Gap analysis compares the gap between an organization’s actual performance against its potential performance. In gap analysis, you typically list out the organization’s current state, its desired state, and a comprehensive plan to fill out the gap between these two states. This analysis can yield a lot of insights into an organization’s performance and functioning. It is pertinent for businesses as well as more organic organizations such as school classrooms and communities.
Starting out with business analysis? You will need to know everything about Excel. This beginner course on Microsoft Excel 2010 will help you get started.
Gap analysis is more organic and flexible than SWOT (Strengths, Weaknesses, Opportunities and Threats) analysis, which typically follows a four quadrant pattern. gap analysis may be highly quantitative or conceptual, using either Excel worksheets or flowcharts. The analyst has much more freedom in choosing what to focus on. At the same time, every gap analysis template must have a few essential components, as shown below:
I. State Descriptions
The first step in gap analysis is identifying your current and future desired state. This can be done by describing the following:
1. Your Current State
Every gap analysis starts with introspection. Your gap analysis template should start off with a column labelled ‘Current State’ wherein you list out all the attributes you’d like to see improved. Your focus can be as wide (ex: the whole business) or narrow (ex: HR policies within CRM division) as the objective demands. The analysis can be quantitative (‘currently get 50 orders per day’), qualitative (‘lack of diversity in workplace’) or both. The key thing is to be specific and factual with an emphasis on identifying weaknesses.
Starting a business? Learn the foundations of business strategy in this course!
2. The Future State
The future state represents the ideal condition you’d want your organization to be in. This state can be highly specific (ex: ‘increase order count to 100 per day’, ‘decrease absenteeism by 25%’), or generic (‘create more inclusive work culture’). Your gap analysis template should record all the idealized attributes as they correspond to the current state.
Sometimes, you may not even have a clear conception of an idealized future state and might be conducting a gap analysis as an exercise towards self-improvement. In this case, you can record ‘N/A’ under the future state column.
II. Bridging the Gap
This is where you identify and describe the gap before finding ways to remedy it.
1. Gap Identification
The next column in your gap analysis template should record whether a gap exists between the current and future state. A simple ‘Yes’ or ‘No’ can suffice (a description of the gap will be made in the next column).
2. Gap Description
The gap description should record all the elements that make up the gap between the current and future state. The description should be consistent with the current/future state. It can be qualitative (‘lack of clear HR policies for employee termination’) or quantitative (’50 orders/day difference between current and ideal state’). This should only serve as a description, not a remedy.
Create the perfect financial presentation by taking this course from Udemy.
III. Factors and Remedies
This is where the rubber hits the road and you identify the factors responsible for the difference between your current and future performance. You can then use this data to come up with a remedies and action plans to tackle the performance gap.
1. Factors Responsible for Gap
The next part of your gap analysis template should list all the factors responsible for the gap identified in the previous column. This list should be specific, objective and relevant (ex: ‘poor employee pre-screening’ can be one reason for high workplace absenteeism).
2. Remedies, Actions and Proposals
The last step in the gap analysis is listing out all the possible remedies for bridging the gap between the current and ideal state. These remedies should directly address the factors listed in the column above (ex: ‘video pre-screening for all candidates before interview’ can be one remedy for employee pre-screening issues). The remedies must be action oriented and specific (‘tie up with new payment processor to reduce shopping cart abandonment’, not just ‘effect measures to reduce shopping cart abandonment’). You can learn how to create more compelling, action-oriented remedies in this course on business planning.
Gap analysis can be an effective tool for analyzing and understanding organizations. It is particularly applicable in a new business setting, of course. New businesses will find it especially useful for gaining insights into how to organize and allocate resources. if you are starting a new business, this course will teach you how to create an awesome business plan.
How do you do your gap analysis? Share your secrets in the comments below!