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A gap analysis is a process by which a company compares its current performance to its performance expectations or targets. Its purpose is to help companies identify gaps or deficiencies so that a strategy can be devised to overcome problems and improve business operations. As complicated as it may seem at first, a gap analysis can be done in four easy steps as outlined in our free gap analysis template.
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The four steps of a gap analysis
When performing aGap analysis, there is a simple four-step process you can use to establish action items to help narrow or close your gaps. Every company has different things to focus on in a gap analysis. In fact, you can use different metrics for different departments when doing your own gap analysis.
The four steps of a gap analysis are:
- Identify the current situation.Define what is important to you in your department or organization. A sales team might focus on lead generation and conversion rates, while the accounting department focuses on efficiency and accuracy. The metrics you use are the most important to the success of your company or department.
- Set S.M.A.R.T targets where you want to land. SMART. doorsthey are specific, measurable, achievable, relevant and time sensitive. When you are specific, narrow down exactly what you are trying to achieve and remove any ambiguity. You want tasks to be measurable so you can see growth towards the goal. While goals must be ambitious, they must be achievable, otherwise lack of motivation and frustration can affect morale. Relevant goals help you achieve overall organizational goals, while time constraints provide a timeframe for measuring progress and evaluating success.
- Analyze the gaps between your location and your destination.Now is the time to assess the gaps and get to the root of the problem. This includes going into detail about why you're not having the success you'd like. The why could be an attitude issue, a training issue, a resource issue, or anything else. Here you will find out.
- Create a plan to fill in existing gaps.What has to happen for you to reach your goals? Develop action items that help bridge the gap between your location and your destination.
Here is a template to guide you in your gap analysis:
download free template
Benefits of an effective gap analysis
An effective gap analysis is a good way to evaluate your business. It can help to set goals and see where you are in the process of achieving those goals. Done right, gap analysis not only goes beyond measuring goal success, it also takes into accountwhat obstacles are thereor what might be wrong with your system that prevents success.
A gap analysis can be used for virtually any business scenario where you can measure performance. Let's take a look at some examples to better understand how to conduct a gap analysis.
Example 1: Increased property sales
John is a realtor looking to increase sales. When conducting a gap analysis, John starts by assessing his current annual income, which is $1 million from home sales. He wantsincrease your sales20% more this year, which is a S.M.A.R.T. Target $1.2 million in real estate sales.
When he asks why he isn't selling anymore, John realizes he doesn't talk to buyers enough and needs more exposure to the real estate market. To overcome this deficit, he commits to joining two new networking groups that meet monthly. This allows John to talk to more people and expand his network of potential buyers, creating a solid game plan for success.
Example 2: Improving office efficiency
Jessica runs a tax company and discovers that her team isn't very efficient at filling out every tax return, hurting the bottom line. The average time it takes your employees to complete a tax return is 55 minutes. She compares this to other tax offices, where the average time per tax return is 35 minutes. She uses a S.M.A.R.T. Objective of reducing the time to prepare the IRS declaration.
Knowing the target of 20 minutes per return, you start to wonder why your team is taking so much longer than other offices. You realize they aren't using all the software tools at their disposal that streamline each shipment. Jessica decides to implement a training program that will teach her employees how to use the resources at their disposal to reduce the time it takes them to prepare for each return.
When should gap analysis be used?
A gap analysis can be used in almost any business phase where you want to see improvement. The more data points you have, the easier it is to create a gap analysis, but even data-free startups can start from scratch, set goals, and develop a plan to move the business forward.
When to use an alternative
If not much data is available to determine an actual gap, you can focus on one aspect of gap analysis: establishing the S.M.A.R.T. gates. This gives your team specific things to focus on. This allows you to do gap analysis when S.M.A.R.T. The target has expired. You can also use aSWOT analysisto identify strengths, weaknesses, opportunities and threats in your business strategy.
What are the four types of gap analysis?
A gap analysis can be performed on:
- performance difference:takes into account the difference in performance
- market niche:evaluate sales numbers
- earnings gap:designed to achieve the desired benefits
- staff gap:assess whether you need more man hours for the task
What are the components of a skills gap analysis?
Every job has a set of responsibilities that are necessary to perform the job correctly. In skills gap analysis, you analyze these responsibilities, determine the skill level required for each task, and consider each employee's competence to complete those tasks.
What is the background to a gap analysis?
By using a gap analysis, your organization can determine the current status of each process used, for example, B. which steps are used, how they are completed, and who is involved in completing each step in the organization. It also allows for a closer look at the tools and resources used in current processes. It then helps the organization determine which best practices to use in the future, including those that need to be maintained, those that need minor changes, and those that need revision. Finally, the organization can see what the finished process will look like, including the obstacles that stand in the way, how efficiency can be improved, and what needs to be done to close any remaining gaps.