Learning & Development

Ready for the future: 11 Practical ways to recognize, conduct and address skills gap

3 key takeaways from this blog:

»What is the cause and impact of skills gap
»How to recognise and address skills gap
»Learn about skills gap analysis

Technological advances, digitalization, and the pandemic have influenced how work is done today. All of them have brought about certain changes such as the need for new positions, the new skills needed to get the job done more efficiently, and the new way of how it’s done. 

The emphasis is on efficiency, innovation, agility and resilience. In order for the business to develop in line  with the new trends, it is necessary to apply them. The question is – how to apply them if the employees do not have the appropriate skills that are required by those innovations? 

If the current employee skills do not match the required innovations for a more efficient work, then we are talking about a skill gap. The skills gap is the difference between the skills an employee needs to perform their job and the employee’s actual skills. 

Skills needed – skills possessed =  Skills gap

The findings from the McKinsey survey indicate that the companies are lacking the talent they will need in the future. 87% of companies say they are either experiencing gaps now or expect them within a few years. The Harvard Business Review in their research forecast 21 new HR jobs in the next 10 years. The Monster`s annual global survey points out that finding candidates with the right skills is the biggest challenge in 2022.

How does the skill gap affect the business?

According  to the Monster’s survey, the skill gap has an impact in:

  • major loss of productivity (70%),
  • inferior work quality (45%),
  • lower morale (40%), 
  • loss of revenue (35%) 
  • a higher rate of staff turnover (33%).

Salesforce-commissioned RAND Europe Report indicates that 14 G20 countries could miss out on 11.5$ trillion cumulative GDP growth if the skill gap isn’t addressed. 

Where are those skills gaps?

Gaps can be found both in hard and soft skills. Hard skills are required to do a specific job and soft skills make people more enjoyable to work with. 

According to the respondents’ report in McKinsey research, the business areas with the greatest need to address potential skill gaps are: 

  • Data analytics with 43% of respondents, 
  • IT/mobile and/or design and management with 26%, 
  • Executive management 25%,
  • HR and talent management with 23%, 
  • Sales and marketing operations and products and/or service design – 22% of respondents.

The soft skills required for the future automated, digital and dynamic labor market according to McKinsey include:

  • Critical thinking skills
  • Communication skills
  • Mental flexibility
  • Teamwork ability
  • Self-leadership
  • Digital fluency.

How to recognize the skills gap?

In order to recognize the skills gap in your company, there are some data that need to be collected: 

  • Observations With observation begins skills gap analysis. Along with the KPIs and survey methods, it helps see a clearer picture.
  • KPIsSpecifics benchmarks of employee contributions; Anything below  the set benchmarks is a skill gap that needs to be addressed.
  • Employee assessmentsIdentifying skill gaps using open-ended questions, surveys, quizzes, tests, role-playing, comparing self-assessment with the report from the managers and supervisors.
  • 360-degree reviewsFull circle feedback on an employee’s performance from other colleagues, managers, customers, clients and vendors.
  • Performance benchmarksDiscovering a skills gap by observing top performer employees.

What is a skills gap analysis? 

It’s all about identifying the weaknesses in the present and turning them into strengths of the future.

“A skills gap analysis is a tool used to assess the difference (or gap) between the actual state and a future, goal state” (Antonuci and Ovidio,2012) It helps an employer to get an insight into which skills employees lack in order to improve them. It also allows an employee to identify skills that need to be developed in order to advance in his career. 

Conducting a skills gap analysis will help you make sure your talent meets the needs of your future business.

How to conduct a skills gap analysis?

There are a lot of templates and examples of how you can run a skills gap analysis. It can also be done both for individuals and for a group or team. Usually, all steps can be grouped into three phases:

  1. Determine the skills you need for the future:
  • What is the organization’s mission?
  • What are the organization’s business goals?
  • What critical skills are needed to be able to perform the mission and meet the business goals? 
  • What jobs within your organization/industry are likely to be (partially) automated?
  • What skills are currently on the rise in your industry?
  • What kind of (non-existing) jobs will your company need more of?

2. Appraise skills that are currently there through:

  • Performance evaluations and employee assessments 
  • Interviews/focus group meetings with supervisors, managers, and employees
  • Gathering all the information from competency assessments into a single, searchable database.

3. Identify gaps and take actions by:

  • Comparing the current and desired state, 
  • Making training plans and goals in order to develop the missing skills.

How to address the skill gap?

After conducting a skills gaps analysis you get a clearer picture of where the gaps are, what employees’ skills are required and what skills are currently there. In order to better understand and address the skill gap in your work environment it is recommended to:

  • Work closely with your managers,
  • Align the gap solution with your organization’s goals,
  • Conduct analyses on a regular basis and take action,
  • Keep up with benchmarks and measurable outcomes.

McKinsey survey points out that, among the companies worldwide, the most common tactic for addressing skill gaps over the past five years has been:

  • Hiring,
  • Skill building,
  • Contracting (Engaging freelance and/or contract workers)
  • Redeploying,
  • Releasing.

On average, organizations take at least two actions to close potential gaps.

Skill building

Bring the culture of learning to your company’s culture through microlearning, courses, trainings, mentoring, buddy, on-job-trainer, job rotation.

As stated by the survey, 54% of executives claim that skills building is the most useful action to close the gap. LinkedIn Learning found that, if companies actively invested in employees’ careers, up to 94% of workers would choose to stay with them longer. Amazon – Upskilling 2025 and Goggle are some examples of companies investing in learning to close the gap.

Hiring

Modify your hiring process and possibly the job description where necessary. When it comes to hiring, more employers (93%) are planning to hire in 2022, than last year – 82%. Many companies focus on hiring people who can fill an immediate gap, rather than on finding people they can develop over the course of a career.

Recruiting and job redesigning

Get the hiring process more structured with structured interviews focused on specific skills. Also, consider candidates’ potential and ability for learning new skills. Nowadays companies fill the vacancy more with internal recruitment (74%) rather than external one (26%).

Solving the skill gap is more than creating one online course and requiring employees to take it. It’s more effective to use different types of training than just one. Also, it’s important for an organization to be agile, supportive and to allow employees to learn, make mistakes and develop. 

Due to a lot of changes, the skills gap is something that is always present, and closing those gaps is a process and a challenge that can be an opportunity for growth.

Author: Branka Vuletic

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