Every business has likely encountered a situation like this: you have a team member who struggles with a particular task or a department that can’t quite keep pace with industry changes. As a manager, leader, or even someone on the team, this might feel somewhat like a failure. However, you need to start being fair to yourself—no one knows what the future holds. Methods of working evolve, and technology changes, which can leave individuals with skills gaps.
Skills gaps are as straightforward as they sound: they represent the difference between the skills required for a job and the actual skills possessed by employees.
If all your team are conditioned to use the Microsoft Office Suite, and you ask them to transfer to a new, ‘better’ system, this creates a skills gap. If your business has moved away from cold-calling and a ‘one-size fits all’ sales approach and instead transitioned to SPIN selling, you’ll have a skills gap.
But these gaps can (and must) be closed.
Consider Rachel. She’s a marketing manager at ‘Shell-yeah!’, a growing beachwear company. She’s been in the business for years and is brilliant at traditional marketing methods. The one thing she hasn’t kept pace with is social media analytics. With so many out there, it’s hard to keep track. Although her team creates fabulous campaigns, they can’t effectively measure their impact or optimise performance based on hard data. Now, this skills gap isn’t just Rachel’s problem; it affects the whole business’s marketing effectiveness.
The thing is, skills gaps like this are remarkably common. In fact, recent research from the Office of National Statistics suggests that a significant portion of the workforce is either “Overemployed” (possessing more skills than their role requires) or “Underemployed” (lacking the vital skills needed for their position). Both of these create inefficiencies and missed opportunities, and they can seriously impact your business’s performance and culture.
It's time to start addressing these skills gaps, and that begins with understanding why they matter. It’s another essential if you want to compete in your market.
The Benefits of Identifying Skills Gaps
Let’s explore why identifying skills gaps really matters in greater detail, starting with something we’ve already touched on:
It helps your business remain competitive
You already know that you can’t stand still in business, or you’ll be overtaken by competitors. Markets evolve, customer expectations shift, and new tech emerges more often than ever before. If you proactively identify and address skills gaps, you’ll be best positioned to stay ahead of these changes.
If you assess the skills you have available versus those needed for success regularly, then you can create a development roadmap that’ll keep you competitive. Doing that regularly can help you:
- Spot emerging trends before they become industry standard
- Prepare for those changes before your competitors do
- Develop capabilities that may be in high demand in future
- Pivot quickly if disruption happens
Let’s go back to ‘Shell Yeah!’ briefly. Their management team wanted to bring in an automatic clothing printer when a clothing line went viral (thanks, Rachel!), and they wanted to capitalise on the popularity. They noticed that there were automation skills gaps – their team were so used to printing by hand that they had a huge skills gap. They trained the staff in advance of the system being implemented and managed to maintain production levels while reducing costs overall – a significant advantage.
Companies that develop their staff’s skills also become magnets for talent. Wouldn’t you want to work for an employer who’ll invest in your growth? In this way, skills gap analysis can become a powerful recruitment tool.
Greater productivity
Here’s an obvious benefit – if employees have the skills they need to perform their roles effectively, productivity naturally improves. That’s because all that time spent trying to get to grips with unfamiliar tasks, asking for help and revising previous work is decreased.
Identifying skills gaps means you can target training where it’s actually needed. Generic development programs may not address what your people actually need. Focus on learning opportunities to impact performance directly and you’ll get some considerable results:
- Tasks are completed more quickly with fewer errors
- Less time spent seeking assistance
- Better collaboration when everyone has the necessary skills
- Resources utilised more efficiently
Back at ‘Shell Yeah!’, the customer service team is having a tough time dealing with complaint resolution times. It seems there’s been a pricing issue with their new range, and they’ve been overwhelmed. After skills gap analysis revealed specific deficiencies in conflict resolution techniques, targeted training revealed measurable statistics: the team reduced average call times by 23%. That also improved customer satisfaction scores significantly.
Done across the board, closing multiple skills gaps can have a huge effect on overall productivity, something that untargeted development programs can only dream of.
Boosts employee retention and motivation
One of the main reasons to identify skills gaps is that it allows you to directly connect and engage with employees and retain them. When people don’t have opportunities to grow, they feel ‘stuck in a dead-end’ and will likely look for work elsewhere so they can advance.
However, if your company identifies skills gaps and supports your team in addressing them, you’re sending a powerful message: “We value you, and we want to invest in your future!” And when you do:
- Employees feel ‘seen’ and valued as individuals
- Career paths become clearer and more achievable
- Work becomes more satisfying
- A culture of continuous improvement develops
The management team at Shell Yeah! really noticed a difference in staff turnover following a structured skills gap programme. It dropped from 22% to just 6% annually, saving a small fortune in recruitment and onboarding costs while retaining valuable institutional knowledge.
A boost in staff retention has knock-on effects throughout a business. ‘Stable’ teams that aren’t losing people constantly develop stronger binds and more effective working relationships. Knowledge is deepened rather than rebuilt. And that important reputation as a great place to work is further developed, attracting even more talented people.
You shouldn’t ignore the psychological effect it has, either. If your people see clear paths to growth or skills mastery, they naturally are more motivated to follow those paths. Work isn’t ‘just a job’ anymore – it’s a journey of development, and that’s exactly the mindset you want for high-performers.
It helps businesses make better, more insightful decisions
Performing skills gap analysis doesn’t just benefit individual employees. It can provide leaders with crucial strategic data which will inform decision-making. Once you understand the current capabilities of your workforce compared to future needs, you’ll gain insight that informs everything from:
- Recruitment priorities and where to invest in new talent
- Whether to train existing staff or hire for specific capabilities
- Which departments need the most urgent development support
- How to structure teams so they perform optimally
- Where competitive advantages might be developed
Using skills gap analysis, Shell Yeah! discovered that although they had plenty of creative outlets, they lacked certain technical skills to implement their ideas. This insight allowed them to restructure. They helped some of the design team with experience of a similar tool, trained on the printing systems and brought in a specialist to address a gap they spotted. The technical team needed strong leadership, and they got it through targeted hiring.
Without this kind of analysis, businesses often make decisions based on assumptions or incomplete information about the capabilities of their workforce. That can be costly hiring mistakes, training programmes that don’t address the skills that are really needed and missed opportunities to capitalise on existing strengths.
Improves adaptability to change
Businesses that regularly assess skills gaps develop a clearer picture of their ability to respond to change. That means when you hit a roadblock and have to adapt to change, you don’t have to go into crisis mode: you’re already responding. It’s an ongoing process.
When market shifts occur or new tech emerges, you’ll already know:
- How quickly you can adapt based on existing skills
- Which teams have the capability to lead change initiatives
- Where external support might be needed during the transition
- How to prioritise development resources during periods of change
For some reason, extra-large robes have become the must-have beach accessory this year. The team at Shell Yeah!’ caught wind of this, and despite having no experience designing this type of garment for beachwear, a skills-gap analysis revealed that one team member had previous experience designing bathrobes. Another had extensive experience with garish patterns from a previous role designing pushchairs. Together, they trained the team and brought something unique to the market—and it became a best-seller.
This readiness for change offers a significant competitive advantage: You view disruption as an opportunity rather than a threat.
Enhances collaboration across departments
Identifying skills gaps can break down silos between departments by highlighting complementary capabilities and development needs. When your team’s skills are mapped across an entire business rather than just single departments, interesting patterns may emerge:
- Complementary skills that could be used better on different projects
- Common gaps might be addressed through shared training
- Opportunities for mentoring relationships across traditional boundaries
- Potential for internal mobility to better distribute skills
Having this broader perspective certainly helped collaboration at ‘Shell Yeah!’. The marketing and sales team both realised that they didn’t know much about the production process, which often led to overpromising on delivery times.
A skills gap analysis showed that a few team members had prior experience with supply chain management, and some of the marketing team had worked in inventory forecasting in previous roles. By bringing these employees together for cross-training sessions, they developed a better understanding of production timelines. As a result, both teams began setting more realistic customer expectations, which in turn reduced complaints and improved overall customer satisfaction.
The newfound collaboration didn’t just solve a problem, it strengthened interdepartmental relationships, making ‘Shell Yeah!’ a more efficient company.
Summary
Skills gaps are the difference between the capabilities needed for optimal performance and those actually present among your team. They represent both challenges and opportunities for companies with a growth mindset. By identifying these gaps, companies can gain valuable insights that improve competitiveness, boost productivity, engage their team, and inform better overall strategic decisions.
And what of Rachel, the marketing manager at ‘Shell Yeah!’? Well, the company identified her social media analytics skills gap early on. With targeted training and support, she transformed her department’s approach to digital marketing, driving measurable results while feeling more confident and engaged in her role. As a result, ‘Shell Yeah!’ benefitted from more effective campaigns, and Rachel felt more valued and committed to them as they invested in her growth. Win-win.
When your sector sees rapid change and fierce competition for talent, businesses can’t afford to make guesses about their capabilities. Systematic skills gap analysis provides the clarity needed to make smart investments in your most valuable assets – by upskilling your people.
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