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Rapid changes in technology, business priorities, and job requirements can make it difficult for organizations to maintain the capabilities they need. Without a clear understanding of existing workforce skills, leaders may invest in training, recruitment, or workforce planning without addressing the most important capability gaps.
A skills gap analysis helps organizations identify where current skills do not align with present or future needs. This guide explains the key methods of skills gap analysis, how to conduct the process, and how to use the findings to support upskilling, reskilling, hiring, internal mobility, succession planning, and workforce development.
A skills gap analysis is the process of comparing the skills employees currently have with the skills they need to perform their roles effectively and support business goals. It can be conducted at the individual, team, role, department, or organizational level.
The process typically involves identifying required skills, assessing current proficiency levels, measuring the difference between current and required capabilities, and prioritizing the gaps that require action.
Organizations can use the findings to make more informed decisions about employee development, recruitment, workforce deployment, succession planning, and long-term skills requirements.
A skills gap analysis helps organizations understand where workforce capabilities fall short of current or future business needs. Its key benefits include:
Organizations can use different methods to evaluate current workforce capabilities and identify areas that require development. Combining multiple methods usually provides a more accurate and balanced view of employee skills.
Skills assessments use structured tests, simulations, or practical exercises to measure technical, functional, or role-specific proficiency. They provide consistent and comparable data, but each assessment should closely reflect the actual requirements of the role.
Self-assessments ask employees to rate their own proficiency and identify areas where they may need development. They are easy to conduct at scale, but the results can be subjective and should be supported by additional evidence.
Manager and peer evaluations assess how employees apply their skills in day-to-day work. They provide useful context for behavioral and interpersonal skills, but the results may be influenced by personal judgment or bias.
Performance data and employee feedback use work samples, project results, performance records, interviews, surveys, and feedback sessions to identify demonstrated capabilities and development needs. These sources provide practical workplace evidence, although results may also be influenced by workload, resources, team support, or internal processes.
For a reliable skills gap analysis, organizations should combine objective data, such as assessments and work samples, with contextual input from employees, managers, and peers.
A skills gap analysis compares the capabilities employees currently have with the skills required to meet business and role expectations. The process should involve HR, department managers, business leaders, and employees where appropriate.
Decide whether the analysis will focus on an individual, team, department, role, or the entire organization.
Clarify the reason for conducting the analysis. Objectives may include preparing for new technology, improving performance, supporting succession planning, developing future capabilities, or addressing changing customer and market requirements.
HR teams should also meet with relevant managers and stakeholders to explain the process, define responsibilities, and confirm how the findings will be used. External consultants may be involved when specialist expertise or an independent assessment is required.
List the technical, functional, and behavioral skills needed for the roles included in the analysis.
Use the following sources to identify and validate required skills:
The objective is to distinguish between genuine capability needs and unrealistic or outdated role expectations. Skills should then be prioritized according to their importance to current performance and future business plans.
Establish clear proficiency levels for each skill so that current and required capabilities can be evaluated consistently.
A simple framework may include:
The required proficiency level may vary by role. Not every employee needs advanced proficiency in every skill.
Evaluate employees’ current capabilities using appropriate skills gap analysis methods.
These may include:
Combining multiple sources can provide a more reliable view than relying on a single assessment method.
Compare employees’ current proficiency with the level required for their roles.
Prioritize the gaps according to:
A large gap in a business-critical skill should generally receive more attention than a similar gap in a skill that is rarely used.
Choose the most appropriate intervention for each prioritized gap. These may include upskilling and reskilling, mentoring, internal mobility, succession planning, practical work assignments, or external hiring.
For each action, define:
Reassess skill levels regularly to determine whether the selected interventions are closing the gaps and supporting the original business objective.
Consider an organization evaluating employee capabilities across IT, banking, and artificial intelligence roles. It defines three proficiency levels, Beginner, Intermediate, and Advanced, and compares the proficiency required for each skill with employees’ current capabilities.
In this example, cybersecurity incident response, financial risk analysis, and responsible AI and model governance have the highest priority because employees are at the Beginner level while Advanced proficiency is required.
Moderate gaps can be addressed through targeted training, practical assignments, and mentoring. The recommended actions should be reviewed during future assessments to measure progress and determine whether the identified gaps have been reduced.
After identifying and prioritizing skills gaps, organizations should choose the most appropriate intervention based on the size of the gap, its business impact, available resources, and the time required to address it.
Organizations should assign responsibilities, establish timelines, and define measurable outcomes for each intervention. Skills should then be reassessed regularly to determine whether the selected actions are reducing the identified gaps.
NatWest Group is a banking and financial services organization. As technology, customer expectations, and job requirements changed, the organization needed to prepare employees for future roles rather than focus only on the technical skills required for their current positions.
NatWest recognized that rapidly changing roles and the shorter lifespan of technical skills made it difficult to predict exactly which jobs would be needed in the future.
The organization therefore needed to identify transferable capabilities that would help employees remain adaptable, mobile, and prepared for changing career requirements.
NatWest conducted an evidence-based review using behavioral science, academic research, and external workforce trends. This process identified five critical employee capabilities:
The organization gained leadership support and incorporated these capabilities into workforce planning, recruitment, employee assessment, performance management, and career development.
NatWest also introduced a capability self-assessment tool that allowed employees to evaluate their strengths and identify development gaps. The assessment was supported by learning resources, team activities, manager discussions, videos, toolkits, and interactive learning experiences.
The capability self-assessment was completed more than 52,000 times, helping employees understand their strengths and focus their development on relevant future capabilities.
The initiative also helped NatWest:
The case demonstrates how a skills gap analysis can help an organization move beyond current job requirements, identify transferable future capabilities, and integrate skills data into broader workforce decisions.
A skills gap analysis helps organizations identify the capabilities their workforce needs to meet current and future business goals. This includes conducting an AI skills gap analysis to understand where employees need stronger capabilities in areas such as artificial intelligence, automation, and data-driven work.
By assessing existing skills and prioritizing critical gaps, leaders can make better decisions about upskilling, reskilling, internal mobility, succession planning, and hiring. To achieve lasting results, organizations should assign clear actions, measure progress, and reassess workforce skills regularly as roles, technologies, and business priorities change.
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