Gap Analysis Process

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What is Gap Analysis?

Gap analysis can be described as the process of evaluating a company’s performance by comparing its actual/current performance with its projected or desired performance. It is generally used by organizations to assess whether they are making the best use of their resources and are performing at their idealized potential. It places a focus on an organization’s goals and objectives so that an action plan can be created to achieve these goals by eliminating problems or by enhancing outputs and processes. 

There are many different approaches that can be taken to conduct a gap analysis. Within this article, however, we will dissect the cardinal steps that one must take while using this tool.

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The Use of Gap Analysis

Some of the uses of gap analysis are as follows: 

  • Increase Efficiency and Optimization of Resources: Gap analysis can be used by organizations to optimize the allocation of their resources and to increase the efficiency of business processes. 
  • Augment Performance: By evaluating performance using gap analysis, we can place a focus on attributes such as employee efficiency, productivity, and performance level. This allows us to identify the ways in which we can augment the performance of different processes even when there are no obvious inefficiencies or problems. 
  • Aid Decision Making: Gap analysis aids in the process of decision-making as it involves creating a documented report that evaluates and reveals the strategies that will be most useful to bridge existing gaps.   

The Gap Analysis Process

Now that we have a clear understanding of what gap analysis is and what its uses are, let’s understand the process of gap analysis. The gap analysis process is an outline of the steps required to conduct a gap analysis. As this strategic management tool has a range of applications, there are many approaches one can take to perform a gap analysis. However, there are a few fundamental measures that must be taken to conduct gap analysis:

  • Outline your Areas of Focus: The process of gap analysis always begins by clearly outlining the areas of focus. These are the aspects of the business that require improvement so that the organizational goals can be met in a more effective way. Areas of focus can be broad and can target the entire business, or can even be narrow, targeting certain metrics or business processes. A good way to select your areas of focus is to consider the existing goals and objectives that your business aims to achieve.  
  • Evaluate Current Performance: Once you’ve clearly defined your areas of focus, you must measure and evaluate your current performance in these areas. For instance, your company may currently be experiencing a 2% growth per year and you may want to increase this. Your “current state” will therefore be 2%. 

Your current state does not necessarily have to be financial. Gap analysis can also be used to focus on areas such as employee satisfaction and CSR, for example. 

  • Define Desired Performance: The next step is to clearly define your desired performance in your areas of focus. Your desired state should be one that allows you to achieve organizational goals and objectives. Continuing with the previous example, if your current state is at a 2% growth per year, then your desired state could be a 5% growth per year. 
  • Outline Gaps and Potential Strategies to Bridge them: The fourth step is to clearly define the gaps between current and desired performance and then suggest strategies that can be used to bridge this gap. Once you’ve listed down all the potential solutions, you should also evaluate each one to help determine which one will let you achieve your goals in the most effective way and with the effective allocation of resources. 
  • Create an Action Plan: The final step of the process is to identify all the different factors that contribute to creating the gaps and then outline corresponding action steps that can be initiated to fill them. For instance, if a factor relates to low profit margins, you can take steps to minimize costs. It is important that your action steps are specific and that your final action plan effectively addresses all the gaps in your business that prevent it from reaching its desired state.

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FAQs on Gap Analysis

Gap analysis is a strategic planning tool that is used to evaluate an organization’s performance by examining the gaps between its current and desired performance.

The process of gap analysis is as follows; 

  1. Outline your Areas of Focus
  2. Evaluate Current Performance
  3. Define Desired Performance
  4. Outline Gaps and Potential Strategies to Bridge them

A few valuable tools used to conduct gap analysis are; 

  • SWOT Analysis
  • Fishbone Diagram 
  • McKinsey 7s Model
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Join 500 + global clients across 40+ countries