An organization performs a gap analysis to measure its actual performance against where its goals. Companies can identify gaps from a variety of perspectives including skills, business direction, business processes, information technology or organization-wide performance. The gap analysis process entails conducting an assessment and documenting the findings. The firm must first acknowledge and approve the differences between the company's future needs and current competencies. As with most evaluations, there are pros and cons of gap analysis.

Providing an Organizational Overview

One of the advantages of a gap analysis is that it can give decision makers a comprehensive overview of the entire company or a particular function, such as accounting, information technology or operations. This allows directors and executives to determine whether the department or organization has the resources to meet their mission, goals and objectives. For example, a school may perform a gap analysis to gain insight into where it stands relative to the implementation of a school improvement process. This type of overview helps the organization identify gaps, analyze the factors that led to the current situation and outline the foundation required for improvements to take place.

Evaluate and Establish Priorities

On completion of the overview, the organization can evaluate the data and segregate the most relevant information for ranking desired outcomes and objectives. The gap analysis helps a firm focus its efforts and make informed decisions. In addition, a company can allocate limited resources and design efficient budgets by taking into account its main concerns. Priorities are categorized as high, medium and low; the classification does not necessarily mean the priority has ranking over others for attention or resources, but may help when conducting further investigation into issues.

Time and Cost Limitation of Gap Analysis

Time and cost represent two of the major disadvantages of conducting a gap analysis. Typically, an organization will bring in a consultant to perform the assessment; even so, participation takes valuable time away from employees who participate in the project. In addition, directors and managers must also engage in the exploration and evaluate the results. Depending on the results expected at the commissioning of the analysis, it may be more cost-effective to ask managers and supervisors their opinions on potential gaps or areas of deficiencies.

Apprehension Among Employees

One of the disadvantages of a gap analysis is that bringing in a consultant to conduct a gap analysis could result in apprehension or suspicion, which may ultimately affect staff morale. This is especially true if the process evaluates employees' skill sets. Make an effort to communicate the purpose of the evaluation to employees; explain how the project benefits them and the organization.

This might help them understand the importance of the analysis and alleviate some concerns. Consider heading off possible tension by asking key individuals to work with the gap analysis team; they could lend their experience or expertise by acting as liaisons for their departments.