What is a Skills Gap?

A skills gap is the discrepancy between the expertise a business needs its employees to have and the reality of their workers’ skills.

When experiencing a skills gap, a business may find it difficult to keep pace with technological changes or fail to meet its customers’ needs. If there is a wider skills gap across the workforce available for hire, companies may struggle to staff vacant roles. 

Any organization can suffer from a lack of soft skills—such as communication or leadership skills—with its workforce. However the absence trade-specific or tech skills is most common in the following industries:

• Engineering
• Advanced manufacturing
• Software development
• Medical professions, such as nursing
• Finance
• Cybersecurity
• Construction

Why is there a Skills Gap?

Before you can address the skills gap within your business, it helps to understand the causes. These include:

The retirement of key workers

One of the major causes of skills gaps is the diminishing number of available workers, especially at senior levels.

Until recent years, so-called baby boomers (those born between 1946 and 1964) made up a large chunk of the workforce. However, as we get further in the 21st century, many within this generation have already retired or are nearing retirement age. 

This means that the valuable skills these workers possess are also disappearing from the talent pool. With many of these individuals now leaving senior roles, a skills gap is emerging at the top of some businesses.

Younger people entering the workplace later

As part of a global trend, many young people, especially Millennials and members of generation-Z, are spending longer in education than previous generations. While a more highly educated workforce is clearly a good thing, this delay in entering employment can lead to fewer skilled people in the workforce.

Constantly evolving technology

The speed of technological change is one of the most significant factors contributing to the skills gap. In fact, a person who trained in computer programming could find many of their skills becoming obsolete in a few short years. To prevent this from happening, these individuals will need to undertake constant professional development throughout their careers.

Even in less tech-heavy roles, office workers need to keep up to date with changes in popular software packages and, in some cases, social media.

For businesses, this creates the challenge and expense of training existing employees to ensure their skills remain relevant.

Soft skills gap

When hiring recent graduates, some employers report that these workers lack the soft skills necessary to succeed in a professional environment, such as punctuality or an understanding of workplace protocols. There is a school of thought that this gap is the result of fewer young people gaining professional experience through part-time jobs or internships while they are in education.

Covid-19

During the pandemic, many skilled workers reassessed the way they live and work. For some, this meant starting their own businesses. For others, it meant leaving the workforce entirely. As a result, the skills gap, which was already problematic before 2020, has worsened in recent years.

Tackling the Skills Gap

While the causes of the skills gap are beyond the control of any single business, you can take steps to lessen its impact within your organzination. You can:

Conduct a skills gap analysis

As the name suggests, this is a process through which you can identify any essential skills missing in your workforce. An analysis involves comparing the skills that your colleagues currently possess against those that your business requires to operate effectively.

There are several ways you can assess your employees’ skills. These include:

• Self-evaluation: This is a process in which employees assess their own skills and abilities, as well as identifying their targets for improvement.
• Competency testing: Under this model, you’ll measure your workers’ abilities against those needed to perform their role. Competency tests are often administered as a written exam in which the employee describes their responses in work-based situations.
• Colleague and client feedback: Often referred to as 360-degree feedback, this approach involves seeking input from individuals who regularly interact with the employee.

Following your analysis, you can then decide if you need to train your existing employees or hire new members of staff.

Set clear targets

Once you have identified a skills gap, sit down with other key stakeholders—such as your chief operating officer and head of HR—to decide on the most effective way to address these shortcomings. It is important to include key dates and milestones within your plan. Likewise, you should schedule regular reviews to track your progress.

You can do this by setting yourself target dates by which you would like to achieve key milestones and then meeting to check whether you have achieved these goals. For instance, you may set a target to ensure that all your staff will have been trained in the use of certain software within three months.

Hire new employees

In certain cases, recruitment is the most effective means of plugging a skills gap. When writing adverts for these new roles, it can be a good idea to focus on the skills your business needs. 

As you’re deciding on a salary for new employees, try to calculate the amount of revenue that narrowing the skills gap could bring to your business. You’ll then be in a better position to decide on the right salaries for these new employees.

If you’re unable to find employees who are an exact match for the skills you need, consider any candidates who may be suitable for upskilling. Remember, it’s always sensible to consider both internal and external candidates when seeking to fill a vacant post.

Train existing employees

Rather than hiring new staff, you may decide to plug the skills gap by improving the talents of your existing employees. Options for upskilling your employees include providing additional training, paying for your workers to obtain further qualifications, and job shadowing programs.

Consider remote working

If you operate in a small community, you may want to consider increasing your hiring pool by introducing remote working across your business. While workers who live in commutable distance may not possess the abilities you need, those living hundreds, or even thousands, of miles away could be a strong fit for your business. 

Ask yourself if your employees actually need to work on-site or if they could fulfil the requirements or the role by working from home. Of course, remote working won’t be suitable for every role or industry.

Consider succession planning

One of the most common mistakes that businesses make when dealing with a skills gap is to simply respond to the problem when it arises. In many cases, this can be too late to prevent financial loss.

As part of your skills gap analysis, it is important to consider if any key individuals may soon be leaving your organization either through resignation or retirement. You can then identify the hole this may leave. Armed with this information, you can proactively seek solutions before the situation occurs. 

For instance, you can work with the departing employee to devise ways in which they can pass on key knowledge before they move on.

Don’t forget soft skills

When we think of the skills gap, it’s easy to focus on specialist knowledge or expertise related to a trade. You should not, however, overlook the important role soft skills can play in a business. 

Try to identify members of staff who have talents such as boosting morale, creating a rapport with customers, or staying calm under pressure. If these skills are missing, you may want to actively recruit new members of staff with these attributes.

Conclusion

The worldwide skills shortage will clearly not disappear any time soon. Luckily, there are steps you can take to reduce its impact on your company and even create fresh opportunities for growth.

Remember: knowledge is a powerful weapon. Only by identifying the areas in which your business is lacking key skills can you create the best possible workforce, either by hiring new members of staff or by upskilling existing employees.