What is a skills gap analysis?

Why is it important in 2025?Copied

In 2025, skills gap analysis is a strategic imperative for resilience, innovation, and workforce agility.

According to Arizona State University, organizations that fail to anticipate skills shortages risk stagnation ^[1], non-compliance, and costly misalignment with evolving market demands.

The accelerated pace of change – driven by AI, sustainability targets, demographic shifts, and geopolitical tension – makes annual workforce planning insufficient.

Skills are becoming obsolete faster than ever, particularly in sectors like logistics and healthcare where automation and regulation are rapidly reshaping roles.

Key drivers behind the growing importance:

• Digital transformation: 50% of workers will need reskilling by 2025 (World Economic Forum).
• Labour market volatility: Talent scarcity across technical and frontline roles.
• Regulatory pressure: Especially in healthcare, food safety, and supply chain compliance.
• Consumer expectations: Require adaptive service delivery models powered by skilled labour.

This landscape necessitates proactive, continuous skills analysis to remain competitive and future-ready.

How does a skills gap analysis work?Copied

A skills gap analysis works by comparing existing employee capabilities with the skills required to meet strategic objectives – systematically, department by department or role by role.

It is typically executed in four to six stages, integrating both qualitative input and data analytics.

At its core, the process aims to identify what’s missing, why it matters, and how to close the gap.

This process can be simple for small businesses or complex for enterprises with global operations. However, the underlying principles remain consistent.

What are the key steps in the process?

Each step builds upon the last to ensure comprehensive and actionable results:

1. Define Strategic Objectives Understand where the organization is headed  –  e.g. digital adoption, expansion, regulatory changes.
2. Map Required Skills Identify the specific competencies and behaviors required to support those objectives.
3. Audit Current Skills Use self-assessments, manager reviews, skills testing, and HR systems to gather data.
4. Identify Gaps Compare actual vs. desired skills to locate the deficiencies in capability or capacity.
5. Prioritize Gaps Rank by strategic importance, urgency, and impact on business performance.
6. Develop Action Plan Define whether to upskill, reskill, redeploy, or recruit  –  including budget and timelines.

When should you conduct one?

Skills gap analyses should be conducted annually at a minimum, and triggered during key transformation events. Examples include:

• Launching a new product or service
• Integrating new technology (e.g. warehouse automation)
• Regulatory changes (especially in healthcare and food sectors)
• Workforce restructuring or mergers

Best practice: Align the analysis with your annual workforce planning or L&D calendar to drive synergy and budgeting.

What frameworks and models can you use?Copied

Frameworks provide structure, consistency, and depth to skills gap analysis, enabling organizations to move beyond intuition and towards evidence-based workforce planning.

Selecting the right model depends on your organization’s size, maturity, and industry complexity.

How does the McKinsey 7S model apply?

The McKinsey 7S Framework is a holistic model that considers seven interconnected organizational elements: Strategy, Structure, Systems, Shared Values, Skills, Style, and Staff.

It is especially valuable for large enterprises undergoing change, helping ensure that skills are aligned not just to tasks, but to organizational culture and strategic vision.

Use case: In logistics, for example, aligning systems (like warehouse software) and skills (data interpretation, robotics operations) ensures full utilization of technological investments.

What about the TNA (Training Needs Analysis)?

The Training Needs Analysis (TNA) model is a tactical subset of skills gap analysis, focused specifically on learning interventions. It asks: What must employees learn to close the gap?

It typically includes:

• Organizational Analysis: Why training is needed.
• Task Analysis: What needs to be taught.
• Individual Analysis: Who needs training.

TNA is particularly effective in frontline-heavy sectors like food manufacturing or medical services, where compliance and procedural consistency are critical.

What tools and software help automate the process?Copied

Skills gap analysis software automates data collection, benchmarking, and reporting  –  making the process scalable, repeatable, and evidence-driven.

It replaces time-consuming spreadsheets with real-time dashboards and integrates with HRIS, LMS, and performance systems.

These tools streamline skill audits, map learning resources, and track progress over time, offering immense value for both HR strategists and operational managers.

Which tools are best for SMEs vs. Large Enterprises?

SMEs typically require simplicity, affordability, and ease of integration:

• Skills Base: Intuitive skill matrix mapping and visual reports.
• iSpring Learn: Combines LMS with gap analysis for training effectiveness.
• Kahoot! 360 for Teams: Engaging assessment tools to gauge frontline skill levels.

Enterprises demand complexity, scalability, and ecosystem integration:

• • Degreed: Skills intelligence and LXP with analytics.
  • Workday Skills Cloud: Deep HRIS integration with AI tagging and recommendations.
  • Cornerstone OnDemand: Robust competency management with workflow automation.

How do AI-based tools improve efficiency?

AI-driven platforms go beyond static gap identification  –  they predict emerging skill needs, recommend learning paths, and auto-tag competencies to job roles.

This not only speeds up the process but enhances accuracy and relevance.

Features typically include:

• Natural language parsing of job descriptions and CVs
• Predictive analytics for future skills demand
• Automated skill taxonomies updated via machine learning

In warehousing, for instance, AI can suggest forklift certification or IoT proficiency training based on operational trends and safety data.

How do skills gaps differ across industries?Copied

Skills gaps manifest differently across sectors due to varying compliance requirements, technology adoption rates, and operational workflows.

Industry-specific context is essential when interpreting gap data and designing interventions.

Let us examine four sectors in particular: Food and Beverage, Logistics, Warehousing, and Medical.

Food and Beverage

In food and beverage, gaps often emerge in compliance, digital traceability, and process automation.

Key drivers:

• Stricter food safety regulations (e.g. HACCP, BRCGS)
• Rising demand for digital production tracking (e.g. blockchain)
• Shortage of skilled maintenance and QA technicians

Skill priorities:

• Hygiene protocol adherence
• SCADA and ERP systems literacy
• Lean manufacturing and waste reduction

Practical Tip: Use TNA to ensure HACCP-trained staff are up to date annually.

Logistics

Logistics faces acute gaps in tech fluency, route optimization, and regulatory knowledge.

Key challenges:

• Increased use of fleet management and predictive delivery software
• Pressure to reduce carbon footprint (skills in route planning and emissions reporting)
• Labour shortages in middle-mile and last-mile logistics

Skill priorities:

• Geo-analytics and telematics
• Digital inventory management
• Cross-border compliance (e.g. customs, documentation)

Tool Suggestion: Combine Workday Skills Cloud with transport-specific add-ons like Project44.

Warehousing

Warehousing roles are transforming due to robotics, IoT, and smart inventory systems.

Common gaps:

• Low familiarity with automated picking/packing technology
• Limited data interpretation for demand forecasting
• Safety certifications lagging behind tech rollout

Skill priorities:

• RF scanners and WMS tools
• Warehouse robotics operation
• Health & Safety recertification

Image suggestion: Side-by-side comparison of manual vs. automated warehouse skill profiles.

Medical and Healthcare

Healthcare is experiencing skill deficits in digital systems, remote care delivery, and interdisciplinary collaboration.

Critical areas:

• Adoption of EHR systems and telemedicine platforms
• Communication and empathy in digital interfaces
• Continuous CPD requirements to stay licensed

Skill priorities:

• Data privacy and cybersecurity awareness
• Digital bedside manner
• Clinical documentation and coding (ICD-10)

Regulatory Tip: Ensure alignment with national clinical competency frameworks (e.g. NMC, HCPC).

How do you turn skills gap insights into action?Copied

To convert insights into value, organizations must operationalize their skills gap data through structured, measurable interventions.

This includes aligning development pathways with business goals, securing leadership buy-in, and embedding accountability.

A gap analysis is only as powerful as the decisions it enables. Without execution, it’s a diagnostic with no prescription.

What strategies work best for closing the gap?

Depending on the nature and urgency of the skills shortfall, companies typically pursue one or more of the following strategies:

1. Upskilling Enhancing employees’ current capabilities to meet new expectations (e.g. training logistics coordinators on TMS platforms).
2. Reskilling Shifting employees to entirely new roles (e.g. retraining F&B workers as quality assurance analysts).
3. Redeployment Reassigning talent where gaps exist but training isn’t viable short term.
4. Recruitment Hiring externally when speed, precision, or novelty outweigh internal investment.
5. Knowledge Transfer Using mentoring or SOP libraries to preserve institutional knowledge and bridge generational gaps.

Action Plan Tip: Map each gap to one of the five responses, assign owners, and define deadlines.

How can you measure ROI?

ROI measurement ensures that training or hiring decisions yield actual performance gains. This includes both leading and lagging indicators:

Use tools like Degreed or Cornerstone to track skills development alongside performance KPIs.

ROI Calculation Formula:

ROI = (Net Benefit from Skill Investment – Cost of Investment) / Cost of Investment × 100%

Why should skills gap analysis be continuous?Copied

Skills gap analysis must be a continuous, dynamic process — not a one-off audit — to remain relevant in the face of constant change.

Static reports become obsolete within months, especially in fast-evolving industries like healthcare and logistics.

Organizations that adopt a cyclical approach to skills diagnostics can pivot faster, optimize talent pipelines, and maintain a culture of proactive development.

Key Reasons for Continuity

1. Technological Advancements Automation, AI, and digital tools shift required skillsets regularly.
2. Strategic Evolution As goals change — entering new markets, adopting ESG — so do talent needs.
3. Employee Turnover Natural attrition disrupts skill continuity. Continuous analysis ensures early detection.
4. Market Dynamics Supply chain shocks, regulatory updates, and economic shifts alter workforce priorities.

Best Practice: Integrate skills audits into quarterly OKR reviews, not just annual HR cycles.

Tool Suggestion: Use a talent intelligence platform with real-time skills tracking to automatically surface gaps as roles evolve.

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Rick van Echtelt

Rick van Echtelt is the Co-Founder and CEO of AG5, where he leverages over two decades of experience in entrepreneurship and developing skills management software.

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