A gap analysis helps you figure out where you are now—and where you want to be. It compares your current performance to your goals, so you can spot what’s missing and what needs to change.
Whether it’s a gap in strategy, skills, processes, or results, identifying it early helps teams stay on track and make better decisions. Organizations often use gap analysis during planning, after a performance review, or when tackling a new initiative.
Want to learn how to run one yourself? Check out our step-by-step guide on how to conduct a gap analysis.
Gap Analysis Definition
Gap analysis is a process used to compare where you are now with where you want to be. It helps identify the difference—or “gap”—between your current state and your desired future state.
- Current state – what’s happening right now (e.g., your team’s performance, processes, or results)
- Future state – your goals or targets (e.g., higher sales, faster delivery, better customer experience)
The gap is the space between the two. Understanding it helps you see what’s missing, what needs to improve, and the steps you should take to close it.
Example: If your support team currently resolves 60% of issues within 24 hours, but your goal is 90%, the 30% difference is your gap—and that’s where your improvement efforts should focus.
Purpose of Gap Analysis
Gap analysis helps teams and organizations get clear on what’s working—and what’s not—so they can take focused action. Here’s why it’s so useful:
Strategic alignment: It keeps everyone moving toward the same goals by highlighting where current efforts don’t match the bigger picture.
Spotting inefficiencies: It uncovers weak spots, delays, or broken processes that might be holding things back.
Planning for growth: Whether you’re scaling a team or launching something new, it helps you see what needs to be in place first.
Compliance and audits: It makes it easier to check if you’re meeting required standards and where improvements are needed.
Change support: During times of change, a gap analysis gives you a clear before-and-after view to guide decisions.
Core Components of a Gap Analysis
Every gap reporting is built around a few simple parts that help you understand what’s missing and what to do about it:
Current state: This is your starting point—what things look like right now. It could be your team’s performance, a process, or a business result.
Future state: This is where you want to be—your target, goal, or ideal outcome.
The gap: This is the difference between the current and future states. It’s what needs to change or improve.
Action plan: Once you know the gap, you can outline the specific steps needed to close it, using a gap analysis template or a structured action plan to guide the process.
Types of Gap Analysis
There are different kinds of analysis gaps you might need to look at, depending on your goals. Here are some of the most common types:
Performance gap: This looks at the difference between what’s actually happening and what was expected. For example, your support team is handling 40 tickets a day—but the goal is 70.
Strategic gap: A strategic gap shows where your business goals don’t match your current capabilities. You might want to expand into a new market but lack the infrastructure or team to make it happen.
Market gap: This gap reveals missed opportunities in your industry or customer base. For instance, your competitors offer a service your customers keep asking for—but you don’t.
Compliance gap: This type focuses on where you fall short of industry rules or legal requirements. For example, you might not meet updated data privacy standards.
Skills gap: A skills gap shows the difference between the abilities your team has and what’s needed to succeed. Maybe you’re shifting to cloud tools, but only a few employees have the right training.
Product/service gap: This appears when what you offer doesn’t fully meet customer needs or expectations. Maybe your software is missing a key feature that users now consider essential.
Gap Analysis Applications
Gap analysis isn’t just for one type of problem — it can be used in many areas to find what’s missing and plan how to improve. Here are some of the most common applications.
- Business strategy and planning: Companies use gap analysis to check if their current performance matches their long-term goals. It helps spot where they’re falling short so they can adjust plans, set realistic targets, and prioritize resources.
- Process improvement: Organizations analyze workflows to find inefficiencies or bottlenecks. The results guide process redesigns, automation, or better coordination between teams.
- Skills development and workforce planning: HR teams use gap analysis to see if employees have the skills needed for current and future work. It can reveal training needs, hiring gaps, or opportunities for internal promotions.
- Technology upgrades: IT teams assess whether current systems meet business needs. If tools are outdated, slow, or missing key features, a technology gap analysis helps plan upgrades and digital transformation.
- Compliance and risk management: Businesses compare their current practices to regulations or industry standards. This helps identify compliance gaps before they become costly legal or reputational issues.
Gap Analysis Examples
Here are a few quick, real-world scenarios that show how gap analysis works across different industries:
- Retail: A clothing brand set a quarterly sales goal of $500,000 but only brought in $380,000. A gap analysis helps identify why—maybe it’s low foot traffic, poor online visibility, or inventory issues.
- HR: A company wants to adopt a new software platform but finds most employees lack the necessary digital skills. A skills gap analysis reveals the need for targeted training before rollout.
- Manufacturing: A factory plans to produce 10,000 units a week but consistently delivers only 8,000. A performance gap analysis shows issues in supply chain delays and machine downtime.
- Healthcare: A hospital aims to process 100 patient check-ins per day but is only managing 70. A gap analysis uncovers bottlenecks at the reception desk and underused digital registration tools.
- Education: A university wants 90% of students to graduate within four years but finds only 70% do. A gap analysis helps uncover issues like course availability, academic support, or student engagement, pointing to areas for improvement.
Benefits of Conducting a Gap Analysis
Running a gap analysis framework gives teams and leaders a clearer picture of what’s holding them back—and how to move forward. Here’s what it helps you achieve:
Improved strategic clarity: It aligns your current efforts with long-term goals, so everyone knows what to prioritize.
Better resource allocation: By pinpointing exactly what’s missing, you can focus time, budget, and energy where it matters most.
Increased competitiveness: Identifying performance gaps early helps you stay ahead of industry changes and customer expectations.
Informed decision-making: With a clear view of the gap, you can make smarter, more confident choices backed by data.
Risk reduction: Spotting gaps in compliance, skills, or processes early helps prevent costly mistakes down the line.
References
Kim, S. and Ji, Y. (2018). Gap Analysis. [online] ResearchGate. Available at: https://www.researchgate.net/publication/327879112_Gap_Analysis.
Einstein, B. (2024). How Gap Analysis Can Drive Strategic Change in Your Company. [online] Business Insights Blog. Available at: https://online.hbs.edu/blog/post/gap-analysis.
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