What Is a Competency Gap? Examples and Tips for Analysis

Key takeaways

A competency gap is an area where employees lack the necessary skills to meet the expectations of their roles.

• According to the Future of Jobs Report 2025 from the World Economic Forum, 85 percent of employers plan on prioritizing upskilling their workforce [1].

• Indicators of a potential competency gap include declines in business performance, challenges in attracting talent, and lower employee engagement.

• You can experience benefits such as improved employee retention and engagement by investing in employee development.

Explore what a competency gap can mean for your business. If you’re interested in providing customizable, expert-led courses to your workforce to help address competency gaps, Coursera for Business offers tailored content across a wide range of learning paths. Whether you want your employees to develop skills in data, information technology, generative AI, and many other fields, Coursera can help you keep your employees up to date in a fast-changing economy.

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What are competency gaps and why do they matter?

Competency gaps occur when employees need to build the specific skills, experience, or knowledge required to continue meeting the expectations of a particular role. As corporations face rapidly evolving technologies and unfilled positions, employee skill gaps make it challenging to find the best employees to grow a business.

The World Economic Forum’s The Future of Jobs Report 2025 revealed that most of the leaders surveyed intended to adopt emerging technologies, with 85 percent of employers planning to prioritize upskilling their workforce. As a result, survey respondents indicated that 40 percent anticipate reducing roles tied to outdated skills, and 50 percent aim to move employees into areas with stronger growth [1]. The data from that 2025 survey underscores just how much of a challenge exists within the corporate landscape.

What is the definition of competency gap within a corporate landscape?

Within a corporate landscape, competency gaps manifest as areas where current employees or candidates for open roles lack the requisite skills to meet those expectations. For example, a software company might struggle to find people who have the right coding skills, or hospitals might have unfilled jobs in specific, specialized care roles.

Some industries facing the greatest impact from competency gaps include technology and hiring science, technology, engineering, and mathematics (STEM) roles. However, although technical skills are among those driving the skills gap, workplace skills are also in short supply. Some examples of skills often identified as part of the competency gap include:

• Artificial intelligence

• Data science

• Cloud architecture

• Application development

• Cybersecurity and compliance

• Process automation

• Big data 

• Technological literacy

• Leadership

• Collaboration and teamwork skills

• Critical thinking and problem-solving skills

• Interpersonal and communication skills

• Writing skills

The relationship between competencies and organizational success

Increasing employees’ skills can enhance engagement, loyalty, and productivity while filling critical roles, increasing retention, and helping to attract top talent, ultimately improving the company’s competitive edge. The relationship between competencies and organizational success is straightforward: the right competencies help employees thrive in their roles and help a business grow. 

As a business leader, you might have goals and dreams for your company’s future expansion. However, if your workforce doesn’t have the skill set to meet those goals, you’ll find your company struggles to stay innovative.

Recognizing the indicators and impacts of competency gaps

Identifying indicators of competency gaps is a helpful first step toward addressing issues in your workplace. If facing any of these indicators, consider addressing competency gaps. Some indicators of competency gaps include:

• A consistent challenge to fill critical roles.

• Feedback from employees that reflects disengagement with their career path or work expectations.

• Clients and customers aren't receiving the full support they need due to either staff shortages or undertrained employees.

• Managers struggle to successfully manage their teams, including through decision-making, hiring, and training.

• A marked decline in overall business performance.

Impacts of competency gaps on employee performance

When employees have competency gaps, companies risk those gaps, resulting in a decline in that employee’s performance. Employees facing competency gaps may struggle to fully participate in a company’s ecosystem, resulting in unemployed and underemployed workers, even as businesses struggle to fill positions. In turn, it can harm companies’ competitiveness and reduce living standards for many middle-class workers.

Addressing employee competency gaps not only helps your company achieve its goals through a highly skilled workforce but also makes employees happier and more productive. It's also notable that organizations that invest in their employees' professional development not only fill skills gaps within the business but also tend to see improved employee retention, driven by higher employee engagement.

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What is competency gap analysis? Assessing and analyzing competency gaps

Having the tools to identify the precise skills missing or underrepresented in your workforce is critical, which is why competency gap audits or analyses is so vital to the overall health of your business. Conducting a competency gap analysis helps you pinpoint the areas where employees most need additional training. To successfully conduct a competency analysis, you’ll want to follow these key steps:

1. Assess and state company goals.

First, address why you want to conduct a competency gap analysis. Is it because you are implementing new technology in the workplace, or are you experiencing worker shortages? Knowing why you want to analyze for competency gaps will help you understand what to look for.

2. Determine the skills needed to meet business goals.

Once you know your business goals, you can identify which skills you’d like your team to have to help meet those goals. For example, if you’d like to implement new software within the next three to five years, then technology or coding skills would be on your list.

3. Evaluate current skills.

Next, it’s time to assess your workforce's current skills. Examine performance reviews, conduct surveys, and meet with executives to learn more about your company's current landscape. Speak to professionals across all departments to gain a comprehensive picture of what your employees know now and get a sense of where gaps might exist in the future.

4. Implement a training and action plan.

Once you better understand the competency gaps in your workplace, you can create and implement an action plan. Increasing wages to attract talent and offering training opportunities for your current workforce could help close gaps. Additionally, involving employees in the process can help them become more invested in their professional development, further increasing engagement. 

Strategic approaches to addressing competency gaps

Addressing the competency gaps is the final step of a competency analysis, and it allows you to be strategic and creative in how best to help your unique workforce upskill and reskill. Consider the following strategies to help you act on what you learn after completing a competency gap analysis. 

Developing tailored training programs

Training programs customized to employees’ specific needs help close competency gaps effectively by ensuring that the time, effort, and money invested are directed toward real, actionable changes. Cohort-based learning provides the chance for employees to share knowledge and progress while still focusing on skills necessary for their careers. Modular learning helps break big lessons down in a way that provides employees with opportunities to learn applicable skills. 

Succession planning and talent development

Part of closing competency gaps is succession planning, or the investment in current employees to develop their skills and expertise for future leadership roles. Once you have a clear image of where you’d like your company to be in the next five or so years, reach out to HR and management to help identify workers who have the potential to develop into advanced roles. Developing talent is critical to a competitive workforce that leverages the knowledge and seniority of current employees.

Communicating competency gap findings and strategies

Understanding competency gaps within your company provides an opportunity to collaborate with employees by communicating those gaps and finding strategies that benefit everyone. It’s essential to make it clear to employees that competency gap assessments are a positive move forward. Impress upon them that bridging the gap offers them a chance to take control of their careers and build their professional strengths.

Read more: How to Create a Competency Development Plan

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