our organization? What skills or competencies are most valuable to that end?
- What skills must employees possess to perform their jobs well and efficiently?
- What skills are currently emerging in the industry?
- Are there new technologies that our employees need to be proficient in?
- What future functions may not exist now, but will we need in a few years?
💡 Tip: it helps tremendously if you already have in job profiles what skills and competencies are needed to perform a job successfully.
2. Map your employees’ current skills
The next step is to maintain the current level of skills in your organization.
Skills measurement can be done in a number of ways:
(a) With assessments of soft skills, behavior and cognitive ability: for example, a motivational test such as from TMA, a Big Five personality test, a traditional assessment (as widely used in recruitment) or a neuro-cognitive test such as Equalture.
(b) With evaluation and performance reviews, including 360-degree feedback to get as complete and honest a picture as possible
(c) With interviews, for a more qualitative insight. But beware that the least gives objective results: someone can give socially desirable answers in a live interview, and interviewers always have unconscious biases that color their picture.
These methods are complementary; you can combine them.
But whatever method(s) you choose, the most important thing is to capture the current skill level of employees capture. You do that in a skill matrix.
- That way you can immediately see if there is a skills gap in the level of skills that employees are currently should possess
- You can view the skill level or gap at the individual level, by position, team, department or organization-wide
3. Capture future skills and determine the ‘gap’
Then we go back to the crucial skills from step 1.
Now create an overview of the future skills that are going to be needed in your organization.
- It is most convenient to link these to a job profile (which is often just a bit more efficient than linking skills to an individual employee).
- Similarly, you can see the skills gap by job function when it comes to skills yet to be developed in the next 5 (or 10) years.
Because these are future required skills, you can change the level that employees possess yet.
But what you can do is capture these future skills in your process for evaluating, coaching and providing advancement to employees: your performance management process.
Also, don’t forget to ask what skills employees want to develop themselves.
You then track progress on those yet-to-be-developed skills using job profiles, development goals and career paths.
According to Gartner’s survey of 3,375 employees, 6 in 10 are not getting the on-the-job coaching they need to maintain key skills in their jobs.
– Source: HBR 2024
4. Action: ways to reduce the skills gap in your organization
And now for the final and most important step: supplement the knowledge and skills of employees so that you can close any skills gap.
You could address the skill gap from step 3 by smart recruiting, and looking for the rare people who have mastered exactly the skills that will become important in your organization in the coming years.
But that’s the theory, because in a tight labor market, finding the right people is a big challenge.
Therefore, the solution to the skill gap (and to immediately retain more employees) is to provide the proper coaching, in-service training and internal mobility provide.
These are the interventions’ you can take from HR:
- Substantive guidance or “on-the-job coaching” from mentors, coaches or (operational) managers to teach job-specific, technical and soft skills
- Internal training For larger groups of colleagues: this can be for technical skills as well as soft skills such as leadership
- External training: you can provide a training budget for that (which can also be tax smart)
- Job crafting: have managers or internal coaches help colleagues shape their jobs themselves so that tasks best match their talents
- Set up a learning and development program and for that, find a software tool that makes it as easy as possible to take courses, online or hybrid.
Also, make sure that your learning and development captured in KPIs and development goals, and include it as a talking point in 1-on-1 meetings between employees and managers.
That way you create ownership for it, and don’t leave it to non-commitment (whether there is an hour left in someone’s schedule at the end of the week).
Evaluate regularly on progress
How are your colleagues’ skills developing? Are they demonstrating behaviors appropriate to their level?
A final tip is to keep evaluating for progress in developing new skills.
For that, of course, you need (team) managers, colleagues, mentors and their feedback. So integrate skill evaluation therefore into your evaluation conversations and interview cycle.
💡 Then you can smartly track current skills, skill levels and the progress of skills employees want to develop further in a Performance Management tool.
