How to Conduct an Effective Skills Gap Analysis Using a Skills Matrix

Explore the growing phenomenon of the skills gap, particularly impacting the manufacturing sector. Learn why industry experts advocate for regular skills gap analyses and how to implement an effective one in this article.
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Published on:
22 November 2023
Updated on:
28 February 2024

The Skills gap is a phenomenon that is gaining popularity worldwide. Its effects have been substantially felt within the manufacturing sector over the past few years. Many industry experts recommend every organization take a skills gap analysis every now and then to tackle this challenge.

Yet, what is a skills gap? How can you undertake a skills gap analysis of your employees? And which tools should be used when conducting a skills gap analysis? For project managers and human resource officers who are new to skills gap analysis, starting one can seem daunting.

But worry not, this article will guide you in implementing an effective skills gap analysis. We will briefly introduce you to the skills gap phenomenon, the skills gap analysis, the skills matrix as the primary analysis tool, and a step-by-step guide to conducting a successful skills gap analysis.


What Is a Skills Gap?

A skills gap is a condition where there’s a mismatch between the skills required to do a particular job and an employee’s current skills. This condition can occur in any industry. The manufacturing sector is hit particularly hard by the skills gap issue. For example, 2.1 million manufacturing jobs are said to be unfilled within the 2020-2030 timespan in the US, according to a Deloitte study.

Europe’s manufacturing industry is experiencing the same problem in the form of qualified manufacturing worker shortages, as this Eurofund research report suggests. Hence, the skills gap issue in the manufacturing sector is indeed a serious concern.

Various factors are contributing to this problem, with retiring workers, education & industry needs mismatch, and ever-evolving technological advancements, to name a few.

For a deeper dive into this phenomenon, check our article on the skills gap in the manufacturing sector.

What Is a Skills Gap Analysis?

As a project manager or human resources officer, minimizing the skills gap’s effects on your team is vital. This can be done by doing a skills gap analysis. In its essence, a skills gap analysis is the process of investigating whether there’s a skills gap within an organization and finding out in which particular employees these gaps lie.

A skills gap analysis is generally done using a skills matrix. In the following sections of this article, We will further explain the skills matrix and a step-by-step guide to implement a skills gap analysis.

What Is a Skills Matrix?

A skills matrix is a visual representation of your team members’ proficiency in selected skill sets. It displays your employees’ skill levels measured in numbers and is often color-coded as well. Thanks to it, you will immediately be informed of your team members’ selected skill levels with just a single glance.

How to Create a Skills Matrix?

A skills matrix can be conventional or software-based. Conventional means that you have to manually draft and manage the matrix, generally using a spreadsheet tool such as Microsoft Excel or Google Sheets. Alternatively, you can download a skills matrix template online and edit it to suit your needs.

A skills matrix can also come with dedicated software. A software-based skills matrix is much more powerful than a conventional one, as it offers handy features such as regular quizzes and tests, long-term employee training planning, integrated notifications, and many more.

Moreover, using skills matrix software is also more time-efficient, as it already comes with a pre-made matrix template – freeing you from the task of designing the matrix from scratch.

For a deeper insight into skills matrices, check out our ultimate guide.

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Considering Whether Your Organization Needs a Skills Gap Analysis

A skills gap analysis is an essential yet time-consuming task. As a result, many project managers and human resource officers are tempted to skip it, as its urgency is not so visible.

Here are several instances where it’s necessary to undergo a skills gap analysis within your organization:

Transitioning to a New Technology or System

The most evident need for having a skills gap analysis is when your team is transitioning to a new technology or system. When doing so, you must find out whether the current skills of your team members are sufficient to operate the new technology or system.

If the skills gap analysis shows that your team members’ skill levels are satisfactory, then your transition will be a smooth one. Otherwise, should your team members’ skill levels be insufficient for the transition, it’s best to plan training programs to close the skills gap. Either way, it’s always best to know whether there’s a skills gap in your team in advance, as you will have ample time to address this gap.

For example, any company must organize a routine tax return. Traditionally, an organization’s accounting department has to make and manage long and highly detailed Excel spreadsheets, tracking the organization’s profits and expenses down to the last cent. Afterward, they also need to fill out multiple pages of tax return forms from the government.

Any employee in the accounting team of any organization fully understands how time-consuming, meticulous, and exhausting this process is. Fortunately, this process can be partially automated using corporate tax software.

With it, your accounting team can simply input the required tax information on the provided fields and upload the necessary documents. This saves enormous time and effort previously spent on manually creating & running multiple Excel spreadsheets, manual calculations, and researching constantly changing tax regulations.

However, using this powerful time-saving software is not easy. It takes time and practice for your accounting team to transition from a traditional tax reporting system to a software-based one. Hence, it’s best to assess their readiness to transition into corporate tax software and where the skills gap lies. All can only be done by conducting a skills gap analysis.

A group of factory workers stands in a workshop, wearing reflective vests and hard hats. One person is holding a clipboard, and others are attentively listening to someone speaking to them. Industrial equipment and machinery are visible in the background.

Acquiring New Machinery on the Shop Floor

Similarly, by using new machinery in your manufacturing plant, your employees will likely require extra training. For example, you’re introducing 3D printers to your shop floor.

A 3D printer is a highly versatile machine, as it can materialize any object that has been designed on Computer-Aided Design (CAD) software. It’s also cost-effective, as many 3D printers cost as low as a few hundred Euros.

Its operational cost is much lower than continuously purchasing parts from suppliers and storing them in a warehouse. Therefore, many manufacturing plants worldwide have introduced 3D printers as an integral part of their production process.

However, mastering CAD software requires months of prior training for those new to 3D product design. Hence, to harness the immense potential of 3D printers and any other revolutionary manufacturing tool, it’s crucial to ensure that your employees have the required skills to do so.

Manufacturing New Products

If your organization plans to introduce a new product to the market, it’s also wise to check whether your current employees have sufficient skills to support it. Check whether your employees have the skills needed to produce, maintain, and provide customer support for this newly-launched product.

For instance, picture yourself as the Plant Manager of an automotive factory specializing in producing thousands of sedan cars monthly. At some point, the company’s upper management decides to produce new SUV models as well in your plant.

As a Plant Manager, you are responsible for ensuring that these SUVs are well-made and are well-supported when they’re already in your customers’ hands. After all, SUVs and sedans have different chassis, dimensions, designs, and many other differences.

It’s your job to ensure that your employees are up for the task and to provide extra training if necessary. There’s no better way of knowing that, other than through a skills gap analysis.

Future Expansion Plans

Another good time for carrying out a skills gap analysis is when planning future corporate expansion plans. This includes opening a new production facility, entering a new market, or simply increasing the production capacity of your current plant.

Before expanding, it’s always important to check whether your existing team has sufficient skill range and bandwidth. To gain the necessary insights, you would need to implement a skills gap analysis using a skills matrix.

Employees’ Concerns

Another obvious sign that an imminent skills gap analysis is necessary is when one or more employees have expressed their concerns. For example, your employees might inform you that their skills are inadequate for their daily tasks.

In that case, taking a skills gap analysis is the most logical response. After identifying the skills gap, a short- and long-term employee development plan can be formulated. This is also a good strategy for employee retention.

According to an IBM survey, 36% of its respondents say that “continuous learning opportunities” are what employees expect from their employers (other than their salaries). With the ongoing manufacturing skills gap, retaining your incumbent employees is in your best interest. Thus, an employee development plan is an effective way to improve their performance and to maintain their loyalty.

Unsatisfactory Performance

Should you believe that your team is underperforming or its performance has declined for some time, it’s also a subtle sign to start a skills gap analysis. Perhaps one or more of your team members’ skill sets are becoming obsolete and cannot keep up with the ever-developing industry tools and techniques. Or, possibly, your team is understaffed and needs extra staffing as soon as possible.

Should the skills gaps that negatively affect your team’s performance have been detected, it’s time to address them. Either you can organize training programs to close the gap or you can hire external talents. Either way, your decisions will always be fact-based after a skills gap analysis.

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How to Perform a Skills Gap Analysis?

Now that the basics have been covered, it’s time to dive deeper into the implementation part of how to perform a skills gap analysis.

In general, a skills gap analysis can be conducted on two levels: individual or team. An individual-level skills gap analysis means assessing an employee’s existing skills and comparing them with the requirements of their current position. Meanwhile, a team-level skills gap analysis refers to reviewing the existing skill sets of all employees within a team and comparing them with the industry standards in each of their positions.

The contents of an individual and team-level skills gap analysis are the same. The only difference is the scope of analysis: the former is individual, and the latter is team-wide. In this article, we will focus on team-level skills gap analysis, as it offers the widest cope in its analysis.

A skills gap analysis consists of several steps following a particular sequence. Here’s the step-by-step guide to performing an effective skills gap analysis in any organization:

Step 1: Identifying Relevant Skills That Will Be Assessed

The first step is determining which skills will be assessed in your skills gap analysis. Generally, a skills gap analysis only focuses on technical job-related skills. Due to their technical nature, the evaluated skills should be selected by the project manager of each team or by a highly experienced employee.

For example, an employee working in the procurement team will be assessed on skills such as SAP Ariba (or any similar procurement software), Microsoft Excel (for financial record-keeping purposes), contract drafting, and other relevant skills.

Another example is a Health, Safety, and Environment (HSE) Officer. For this position, graded skills include knowledge of local and industrial regulations on HSE, mastery of occupational safety certifications such as ISO 45001, the ability to use safety tools such as a fire extinguisher, and many other supporting skills.

In addition to technical skills, sometimes project managers would add soft skills such as teamwork, critical thinking, and verbal communication to their matrix. If that’s the case, then using a competency matrix instead of a skills matrix is preferred.

Despite sounding identical, a skills matrix and a competency matrix are, in fact, two separate tools with different contents and purposes within an organization. To better understand the difference between the two, check out our in-depth article here.

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Step 2: Objectively Measuring Your Employees’ Skills Levels

After selecting the graded skill sets, it’s time to evaluate your employees objectively. Measuring your employees’ skill levels can be done through various methods. Some of the most common assessment methods are:

  • Quizzes and technical tests
  • Technical interviews
  • Evaluating your employees’ KPIs
  • Peer-sourced feedback

Ideally, the selected skills are evaluated and measured by the project manager or by the most experienced member of the team, as they typically have the broadest and deepest technical knowledge in their field.

Skills level should be quantified into numerical values, typically within the 1-5 or 1-10 range. The higher the amount, the higher the skill level. Color coding the skills level is also recommended, as it will make your skills matrix more visually intuitive.

Step 3: Analyzing Your Skills Matrix’s Findings

Should your team members’ skill sets have been measured, it’s time to put them into a skills matrix and analyze them. Based on the data displayed on your skills matrix, it’s time to ask yourself the following questions:

  • Are your team members’ skill levels sufficient to perform their daily tasks?
  • Can your team members utilize the latest tools and techniques in the industry for their job?
  • Is there any team member who lags behind their peers in productivity?
  • How are the skill levels of your employees compared to your competitors?
  • Is there sufficient staffing within your team, and is your team members’ workload still manageable?
  • Are there senior team members who will soon retire or leave your organization?
  • Is your organization planning to expand its production capacity, market reach, or product range soon? If so, how would its expansion affect your team?

The answers to these questions will determine whether there’s a skills gap in your team, both in the present day and in the near future.

Step 4:Drafting Short and Long-Term Employee Development Plans

If there’s indeed a skills gap in your team, it’s best to address it as soon as possible. A skills matrix will inform you what skills are lacking and in which particular employees these gaps lie. This pinpoint precision allows you to make well-informed decisions when designing your employee development plans.

To close the existing skills gap, organizing a training program immediately is paramount. If a skill gap is detected among a majority of your team members, then it’s logical to organize a team-wide training program. Training all of your team members at once is an efficient way to address the skills gap issue.

On the other hand, if a gap is detected in a small number of employees, then it’s best to have personally tailored training programs. Thus, only the concerned employees will be trained, saving your sufficiently skilled employees’ time and your organization’s training budget.

Even if a skills gap doesn’t exist in your team, it’s still recommended to have a long-term employee development plan for each employee. Examples of employee development programs can come in the form of:

  • Routine technical competencies and soft-skills training activities/seminars
  • Yearly team-building activities
  • Funding your employees’ participation in industry conferences and events
  • Providing a set amount of budget and paid time-off days that your employees can use to participate in training programs of their choice
  • A mentorship program run by senior employees for junior/new employees
  • Having an in-house talent development department

Step 5: Recruiting Possibilities

If a skills gap is too big to be addressed by any employee development program, then recruiting new talents is the best solution. Choosing the ideal recruits with the skills and experience your team lacks has never been easier, thanks to your skills matrix’s data visualization.

Step 6: Your Skills Gap Has Been Closed, What’s Next?

If your team’s skills gap has been closed (either by employee re-skilling, recruiting new talents, or both),  it’s best to still perform a skills gap analysis routinely.  Even if there’s no indication that a skills gap exists within your team, a routine skills gap analysis is still beneficial for any organization.

Many human resources experts recommend conducting a skills gap analysis once a year. Of course, the ideal frequency differs between industries. Some industries experience disruptions and innovations faster than others. Technological advancements in the electronics industry undoubtedly happen at a faster pace than in the textile industry, for example.

Utilizing Your Skills Matrix Beyond Skills Gap Analysis

A skills matrix can be used beyond conducting a skills gap analysis. It can also be used as a supporting performance tracking tool – which is helpful for succession and employee compensation planning purposes. As a result, any project manager or human resource officer will be better informed when deciding their employees’ long-term career progression and compensation package.

Using Skills Matrix Software for Your Skills Gap Analysis Needs

A skills matrix is your primary tool when performing a skills gap analysis in your team. While it’s possible to draft and run a skills matrix using Microsoft Excel or Google Sheets, opting for skills matrix software is a better choice.

A software-based skills matrix offers many features and advantages that a spreadsheet-based skills matrix can never match. Useful features include a built-in matrix template, a long-term employee training planning system, and the ability to generate a personalized employee skills report.

Azumuta’s Skills Matrix & Training module takes it a step further: it’s the only skills matrix software in the market that can be paired with Digital Work Instructions.

A webpage showing an assembly instruction for washing machines with a skill matrix for training levels. The dropdown menu for selecting a training level includes options: Novice, Beginner, Intermediate, Advanced, and Expert, each with corresponding colorful icons.

This integration allows you to send visually intuitive instructions to your employees, monitor your shop floor in real-time, digitally gatekeep your products’ quality control process remotely, and many other time and cost-saving features – all from the comfort of your desktop/tablet/smartphone.

Therefore, keeping track of your team members’ performance and skill levels has been digitalized and automated. Gone are the days of manually inputting employee skill levels into a skills matrix spreadsheet – that you’ve spent hours drafting and operating.

Check out how Azumuta’s Digital Work Instructions module has led to a 60% decrease in customer complaints, a 40% increase in complaint resolution speed, and halved the time needed to create and manage work instructions in our customer’s success story. Be sure to check other success stories here.

As a project manager, Azumuta’s Skills Matrix & Training module will make your skills gap analysis an effortless and time-efficient process.

Learn More About Azumuta’s Skill Matrix & Training

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