How can you when your company is not where it's supposed to be? Evaluating performance is an essential part of any business. You have to know if goals are not being met and what to do about it.
For that, companies need efficient analysis systems. Gap analysis is one of the methods used to make such evaluations. The approach allows organisations to compare their present statuses with estimated results to see how far they have come.
Understanding company progress gives you an idea of the growth level in a particular timeframe. If the analysis shows that objectives are yet to be attained, then you can implement the necessary measures to change that. However, enterprises must first learn how to leverage gap assessment.
The gap analysis also called needs analysis, is a process that compares current results with expected or desired performance.
What is gap analysis mean? The simple answer is to find the gap and then evaluate solutions.
The evaluation method aims to check if a company meets expectations. It measures the present standing of a business unit, team or enterprise with the targeted state. During the assessment, you can find out where the issue lies in the processes, capabilities, systems, strategies, skills, technologies and practices.
Gap Analysis: Performance versus Potential.
Strategic business management technique for measuring possible outcome and the actual outcome.
These simple tools enable you to understand where your business currently is, and what you need to address to get to where you want to be.
Identifying the challenges causing the suboptimal performance puts you in a better position to find actionable solutions. Needs analysis or gap analysis is suitable for evaluating team and individual performance.
Gap assessment is used to measure the potential of a company or other units and how to achieve it. Proper analyses tell you if resource use is optimal. It shows if there is an under or over-use of resources. You can conduct needs analysis at the strategic and operational levels.
The main aim is to raise business performance level.
If you are to leverage the benefits of gap assessment, then you must do it right. The process involves four main steps.
Begin by analysing and defining organisational goals. Ensure that the objectives are specific, attainable, measurable, realistic and timely.
The second stage requires the use of historical data to gauge performance. Using the established goals as benchmarks, you can analyse how well an enterprise is doing. The evaluation can focus on the financial status or other elements.
Step three is data analysis. After gathering information about a company's status, you need a comprehensive evaluation to pinpoint the primary challenges impacting performance.
Then you have to put together a report with the quantitative and qualitative data collected. This report provides the blueprint of the action items to follow to meet the desired goals.
Besides determining the state of an organisation, an effective analysis should define a timeframe. After identifying the gap between the current and desired state, your evaluation should include a strategic plan to solve the differences.
Various areas in a business can benefit from needs analysis, including quality control, sales and human resources. Some of the reasons to consider the approach are:
Benchmarking - The process allows enterprises to compare outcomes against external factors. It helps companies identify their weaknesses so that they can address them accordingly. You can see what competitors are doing right and how you can achieve similar results in your organisation.
Resources allocation - By evaluating performance, you can establish if your company is using resources as required. Gap assessment reveals the areas where to focus technologies, skills and capital.
Smart decision-making - Once managers are aware of a company's shortcomings, they can decide on the best way to close the gap. You have all the data to help you develop effective solutions that factor in the current and desired state.
SWOT analysis: SWOT stands for
SWOT process helps determine internal and external threats and identify where and how you stand against your competitors.
PEST analysis: PEST stands for
PEST analysis helps identify threats and business opportunities by looking at four primary external factors.
PEST analysis with added legal and environmental factors.
Fishbone diagram: Fishbone, Ishikawa diagram or herringbone diagrams is a cause-and-effect diagram. This is designed to explore possible causes of a root problem.
Nadler-Tushman Model: Examines how each business process affects each other and helps identify gaps that affect process efficiency.
Business processes get divided into three groups:
McKinsey 7S framework: Analysis if a business is meeting expectations by looking at 7 key internal elements.
The simple answer to this question is no. They both offer a way of analysis but there is a difference. What is the difference between SWOT analysis and gap analysis?
GAP Analysis: Internal evaluation analysis of actual business performance to identify areas of performance that are not performing well and identify why and how you can improve results and reach your desired level of business performance.
SWOT analysis: Compares your company against competitors. Helping identify your business strengths, weaknesses, and potential opportunities, as well as threats.
They can be a powerful tool working in tandem together helping you position your company in a better position for success.
Businesses use gap analysis to know how well they are doing in terms of meeting specified objectives and business goals. The assessment can be on everything from sales performance, project management to productivity to supply management.
Regardless of the industry or size, needs analysis can help you get your company where it has to be and improve productivity and profitability.