Gap Analysis
Gap Analysis
What is gap analysis?
- Measure target and current state on the same basis
- Breaking the gap down into people, process, and resource causes
- Multiply gap size by importance to set priorities
Gap analysis is usually described as subtracting the current state from the target. The subtraction itself is easy. The hard part is measuring the target and the current state with the same yardstick. If the target is “strengthen customer response capability” and the current state is “40 complaints received per month,” you can’t subtract one from the other. Only when you rewrite the target as “no more than 15 complaints per month” do you get a gap of 25. Half of gap analysis is rewriting the target in terms you can measure.
There are four steps. First, write the target level as a number or an observable state. Second, measure the current level against the same yardstick. This should rest on performance data, assessment results, or on-site observation, not the manager’s impression. Third, break the gap down by cause: is it a shortage of knowledge and skills, a lack of support from procedures and systems, or too little headcount and budget? Fourth, attach a remedy and a deadline to each cause.
The use most familiar to HR and L&D managers is competency gap analysis. You rate the required and current level for each job role on a 5-point scale and train on the items with the largest gaps first. Here is one rule of thumb to add: rank priorities by multiplying the size of the gap by its importance. A competency with a 2-point gap that has little bearing on job performance should rank behind one with a 1-point gap that drives results. And don’t try to close every gap; results come from concentrating the budget on the top three or four.
The most common mistake in practice is trying to close every gap with training. If sales reps don’t log records in the customer management system because the input screen has thirty fields, three rounds of training won’t change anything. First separate people who can’t do it because they don’t know how from people who can’t do it because the environment won’t let them. Another problem is measuring the current level by self-assessment alone. Self-assessments tend to run more generous than reality, so the gap looks smaller than it is. Add at least one more source, such as a manager’s assessment or performance data, before you trust the numbers.
John KimAuthor of B2B Marketing Design and CEO of Nanum Consulting
Okgum LeeExpert in corporate analysis, fundraising, and business planningIt has no single founder. It became an established method through use in strategic planning, quality control, training needs analysis, and other fields, all built on the same principle: 'look at the gap between the target level and the current level.'
Let’s walk through a hypothetical case. Company A sells industrial equipment and has 240 employees, including 60 sales staff. Next year’s goal is to raise new-customer orders from 80 to 120 a year, but the only request the training team received was a single line: “Strengthen sales training.”
- The training manager asked the head of sales, "What do our reps need to do differently from today to reach 120 deals?" and translated the required level into three numbers: first meetings, proposal submission rate, and win rate.
- The team pulled the past 12 months of sales records to measure the current level. First meetings were 6 per person per month, short of the target of 8, and the win rate after proposal submission was 18%, a 9-percentage-point gap from the 27% target.
- To find the cause of the conversion gap, they reread 40 failed proposals and found that in 26 of them the team had pitched only to the day-to-day contact without understanding the client’s approval structure.
- The causes behind the first-meeting count were different. The sales reps said, "A single quote takes four days to get approved," and the training manager classified this item as a process-improvement task, not a training task and handed it to the sales management team.
- After ranking the eight competency gaps by gap multiplied by importance, the team concentrated the budget on the top two, understanding approval structures and structuring proposals. They built a 16-hour course and trained all 60 people over three months.
- Six months later, the win rate had risen from 18% to 25% and quote approval time had fallen from four days to one, lifting first meetings to 7.5 per person per month. New deals rose from 40 to 57 per half-year.