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Is your company prepared for the future?
It’s an extremely tough question to answer. The past few years have seen black swan events flock like geese. PwC’s Global Crisis and Resilience Survey 2023 found 96% of organizations have experienced disruption in the past two years. 2023 saw AI upend practically every role, function, and industry in some small shape or form.
But it’s a question that, for HR and L&D leaders, is crucial.
HR leaders must acquire a deep understanding of the desired future state of the organization, and the workforce capabilities needed to get there. Developing these capabilities can keep organizations on trajectory, navigating through complex change transformation and disruptive external force, and able to meet core strategic objectives.
According to McKinsey’s ‘The State of Organizations 2023,’ only 5% of respondents said their organizations already have the capabilities they need, defining institutional capabilities as “an integrated set of people, processes, and technology that creates value by enabling an organization to do something consistently better than its competitors do.”
Lorraine Goffe, Chief Human Resources Officer, Northwestern University, offers an example of AI capabilities. “The use of AI is on our radar,” she explains. “But we have not yet identified its specific implications. We will be learning more about it and identifying what it means for our specific HR department.”
This is typical of any company. The picture of capabilities the company needs is consistently shifting. People are hired, fired, or quit; processes spin up, spin down, or are tweaked; technology is shelved, developed, or bought.
Translating capability needs into HR and learning strategy is, therefore, a constant exercise. However, setting up the right frameworks and processes can steer skills development and keep the company agile in its pursuit of its future state.
Understand and communicate goals
Before running a gap analysis, HR must understand the business’s long-term goals, and the capabilities needed to get there. Resilience, agility, cost control, innovation, and customer experience are all examples of valuable capabilities.
This also includes understanding the company's L&D goals, argues Annie Rosencrans, People and Culture Director, HiBob. “Before kicking off a gap analysis for your company, start by scoping out your vision for your organization's learning strategy,” says Rosencrans. “This step will ensure that you build a scalable foundation that can evolve with your business.”
The next steps, particularly in a large national or global organization, can be daunting. Gap analyses can reveal weaknesses in the workforce, including historic gaps in talent acquisition or learning & development.
Employees may also feel uncomfortable about the process. They may feel they are under scrutiny and may even be replaced.
It therefore requires consistent communication at all levels of the business: This process is designed to reveal opportunities for growth, not punish mistakes.
Determine capabilities using a range of inputs
Gap analyses may involve examining a range of qualitative and quantitative data from sources including surveys, self-assessment questionnaires, exit interview transcripts, and performance review manuscripts, alongside further interviews and observations. It may also involve reviewing processes, technologies, and suppliers.
“We look at both local considerations (the current environment in our organization) as well as external trends,” says Goffe. This type of analysis pushes Northwestern University to consider the skills it must develop.
For example, the ongoing imperative for HR to be a strategic function requires data analysis skills. “As we implement new systems and process improvements, we need technical skills as well as communication and change management skills,” explains Goffe.
Translate capability needs into L&D strategy
Having determined skills gaps against company goals, L&D leaders should have a clear picture of development areas.
Major skill gaps may transfer into detailed training programs across entire departments or companies. This could include becoming core pillars of corporate academies, or dedicated programs. For example, to ensure a steady pipeline of leadership, IBM runs Basic Blue, an in-house management training program designed to develop high-capability leaders.
Goffe provides an example of the former at Northwestern University. “One need that we consider “evergreen” is a strong manager population throughout the organization,” she explains. “Thus, focusing on the training and development of managers is an ongoing priority.”
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Whilst some gaps may be what Goffe describes as “evergreen,” an analysis may also reveal specific capabilities missing amongst individuals or teams. Here smaller or one-off internal or external learning opportunities may bridge these skill gaps.
It’s also worth noting that capability gap analyses can also reveal individual goals for skills development, rather than addressing company needs and employee preferences in isolation from one another.
“We don’t see these separately,” says Goffe. “Our L&D strategy includes individual skill development, manager and leadership training, and succession planning. We also will hire externally for the skills/capabilities discussed above as necessary.”
By designing an L&D strategy on capability gaps, be it one-off training programs or large-scale transformation strategies, HR and learning leaders can create close alignment with company goals.
Moreover, running regular gap analyses allows companies to monitor progress within the organization. If gaps have been bridged, L&D resources may be better allocated elsewhere. If they have not, L&D strategies may need to be re-imagined.
This approach continuously prepares employees, teams, and organizations for the future, steering the company toward its desired state.
