Performance Gap Analysis

Performance gap analysis, often shortened to "gap analysis," examines particular aspects of business for problems and suggests solutions for these problems. It is a diagnosis-oriented analysis that pinpoints where an organization or individual is NOT doing what needs to be done by comparing current conditions with expected, desired or required conditions.

Performance gap analysis deals with inspecting a situation, usually from a business perspective, to see how an organization, branch or individual can reach certain necessary goals. "Performance gap" refers to the distance between the current situation and the desired situation, or the goal. Performance gap analysis is one of the most popular and easy forms of business analysis and has widespread applications.

Performance gap analysis is usually conducted in three different stages. First, a problem is identified – an issue that could be expressed as a goal that has not yet been reached or a specific difficulty that needs to be overcome to improve individual or team performance, and hence the business. Next, criteria are developed to accurately define the current performance (as observed and recorded by company metrics) and then the performance required to solve the problem. Lastly, steps to move from current performance to desired performance are formulated and implemented.

Performance and performance factors (metrics) can differ based on the situation. The four-needs system is a common method used for differentiating between different types of performance. The analysis is structured into business, job, training and individual factors. Business needs are rated in terms of results or impact on the market; job performance deals with employee behavior; training needs apply to employee learning and knowledge; and individual needs are based on the reactions of different people to specific situations.

One of the most difficult areas to analyze with the performance gap technique is the arena of soft skills, or skills that deal more with attitude and perspective than with technical skills or acquiring new knowledge. Customer service and teamwork are two of the most common soft skills, and training employees to reach goals in these areas is often challenging for businesses. Because soft skills can be difficult to measure, they are often addressed by more in-depth performance gap analysis.

While many performance gaps already exist within the organizational structure of a company, some are created as the organization moves into new areas or adopts new procedures. This is the second field of performance gap analysis, which takes a change in the workplace and analyzes what needs to be done to successfully deal with the change. This type of analysis is often done as the change is taking place, and thus does not necessarily deal with an existing problem as much as it is designed to ensure that the organization is ready for the new situation.

Performance gap analysis can be useful for all types of businesses, large and small. It is a highly goal-oriented analysis and is often useful for individuals as well, especially athletes in training, students studying for classes, and other people with specific goals they need to meet.