Skills Gap Analysis: How to Identify and Close Workforce Gaps

Recent studies by SHRM and AIHR show that skills requirements are evolving faster than roles can be filled. Most employers expect that core job skills are changing significantly, with reskilling gaps already affecting productivity and execution.[1][2] A structured skills gap analysis converts this guesswork into action by clarifying which skills the business needs, where gaps exist today, and how to close them through targeted hiring and development. This guide focuses on how to conduct a skills gap analysis  thatin a practical, measurable way for recruiters.

What is a Skills Gap Analysis? (And Why It Matters)

At its core, a skills gap analysis helps you answer one question: "Can we actually achieve our goals with the people we have right now?"

It operates on two levels:

• Individual Level: Does this specific employee have the skills to perform their current role or move into a senior one?
• Organizational Level: Does the company possess the collective expertise (e.g., AI fluency, regulatory knowledge) to execute its 5-year plan?

Five Steps to Conduct a Skills Gap Analysis

At some point, every leader asks: "Do we actually have the talent to pull this off?" Whether you are staring down a five-year growth plan or a shifting regulatory landscape, a skills gap analysis is how you move from "gut feelings" to a data-backed strategy. Think of it as a repeatable process that aligns your people's capabilities with your company's most ambitious goals.

Step 1: Translate Strategy into Actionable Keywords

The first hurdle is often translating a vague business goal into a list of skills. To do this, we use an "activity bridge" to reverse-engineer goals into human behaviors.

A. The 12-Month Execution Sentence: Instead of a broad vision statement, create a sentence that defines success over the next year. A helpful way to frame this is: "In the next 6-12 months, we must [Action] so that [Business Outcome] improves".

Example: "In the next 12 months, we must automate our client onboarding so that our customer success team can handle 30% more accounts".

B. Map Activities to Keywords: Break that goal into 3–5 repeatable daily activities. Focusing on repeatable actions and ensures you are identifying skills needed for long-term success. If you aren't sure which technical skills match these activities, you can use an AI tool (like Gemini) with a specific prompt to help you categorize them.

Try this prompt: "Act as an Org Development Consultant. Take my Business Goal: [INSERT GOAL]. Break it into 3-5 daily activities. For each, list the Hard and Soft Skills required using ONET/SFIA terminology. Provide a Target Proficiency Level (1-5) for each skill in a table"*.

While many companies conduct a skills gap analysis during a yearly performance review, relying solely on an annual cycle can lead to "data stagnation" where your records are out of date the moment they are saved.

• The Annual Baseline: Use the yearly review to set your foundational data and align on long-term career goals.
• Trigger-Based Audits: Industry best practice suggests increasing frequency during significant changes, such as company restructuring, new project launches, or when operating in rapidly changing tech industries.
• Continuous Feedback: Treat the skills matrix as a "living dataset" that is refreshed whenever an employee completes a certification or moves to a new project.

Step 2: Audit Current Proficiency

To get an accurate "Current Proficiency" score (1-5), you shouldn't rely on a single perspective. Most organizations use a triangulated approach:

• Self-Assessment: Employees rate their own comfort level with specific keywords/tasks.
• Manager Review: To remove "employee guesswork," managers provide context on how the employee performs under pressure or with complex edge cases.
• Objective Testing: This is the most critical "product angle". Use integrated assessment tools (like those found in Manatal) to get hard data on technical skills, such as coding or data analytics. This moves the score from "I think I'm a 4" to "The test proves I'm a 3".

Step 3: Quantify the Gap

Once you have your “Current Proficiency” against your “Target Proficiency”, subtract both numbers to find your gap.

Step 4: The "4 Bs" Execution Strategy

Once the gaps are quantified, you must decide how to close them. Choosing the right "B" depends on the urgency of the gap.

• Build (Upskill): Use for manageable gaps (-1) and long-term development via internal academies or mentorship.
• Buy (Hire): Use for deep gaps (-2 or -3) where internal foundations are missing.
• Borrow (Contract): Use for high-urgency, short-term project needs (e.g., a 6-month migration).
• Bot (Automate): Use AI agents or RPA for repetitive, low-value skills to free up your team for complex work.

Step 5: Leveraging Technology for Execution

Manual spreadsheets are often out of date by the time they are finished. Modern talent teams use their tech stack to make this a continuous process:

Verifying Skills via Integration: Instead of relying on a candidate’s self-assessment, use an ATS like Manatal that integrates directly with assessment providers. This allows you to sync objective test results directly with your proficiency matrix.

Intelligent Discovery: If your analysis identifies a need for "React Native," use AI recommendation engines to scan your existing database and external sources.

Uncovering Hidden Talent: Manatal’s candidate enrichment features can reveal skills (like those found on GitHub or LinkedIn) that a candidate might have omitted from their resume, helping you close gaps with people already in your pipeline.

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Other Tools That Support Skills Gap Analysis

To move from manual spreadsheets to a continuous process, most modern TA teams utilize a tech stack comprising three main categories:

1. HRIS (Human Resources Information Systems): Stores the foundational employee data and historical performance reviews.
2. LMS (Learning Management Systems): Delivers the training content needed to close the "Build" gaps.
3. ATS (Applicant Tracking Systems): Essential for closing the "Buy" gaps. An AI-powered ATS allows you to visualize the skills entering your pipeline and matches them directly to the open requisitions identified in your analysis.
4. Assessment Platforms: These provide data-driven insights into the actual proficiency levels of candidates and current employees. Integrate these with your ATS to validate claimed skills through technical tests, cognitive assessments, and video interviews, ensuring that "skills gaps" are identified based on proven ability rather than just resume keywords.

Common assessment integrations include:

• Technical & Coding Tests: Tools like Codility and Xobin for evaluating hard skills and programming proficiency.
• Skills & Psychometric Testing: Platforms such as Testlify, TestTrick, and Screenify that offer comprehensive libraries of pre-employment tests.
• Video Interviews & AI Screening: Tools like Jobma, Hireflix, Hirevire, and Alpharun which help evaluate communication skills and soft skills early in the process.
• AI-Driven Evaluation: Specialized tools like Alex that leverage automation to streamline the vetting of talent against specific competency benchmarks.

Conclusion

A skills gap analysis only delivers value when it becomes a repeatable operating process, not a one-off exercise. Treat the skills matrix as a living dataset. Standardize proficiency definitions, refresh inputs regularly, and link every gap to a clear build-or-buy decision with ownership and timelines. When HRIS, LMS, and ATS data are aligned, organizations move from reacting to talent shortages to proactively planning workforce capability with the same rigor applied to revenue and growth targets.

Frequently Asked Questions

Q: What are the top five skills gaps?

A: The modern workforce faces a skills gap in areas such as digital literacy, data analysis, complex problem-solving, critical thinking, and emotional intelligence.[3] These skills are essential for adapting to technological advancements, making data-driven decisions, solving intricate problems, thinking logically, and effectively communicating and collaborating in diverse environments.

Q: Is a SWOT analysis a skills gap analysis?

A: A SWOT analysis examines the strengths, weaknesses, opportunities, and threats of a business, providing a broad overview of its market position. In contrast, a skills gap analysis identifies the difference between the skills an organization currently has and those it needs, focusing on human resources to align workforce capabilities with organizational goals. While both are valuable strategic tools, they serve different purposes in business planning.

Q: How often should a company conduct a skills gap analysis?

A: Companies should conduct skills gap analyses regularly, typically annually, to stay aligned with strategic goals and market demands. The frequency should increase in rapidly changing industries or during significant changes such as restructuring or new projects. Regular assessments help reveal skill gaps, enable adaptation to emerging trends, and maintain a competitive advantage.

Q: How to handle employees who score poorly on a skills gap analysis?

A: To address employees scoring poorly on a skills gap analysis, communicate constructively about their development opportunities. Engage in discussions to understand their challenges and create a personalized improvement plan that includes training, mentoring, and coaching. Regularly monitor progress and provide feedback to motivate them. Foster a culture of learning to benefit both the individual and the team's performance and morale.

Citations

1. SHRM
2. AIHR
3. JobsPikr