What's an HR Gap Analysis? How to Create One (And Why You Need To)

People are key to your organization's growth and sustainability, so incorporating them into your business plan is vital. An HR gap analysis reveals the skills your people have and what skills they lack, so you can make smart, informed decisions about how to adjust your team in order to hit company goals.

Armed with actionable data, you’ll know how to grow responsibly and ensure that your organization's evolving needs are met. Let’s take a closer look at what a gap analysis is and how to conduct one.

What Is Gap Analysis?

A gap analysis consists of measuring a current state and comparing it to a desired one in order to reveal discrepancies, or gaps. In this case, it’s a breakdown of your current workforce and the skills they possess today compared to the workforce and skills you will need to reach key business goals.

Because it identifies upcoming personnel and skill deficiencies within your organization, a gap analysis is also sometimes called an HR gap analysis, a skills gap analysis, or a workforce gap analysis.

Conducting a gap analysis can help you set your organization up for long-term, sustainable success.

This analysis helps your organization plan for growth, project hiring needs for your future workforce, understand the skills and experience in your current workforce, and develop strategies for overcoming the gap between the two.

How to Do a Gap Analysis

Step 1: Define Your Goals

Start by setting up the target. What is your organization trying to achieve? Without a clear objective in mind, it is impossible to know what resources and strategies you need—and thus what gaps you need to fill.

You can define your goals on an organizational level or on a smaller scale, like for individual departments and teams. You may even have a combination of goals.

Step 2: Identify the Organization's Needs

Once you’ve set the goal posts, think through all the professional skills your team needs in order to hit that mark. This list should include both hard and soft skills so you can build a workforce that fits both your talent and culture needs.

Try mining current job descriptions and your organization’s values for ideas, as well as job ads from other companies that are hiring for positions you want to add. You can also ask your employees what skills they feel they’re lacking or wish they had on their teams. Then, for each of these skills, rate how important it is and the level of expertise your organization needs.

Here’s an example of what that might look like:

Step 3: Assess Your Team's Current Skills

Using this new list of key skills, you can start taking inventory of what your workforce already offers. If you’re a smaller organization, you can do this by creating a skills list for each employee in which you catalog their skill set and gauge their expertise in each skill.

Larger organizations may want to lean on employee records. Here are a few good places to gather this information:

• Performance reviews
• Manager assessments
• Employee surveys

Step 4: Create an Action Plan

Comparing your list of key skills needed against your inventory of current skills reveals where the gaps are in your skill set—that’s your HR gap analysis. Now, you need to identify the best solutions to fill these gaps and create a plan of action.

As we mentioned earlier, these solutions will probably take one of three forms:

• Adjusting your headcount
• Developing your people
• Restructuring your workforce

In all likelihood, you’ll end up with a combination of all three.

3 Ways HR Analytics Drive Business Growth

You'll Be Able to Forecast Future Needs

When your organization plans for a big change that falls outside the scope of normal growth, such as a new product, branch, or division, you need to have a people plan to support it.

An HR gap analysis allows you to identify the following:

• How many workers you’ll need
• The skills and experience required
• The timeline for when and how rapidly you should hire them

As Ed Gordon, author of Future Jobs: Solving the Employment and Skills Crisis, aptly puts it: “You can have all the latest technology you want, but if you don’t have the talent behind it, your business is not sustainable.”

You Can Easily Analyze Current Resources

Performing an HR gap analysis can also give you a clear picture of what value your current employees provide to the organization—it’s like taking a people inventory. With this information, you can pinpoint candidates for management succession plans, discover underused skills, and identify employees who could be cross-trained for another position.

As part of your gap analysis, you should also include information such as retirement dates and average turnover so you know which employees you may need to replace in the future.

You Can Build a Data-Driven Strategy

Finally, an HR gap analysis can help you develop a plan for filling the gap between the resources you have now and those you will need down the road. For example:

• Are there current employees who would be well suited to work on the new product line? Internal hiring and retraining may be the best solution.
• Do you plan to build a new team of customer support reps? Starting on a hiring strategy could be the way to go.

Typically, your analysis will point to one or more of these strategies:

• Adjusting headcount (creating new positions, tweaking job descriptions, etc.)
• Professional development (cross-team training, internal internships, etc.)
• Restructuring (establishing a new team, promoting an employee to supervisor, etc.)

Next Steps: Identify HR Gaps at Your Organization

Performing an HR gap analysis can help you set your organization up for long-term, sustainable success. It gives you the information you need to hire more strategically and make the best use of the talented employees you already have.

To recap, here’s how you can get started on your own HR gap analysis:

1. Define your goals
2. Identify your organization’s needs
3. Assess your team’s current skills
4. Create an action plan

With your analysis completed, you’ll be able to confidently step into the future with a clear idea of where your team is headed and how to get there.