This simple, four-step gap analysis plan will help you identify areas for improvement within your department.
Stop us if you’ve heard this one before: an ambitious management professional, let’s call him Carl, wants to improve his department. He has the drive and resources to do so, but he doesn’t know where to start. Should he hire new team members? Develop new systems? Invest in new software? The answer to all of those questions is “maybe,” but he won’t know for sure until he performs a gap analysis.
What is Gap Analysis?
A gap analysis is the process of comparing actual performance to expected or desired performance by asking three questions:
- Where are we?
- Where do we want to go?
- How do we get there?
By determining the answers to those questions, business leaders can improve their companies, develop more efficient processes and better products, and boost profitability.
4 Steps to Gap Analysis Mastery
The simple four-step process outlined below is written for a single department within a company, but you can also apply it to your entire organization or to an individual project—just widen or narrow your focus.
Step 1: Determine Where Your Department is Right Now
Start by determining the current state of your department, which could include looking at finances, customers, resources, output, employees, and more.
Based on your industry and responsibility set, different metrics will be important to you. Maybe a customer support team will be focused on the number of calls received each day and the number of trained reps ready to take them. A not-for-profit organization might be most concerned with the number of volunteers it has on its roster or the amount of fundraising they do in a month.
For example, let’s say that the sales manager of a digital marketing agency wants to increase her client roster. Her gap analysis starts with asking, “Where are we?” Her answer should include detailed information on her current client list, including size, industry, geographical location, and revenue.
Step 2: Identify Where You Want Your Department to Eventually Be
Now that you understand your current state, it’s time to define your desired state.
Let’s say our digital marketing agency’s sales manager has decided she wants to focus growth on bringing in new clients. Maybe her current state is 20 clients and her desired state is to have 40 clients within two years.That’s a good target because it’s a S.M.A.R.T goal:
Narrow the focus of your desired state. What exactly are you hoping to achieve? More clients? Have a specific number to shoot for. Higher revenue? Know the precise figure you want to obtain. The more specific you are, the more likely you’ll be to achieve your goal.
Your desired state should also be measurable. A “happier office atmosphere” is not a great desired state unless you have a way to quantify it. (For instance, maybe you send out a bimonthly survey and you want to see the responses to the question “how happy are you at work?” go up two percentage points.)
Ambition is good, but don’t take it too far and expect your department to accomplish the impossible. It won’t, and you’ll end up frustrated. Instead, choose goals your department can realistically achieve.
This is critical. If the desired state your department is working towards isn’t related to your overall goals, you need to readjust. For example, improving the speed with which your customer support team responds to issues is a good goal if customers have complained about having to wait, but if they haven’t, there might be more relevant goals to go after.
And finally, your desired state should have some kind of time limit. Without a timeframe (and a deadline), your team will likely struggle to prioritize the actions necessary to reach your goals.
Step 3: Analyze the Gaps in Your Department
You know where your department is and where you want to be. Now it’s time to understand why that gap exists.
Start by using the “5 Whys” approach, invented by Toyota and used by companies across many industries. It’s beautifully simple: ask “why?” five times until you get to the root cause.
Let’s go back to our digital marketing agency. Our sales manager might ask:
- Why can’t we get more clients? Because we spend all of our salespeoples’ time serving the clients we already have.
- Why do we have to spend so much time serving our current clients? Because they want access to custom solutions and the salespeople have to translate their needs to the rest of the team.
- Why do salespeople have to translate client needs? Because no project manager role exists and the salespeople know the most about what the clients want, so they end up taking on that responsibility.
- Why doesn’t a project manager role exist? Because we didn’t hire for one.
- Why didn’t we hire for one? Because we focused our recruiting budget on other roles.
In this hypothetical exercise, this company’s first problem was that they don’t have more clients. But by drilling down into that problem and asking “why?”, they learned that they don’t have a good internal structure for serving the clients they already have. That’s the gap that they need to go after and fix, which should hopefully free up the sales team’s time and money to go after new clients instead of serving as account and project managers for current ones.
Step 4: Devise a Plan to Close the Gaps in Your Department
This is where all your hard work starts to bear fruit. Keep these guidelines in mind when developing improvements or adopting new project management methodologies for your department:
Use What You Learned
Don’t fall back on your ideas or assumptions; use the cold hard facts from your gap analysis. Base every improvement on your findings from steps one through three.
Calculate the Cost
You may now know exactly what to do, but do you have the funds to actually do it?
You’ll need to get creative and base your strategy around the resources at your disposal. If your plan requires hiring a new employee, do you have the funds to do so now? Or should you spend a few months preparing their onboarding materials and look to a freelancer to help get you started?
Keep Your Department Accountable
Some gaps will take years to close, and it can be hard to keep your team accountable. Set milestones along the way and provide transparency around the process. Celebrate when you reach milestones on time; it’ll keep your team motivated and remind them (and you!) what you’re trying to achieve.
For instance, our sales manager sends out monthly emails to her team with progress updates on her plan to hire account and project managers, as well as the sales team’s progress on bringing in more clients. When they bring in five new clients within the first five months—one month ahead of schedule!—she orders a food truck to come to the office and gives everyone a Friday afternoon off to celebrate and have a picnic.
Gap Analysis: A Quick Case Study
He’s the sales manager at a small software company in Austin, Texas. His team works hard and has experienced growth each of the past three years, but Carl knows they are capable of more. He decides to perform a gap analysis to find areas to improve.
First, Carl takes a look at his department’s current state. Last fiscal year, Carl and his team sold $542,000 worth of product, which was 12% more than the year before. This year, Carl wants to grow by 15%.
At this point, Carl knows his current state—12% growth—and his desired state—15% growth. That goal is specific, measurable, achievable, relevant, and time-based, so now it’s time for him to analyze the gap and figure out why his team only hit 12% last year. Carl discovers that his reps aren’t making enough sales calls to grow any faster. But with each of his reps at full capacity, Carl realizes that he’ll need to bring in fresh talent to reach his desired state. Fortunately, his company has the financial resources to make that happen.
Carl starts the search and eventually finds a great new salesperson to add to the team. He brings her onboard, monitors his team’s progress to make sure they’re on target to hit their goals, and celebrates each milestone with his staff. Well done, Carl.