How to Perform a Gap Analysis

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How to Perform a Gap Analysis
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What is Gap Analysis?

Gap analysis is a method of performance evaluation that is leveraged by organizations. It involves comparing the organization’s expected or desired performance with its actual performance to understand and evaluate its shortcomings. By doing so, an action plan can be created to achieve its idealised state. 

Gap analysis is a great tool to achieve an optimized allocation of resources and increase efficiency as it involves clearly outlining the factors that inhibit organizational growth and finding ways to eliminate (or reduce the impact of) them. It does so by providing a basis for the measurement of factors such as productivity, time, resource allocation, and human resources so that they can be compared to benchmark values or desired values for the identification of gaps. 

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How to Perform Gap Analysis?

How to Perform a Gap Analysis

Gap analysis can be performed using the following framework: 

  • Analyze Current State 

The first step in conducting gap analysis involves developing a thorough understanding of the current state of the organization. In this step, you must also define your area(s) of focus and the scope of analysis. Some typical areas of focus include:

  • Innovation
  • Customer Satisfaction
  • Community Impact
  • Financial Growth 
  • Employee Satisfaction
  • Define Desired State

The next step is to define your desired future state in your areas of focus. For instance, if one of your focus areas is employee satisfaction, you should define your desired employee turnover rate. If your current employee turnover rate is 8%, you could set your desired state at a turnover rate of 6%. 

  • Outline Gaps

Now that you’ve clearly defined your current state and desired state, you can must now clearly outline the difference between the two (the gaps). In this step, you should also think of potential solutions that will allow you to bridge this gap effectively. In the next section of this article, we will delve into some of the different tools organizations can employ to outline and evaluate these gaps. 

  • Create an Action Plan to Overcome Gaps 

Once you’ve charted out all the ways in which you could fill the existing gaps, you can now create your action plan. In this step, you must create and implement an action plan that outlines the chosen strategies using which you can effectively bridge the gap between your actual and desired performance.  

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Tools used in Gap Analysis

There is a myriad of tools that can be used to conduct gap analysis. We will specifically cover the following three: 

  • SWOT Analysis

SWOT analysis is one of the most popular tools used for business planning. It investigates elements of internal and external origin that affect a business. The internal elements are known as strengths and weaknesses and the external elements are known as opportunities and threats. The model has a simple but effective structure that identifies problems that need to be addressed as well as advantages that can be capitalized on. This helps businesses make better strategic decisions about their current situation so that business goals can be achieved effectively. 

  • Fishbone Analysis

The fishbone diagram, as its name suggests, is a diagram that is shaped like a fish skeleton. It provides a visual framework that can be used to identify and communicate complex gaps in a simplified manner. The underlying problem is placed at the fish’s head and the causes extend to the left. The ribs branch out off the back of the fish, denoting the major causes and their sub-branches branch off to denote the root causes of the issues. 

  • Nadler-Tushman Congruence Model

The Nadler-Tushman model involves looking at the broader picture to understand how different elements of an organization work in amalgamation to influence certain outcomes. It particularly focuses on the following four aspects of an organization that transform inputs into outputs: 

  • Work
  • Culture
  • People
  • Structure

The model dissects each of these elements to help managers and decision-makers understand the ways in which the organization functions and how different parts interact with one another. After this thorough evaluation is complete, its deficiencies are identified so that an action plan can be created to eliminate them. 

FAQs on Gap Analysis

Gap analysis is a strategic planning tool used by businesses that want to evaluate their performance. This tool allows for the identification of performance gaps so that plans and strategies can be devised to overcome them.

 The following steps can be used to perform a gap analysis; 

  • Analyze Current State
  • Define Desired State
  • Outline Gaps
  • Create an Action Plan to Bridge Gaps

A few valuable tools used to conduct gap analysis are; 

  • SWOT Analysis
  • Fishbone Diagram 
  • Nadler-Tushman Model
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Hindol Basu 
GM, Voxco Intelligence

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