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Do you have a crystal-clear understanding of where you would like to take your business, how you are going to get there, and what may be missing from your drive towards successfully seeing your vision happen?
Whether you answered yes or no, it’s beneficial to routinely take your organization through the process of a gap analysis. A gap analysis will give you a framework to identify where you are today, where you want to be, and how you will close the gap between those two places.
What is a Gap Analysis?
A gap analysis is a process to determine your organization’s current performance by comparing it to your vision or future state and then identifying the differences between the two. After conducting an analysis, you can begin planning the steps your organization can take to minimize those gaps. This may sound a bit overwhelming, but you can use a template to help keep the process organized and simple.
Benefits of a Gap Analysis
Conducting a gap analysis will force you to take a look at your gaps and identify root causes for why they occur. In the long run, the analysis should help lessen your identified gaps, as well as give you the tools to identify any future gaps even earlier in the cycle. It will train your team to be aware of what other potential issues or gaps are out there. Sure, you may think about these things daily, but putting it down on paper or in a planning tool makes it actionable. You are then able to keep track of how you are doing compared to the strategic plans and actions you laid out.
Gathering all this information in a template format (rather than in your own head) also allows employees to become engaged in a purposeful way. Leaders assign colleagues action plans to address gaps, generate feedback based on what they are seeing in their respective areas, and have them help develop the organization’s strategic plan.
Gap Analysis Template
We suggest using a gap analysis template when conducting this deep dive. If you choose to create your own, here are some categories you will want to make sure are included:
- The key focus area you are analyzing – What are you focusing on? What is the scope of the analysis?
- The current state for that area – Where are you now?
- The desired state for that area – Where would you like to be?
- The identified gap – What is the difference between the current state and desired state?
- Action items – What are plans you can make to minimize the gap? Who will it be assigned to and when will it be completed?
The template will make it easier to convey to employees where there is still an opportunity for improvement in a visual way, along with the ability to track how the plans to reduce gaps are progressing. You can also use other frameworks out there to help tee up your gap, like the Balanced Scorecard.
A balanced Scorecard could help you begin your assessment of your organization’s performance in four main areas: Financial, Customer, Internal Process and Organizational Capacity. Other spots that would be good to begin your analysis would be starting with a situational analysis like SWOT, PESTLE, Porter’s Five Forces, or VRIO frameworks.
Before you get started on performing the analysis, there are a few ground rules to keep in mind:
- Be honest with your responses. It’s easy to gloss over your accomplishments or minimize your shortcomings, but in order to have an accurate analysis, you will need to be as honest as possible about your organization.
- Avoid vagueness. If you are vague in your responses, it will be difficult in the latter part of the exercise to put down actionable plans to close your gaps. Be specific about what your current and future states are.
- Be realistic with your action plans. These plans should be measurable and attainable to ensure you get the outcomes you are looking for.
Completing your Analysis
Once you and your team are ready, go ahead and get started with this template outline.
1. Define Your Specific Key Focus Area (What Is Your Scope?)
Since you can conduct an analysis on your organization as a whole, down to a specific department, or even to a process level, you need to be specific with the scope of the analysis. If you are doing the analysis for your whole organization, it may make sense to break it down into a handful of areas you would really like to improve. Some examples of key focus areas could be Customer Experience, Operations, Employee Satisfaction, and Financial Growth. The list is endless.
2. Identify Your Current State (Where Are You Now?)
This can seem like a daunting task – assess the current state of your organization. But let’s break it down. Do you currently have either a strategic plan (whether in a dusty binder or in a tool) or have you done a Balanced Scorecard for your organization? This is a great starting point to look at the current state. Keep in mind you want to be specific and focused when defining the current state.
If we look at the example Key Focus Areas above, let’s carry that through for a few Current State examples:
- For Financial Growth, let’s say you are generating $500,000 in revenue per employee, and your goal is to grow that to $1,000,000 in revenue per employee. Your current state could simply say, “Our current state is $500,000 in revenue per employee”.
- For Operations, let’s take On-Time Delivery as something that defines how your organization is doing. Currently, On-Time Delivery is sitting at 85% organization-wide, and the goal is to move that to 90%. Your current state would read something like, “Our current state for On-Time Delivery is 85%”
- For Employee Satisfaction, you could measure this by looking at Employee Turnover Rate. If your current turnover rate percentage is 15%, that is your current state.
- For Customer Experience, maybe you measure this by conducting customer surveys. For example’s sake, let’s say you are currently getting the feedback that 80% of your customers are satisfied with their experience; that would be your current state.
The number of current states you can identify may seem endless, which is why it is imperative to have the focus areas of where you would like to conduct your gap analysis: organization, department, or process.
3. Identify Your Future State (Where Would You Like To Be?)
Now that some of your current states are defined, it is time to create your future states. Where do you really want to take your organization, department, or process within the next X period of time? You may already have this information captured if you currently have a strategic plan in place. What are your top goals in that plan?
If we keep walking through our examples from above, this is what your future states could look like:
- Financial Growth: To generate $1,000,000 in revenue per employee.
- Operations: To have On-Time Delivery of 90% organization-wide.
- Employee Satisfaction: To lower our turnover rate to 10%.
- Customer Experience: Improve our customer’s satisfaction with their experience to 90%.
Once you’ve identified your own desired future state for your focus areas, it is time to move into recording your gaps.
4. Recognize Your Gaps (Difference Between Current and Future State)
You have your current states for each focus area, along with your desired future states, so now what? It is time to identify the gaps between those two statements. Once you have those gaps written out, you can move on to the last part of the analysis. What are you going to do about it?
- Financial Growth: Current State $500,000, Future State $1,000,000 – The Gap: $500,000.
- Operations on Time Delivery: Current State 85%, Future State 90% – The Gap: 5% of shipments
- Employee Satisfaction: Current State 15%, Future State 10% – The Gap: 5% less turnover
- Customer Experience: Current State 80% satisfied, Future State 90% satisfied – The Gap: 10% customers satisfied with their experience.
A bonus step you can complete at this time is to ask questions about why these gaps are occurring. This step will help you gather more information before you create your action items to try to close the gap. This process will help you get to the root cause of the gap and help establish stronger action plans going forward.
If your employee turnover rate is 5% higher than you planned or desire, why is that? Is there some underlying cause to have this be higher than you think it should be? What is causing your revenue per employee to be lower than desired? Why are your customers not satisfied with their experience and how do you raise that up?
As an alternative, your gap analysis could reveal that you are doing better than expected. It is just as important to get to the bottom of why that is occurring as it is for a negative gap. It would be very beneficial to determine the processes and procedures in which you are doing well and apply those answers to areas where you may have some opportunity. Keep asking those why’s until you feel like you have enough information to understand the causes.
5. Create Your Action Items (With Assignments and Completion Dates)
Now that you have uncovered why the gaps are taking place, it is time to put action items and plans in place to start closing those gaps. This is not the easiest part of the gap analysis by any means, and once those plans are in place, your organization will need to come together to execute them. A few things to remember:
Base the action items and plans on the information you have gathered and analyzed so far. For example, if your customer experience is suffering because there is a lack of responsiveness, perhaps it is time to be training your customer service representatives on how your organization expects them to communicate with customers. The action item would be “Train Customer Service Representatives on Customer Communication” Assigned to Bob Johnson with a target date for completion of four months from today’s date. Notice the components of the action items: What is the action, who is it assigned to, and by when should it be completed. Then the owner of that action can report on progress as needed.
Once you have worked through your gap analysis, don’t just let it sit. Follow up on the action plans that will get you where you desire and need to be as an organization. Hold your teams accountable so things don’t get dusty and forgotten about.
It may be beneficial to prioritize where you would like to start closing your gaps. If you have financial constraints, it is unlikely you could implement all action plans at one time, so where will you get your biggest bang for your buck?
Finally, the templates on Google will be helpful, but having your strategic plan and your action items from the gap analysis in a strategy execution software like MPOWR Envision will make it that much more seamless to close the gaps and to fully reach your goals.