Is your company dealing with slow productivity and stifled creativity due to a lack of critical skills? 70% of U.S. corporate business leaders say they’re experiencing skills gaps that are weakening their bottom line. Only one in ten HR leaders says their workforce has the skills needed to meet business goals over the next year or two.
Skills gaps in the workplace are having an impact on the bottom line now, from longer time-to-hire to stalled projects and higher turnover. Find out what causes skills gaps, how to spot and close them, and what you can do to minimize gaps in the future.
Skills Gaps, Defined
A skills gap is the difference between the skills companies need to reach their goals and the skills their current workforce possesses.
- Individual skills gaps happen when one employee lacks specific competencies, like a frontline nurse lacking digital charting proficiency. These gaps can usually be addressed through targeted employee skill development.
- Organizational skills gaps refer to widespread deficiencies across teams or departments, for example, a manufacturing department lacking safety protocol compliance across shifts. Addressing these skills gaps requires retraining or upskilling the entire impacted workforce, since they increase operational risk.
What Causes the Skills Gap?
Today, many external factors beyond your control contribute to skills gaps. It’s important to understand what they are, as well as how to respond to change and plan for the future. You also need to recognize the internal factors you can influence.
Emerging Technology & Digital Transformation
Artificial intelligence (AI) tools, automation, and digital systems often roll out faster than your employees can learn them. If tech changes outpace training, or you don’t get employees’ buy-in, productivity drags.
Workforce Demographics
When employees retire, they take their valuable skill sets and institutional knowledge with them, and younger hires lack hands-on experience. That can lead to shortages in critical skill areas across the org.
Inadequate Learning & Development Investment
Two common L&D challenges to closing skill gaps are limited training budgets and time constraints. These can mean your employees miss opportunities for regular upskilling and reskilling. Without accessible learning options, compliance skills fade, and new tools go unused, widening gaps over time.
Evolving Business Needs
New regulations, customer expectations, or market shifts demand skills your teams don't have. When compliance standards, service requirements, or processes change, entire functions can fall behind.
The Business Impact of Skills Gaps
Unaddressed skills gaps hit hard across the business. Here's what they really cost:
Higher Operational Costs
You spend more on emergency external hires, overtime, or consultants to fill gaps. Plus, poor training ROI means you’re repeatedly investing in the same skills without results. It can also make justifying future L&D budgets more challenging.
Difficulty Filling Critical Roles & Extended Time-To-Hire
Important roles remain vacant longer when your internal candidates can’t meet skill requirements. You’re forced to recruit externally — a longer, more expensive way to hire that doesn’t help boost retention via internal mobility.
Delayed Innovation & Competitive Disadvantage
Your workforce needs modern technical skills like AI fluency and soft skills like problem-solving so they can experiment and adapt. Changing business needs and market demands require flexibility, or you’ll fall behind competitors who close gaps faster.
Lower Employee Engagement & Higher Turnover
Employees — especially your most skilled employees — know that they need training and development, and 86% are willing to leave their jobs to get it. Persistent skills shortfalls and no clear growth paths leave your people feeling stuck and increase their risk of burnout. That turnover costs you — anywhere from 50% to four times an employee’s salary.
How To Identify Skills Gaps in Your Organization
Conducting a skills gap analysis is manageable when you break it down — and when your org uses a connected talent management platform. Follow these five steps to get a clear picture of where your workforce stands today and where it needs to go. We’ll also share how the right tech can help.
#1. Understand Business Objectives & Future Needs
Tech tip: Pull strategic goals directly from your performance management system to stay aligned.
First, review your company’s strategic priorities — OKRs, growth plans, and upcoming initiatives. What skills will drive success in the next 12-18 months? Talk to executives and department heads to find out which capabilities are make-or-break for hitting goals.
Complete Step #1 by setting your target skills.
#2. Catalog Current Skills
Tech tip: If you’re using a connected talent platform, you can automatically pull skill ratings from performance reviews and learning completions.
Next, create an inventory of the skills your people have today, including competency levels. Gather employee self-assessments, performance reviews, and manager ratings on key competencies. For larger teams, use simple surveys rating proficiency from beginner to expert.
Complete Step #2 by creating your current skills inventory.
#3. Compare Current Skills To Required Skills
Tech tip: Automated gap analysis tools generate comparison reports instantly across departments.
Compare your current inventory against the target skills from Step 1. Build a gap matrix: green for proficient areas, yellow for developing skills, red for critical shortfalls. That makes it easy to see where support is most needed.
Complete Step #3 by mapping your gaps.
#4. Analyze Trends & Future Readiness
Tech tip: Skills dashboards reveal trends and predict future shortfalls based on hiring and learning data.
Look for patterns across roles, departments, and locations. Are compliance skills fading company-wide? Is digital fluency lagging in specific functions? Factor in external shifts, like new regulations or tech adoption.
Complete Step #4 by identifying risky patterns and areas for improvement.
#5. Validate With Managers & Leaders
Tech tip: Share live dashboards so managers can add real-time feedback.
Share your gap matrix with frontline managers and leaders. Ask if it matches what they’re seeing and if any critical gaps are missing. You’ll get a more accurate picture of skills and build buy-in for solutions.
Complete Step #5 by finalizing your skills gap roadmap that outlines the current internal landscape and the critical skills to develop.
Proven Strategies To Close the Skills Gap
Once you've identified gaps, act fast with these proven approaches:
Build Internal Learning Programs & Processes
When learning and skill development are built into your talent management strategy, your company attracts high-potential job seekers and creates opportunities to promote internal talent. The best part is that an effective L&D strategy helps you proactively address skills gaps.
Learning and development programs are more than training programs. Go beyond the basics to improve relationships with candidates and help grow employees with:
- Mentorships and peer coaching
- Apprenticeships and hands-on rotations
- Leadership development programs
- Conference and seminar attendance
A connected AI-powered LMS centralizes content, tracks progress, and supports AI-driven personalization to close gaps efficiently.
Strategic Hiring & Talent Acquisition
Don't just hire for jobs — hire for skills. Update job descriptions to lead with must-have capabilities and replace years of experience, where possible. Screen candidates against your gap matrix to fill critical shortfalls while building long-term strength.
Implementing Continuous Learning
Replace reactive training with routine upskilling. With microlearning, weekly skill refreshers, and manager-led coaching, you can embed L&D into daily workflows. Tie learning to performance goals so development becomes a habit — supported by your learning tech.
Leveraging Technology & AI for Skills Development
Modern tools automate gap analysis and delivery. AI-powered LMS platforms recommend personalized content, auto-tag skills, and generate reports that show proficiency across teams. Integrate with performance and hiring systems — or better yet, a complete talent platform — for a unified view of talent.
Minimize Your Skill Gaps With ClearCompany
Skills gaps don’t have to slow your business down. With the right approach, you can find your biggest gaps, close them, and keep your teams ready for what’s next.
ClearCompany brings hiring, performance, and learning together in one place, so you can actually see the skills you have and the ones you’re missing. Our learning tools make it easy to build targeted training and track progress over time.
Explore how ClearCompany Learning can support your strategy — request a demo to see it in action.
