Director Eidos Consulting Ltd
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Skills gap analysis: How well do you understand the skills needs in your business?

The way we think about skills requirements needs a shake-up in light of the pandemic – here are some positive ways to approach the challenges ahead.

26th Oct 2020
Director Eidos Consulting Ltd
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Skills analysis meeting
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As L&D professionals, we all understand the value of developing the workforce. Effective L&D investment can result in improved engagement and productivity. Personal development is also being shown to have a significant impact on employee retention.

Yet despite its importance, a recent study by Gartner reported that employees are only applying 54% of the new skills that they learn in the workplace. This indicates that, whilst we know its potential value, organisations are in fact wasting time, money and resources on learning activities that do not have a positive impact on employees or the business.

Identify the current and future skills requirements of your business and determine how these skills are obtained.

Anecdotally, we often see the L&D function being viewed as a cost rather than an investment; an area of the business that can see drastic budget cuts in times of economic difficulty. Yet the need for employees to be sufficiently skilled to perform in and for the business is ever present.

For L&D to be truly effective, its activities must be aligned to the skills needs of the business. An obvious statement, but something that can only happen if those needs are well understood.

Reviewing your skills strategy

Understanding the skills requirements of your business is not always straight forward. Organic growth and changes to the internal and external business environments can lead to an unclear picture of the skills and competencies that your people need.

Also, unexpected disruptions (such as those caused by the Covid-19 pandemic) can create drastic changes to the skills requirements of even the most stable of businesses.

This is why we encourage organisations to invest the time and carry out a strategic skills review on a regular basis.

How to carry out a strategic skills review

By undertaking a skills review, you will identify the current and future skills requirements of your business and determine how these skills are obtained. 

Whatever the size of this review, it needs to be supported from the top and aligned to business objectives. 

Depending on the size of your organisation, the skills review will either be performed by function, or for the whole workforce. Whatever the size of this review, it needs to be supported from the top and aligned to business objectives. 

It is also important to involve those who know the roles best – the people performing them. This will ensure that you have a solid foundation from which to deliver impactful L&D activities that directly contribute to the business.

The current picture

To build a picture of the skills that are required by your business today, consider the following:

  • What are the distinct activities involved in delivering your products or services to customers and what are the skills required to perform these activities? These are the essential skills that generate revenue for your business.
  • What are the activities that are required for your business to operate effectively, efficiently or compliantly and what are the skills required to perform these? We call these ‘enabling skills’ which, although unlikely to generate revenue, are required for your business to be profitable.

Given the huge changes that we have all experienced over the past few months it is likely that current skills requirements will look very different to those of last year. 

Many businesses are seeing a need to support employees in developing skills that enable them to work remotely, whilst changes in customer demand and government restrictions have led some businesses to completely redesign their product lines and delivery models.

You should consider how your company currently obtains these skills. Do you hire individuals that have already developed these skills, or do you develop these skills in house? 

How effective is your existing approach at providing you with the skills you need, when you need them? Evaluating your current recruitment and development processes will highlight any potential shortfalls or areas for improvement.

Looking to the future

In order for your skills review to be strategic, it must consider the future needs of the business, as well as the present. Whilst it is impossible to fully predict the future learning needs of your organisation (as this year alone has shown) there are some key elements that should be examined: 

  • Can you identify any certain or highly likely changes to your business environment? How will these impact on skills requirements? Ongoing environmental analysis should provide you with this information. 
  • What are the strategic priorities of your business? Sometimes companies react to change, and sometimes they create change. For the latter it is important to identify what skills are required to be able to deliver this change. For example, is your business looking to diversify its product line, or target a new market sector? What skills are required to do this successfully?

As above, it is important to identify how you obtain these skills. Forward planning gives you much more scope to develop skills in house and will highlight the value that L&D can bring to the business.

Now is the time to carry out a skills review and ensure that L&D spend is directly contributing to business success.

A company’s skills strategy is central to being able to deliver on its objectives, meet customer requirements and future proof the business. 

A fully informed and regularly reviewed strategy will also ensure that you are able to consistently support your employees to thrive within your business. 

The huge changes that we have seen over the past seven months as a result of the Covid-19 pandemic, to our business processes, our employees and our customers, has highlighted the need to reassess the skills requirements within our businesses. Now is the time to carry out a skills review and ensure that L&D spend is directly contributing to business success.

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