How to run a skills audit for your team: a Step-by-Step guide

A skills audit should answer three questions every manager needs to understand: What can my team do today, what capabilities will we need tomorrow, and where are the gaps?

Without that information, workforce development can become reactive.

Training is purchased because someone requests a course. Recruitment begins when an important capability is suddenly missing. Managers discover that only one employee knows how to complete a critical task when that person goes on leave.

These situations are not always caused by a lack of investment.

Often, they arise because the organisation doesn't have a sufficiently clear picture of its existing workforce capabilities.

A skills audit helps address this.

By identifying the skills required, assessing current capability and prioritising development needs, organisations can make more informed decisions about training, recruitment, succession planning and operational resilience.

And a useful skills audit doesn't need to involve expensive consultancy or complicated assessment frameworks.

This guide explains how to conduct a practical skills audit, including templates, examples, proficiency ratings and ways to analyse the results across your organisation.

What is a skills audit?

A skills audit is a structured assessment of the knowledge, skills and capabilities available within an individual, team or organisation.

It compares current capability against the requirements of existing or future roles.

A skills audit typically examines:

• The capabilities required to perform particular responsibilities.
• The skills employees currently possess.
• The proficiency levels needed.
• Areas where development is required.
• Skills concentrated in a small number of employees.
• Capabilities needed for future organisational plans.

The outcome should be a clearer understanding of workforce strengths, development needs and potential risks.

Skills audit versus skills gap analysis

The terms are closely related, but they describe slightly different activities.

A skills audit establishes the current picture of workforce capability.

A skills gap analysis compares that picture with the capabilities required.

For example:

An organisation identifies that five employees can independently use its reporting system.

However, eight employees need that capability to meet operational requirements.

The skills audit establishes existing capability.

The gap analysis identifies the shortfall.

Both activities are important for effective workforce planning.

Why should organisations conduct skills audits?

A skills audit can support several management decisions.

More targeted training investment

Rather than purchasing training based solely on requests or assumptions, managers can identify where development is genuinely needed.

Improved operational resilience

Skills audits can reveal situations where essential knowledge is held by only one or two employees.

Better workforce planning

Organisations can compare existing capabilities with those required for upcoming projects or strategic changes.

More meaningful appraisals

Skills information can support discussions about strengths, development needs and future objectives.

Stronger succession planning

Managers can identify capabilities that may need to be developed before experienced employees leave or move into other roles.

Clearer recruitment decisions

A skills audit may reveal whether a capability gap can be addressed through internal development, recruitment or another approach.

Better organisational insight

When analysed appropriately, aggregated skills information can reveal development priorities across departments and the wider workforce.

Step 1: identify the skills your organisation needs

Start with the work people actually perform.

Job descriptions can provide a useful starting point, but they don't always capture every capability required in practice.

Speak with employees, managers and relevant specialists to understand what the role involves.

Consider four broad categories.

Technical skills

These are capabilities directly associated with particular tasks or professions.

Examples include:

• Data analysis.
• Software development.
• Financial reporting.
• Equipment operation.
• Technical writing.
• Project planning.
• Specialist assessment.
• Digital systems.

Professional and interpersonal skills

These support effective working across many roles.

Examples include:

• Communication.
• Problem-solving.
• Teamwork.
• Decision-making.
• Coaching.
• Conflict resolution.
• Stakeholder engagement.
• Adaptability.

Leadership and management capabilities

These may include:

• Delegation.
• Performance management.
• Workforce planning.
• Resource allocation.
• Risk management.
• Coaching and development.
• Change management.

Regulatory and compliance-related capabilities

Some roles require particular knowledge, authorisations or demonstrated competence.

Examples may include:

• Role-specific safeguarding knowledge.
• Health and safety competence.
• Information governance.
• Professional standards.
• Industry-specific technical requirements.

Important: A skills assessment does not replace required training, certification, authorisation or formal competency assessment.

Where a specific compliance obligation applies, the organisation must establish that it has been satisfied using appropriate evidence.

Example: skills required for a team leader

Skill	Why it matters
Communication	Explaining expectations and providing feedback
Planning	Organising tasks and resources
Coaching	Supporting employee development
Problem-solving	Responding to operational challenges
Data interpretation	Understanding performance information
Delegation	Allocating responsibilities effectively
Conflict management	Addressing workplace disagreements
Performance management	Reviewing objectives and providing support
Digital systems	Using relevant organisational tools
Risk awareness	Recognising and escalating operational concerns

This is an illustrative framework.

The appropriate skills will depend on the organisation and role.

Step 2: define proficiency levels

Once you've identified the required skills, establish what different levels of capability mean.

Avoid creating a complicated scoring framework that managers and employees interpret differently.

A simple four-level framework can work well.

Level	Description	What it means in practice
1 - Awareness	Basic understanding	Understands key concepts but requires substantial support
2 - Developing	Can perform with support	Completes relevant tasks with guidance
3 - Independent	Can perform consistently	Completes tasks independently to the required standard
4 - Advanced	Can support others	Demonstrates strong capability and can guide or develop colleagues

These are illustrative proficiency levels rather than a universal standard.

For some technical or regulated activities, more detailed competency criteria may be required.

Define what proficiency looks like for each skill

A numerical score becomes more useful when supported by observable expectations.

For example:

Skill: Data reporting

Level 1: Understands the purpose of reports and can interpret basic information with support.

Level 2: Can produce routine reports using established templates with guidance.

Level 3: Can independently produce, check and explain reports to the required standard.

Level 4: Can troubleshoot complex reporting issues, improve reporting methods and support colleagues.

This helps reduce ambiguity during assessment.

Step 3: assess current employee capability

Once the framework is established, assess the relevant employees.

There are several possible sources of evidence.

Employee self-assessment

Ask employees to evaluate their own proficiency against the agreed criteria.

Self-assessment can help identify confidence levels, development interests and capabilities managers may not be aware of.

However, self-assessment is not always an accurate measure of competence.

Some employees may underestimate their abilities.

Others may rate themselves highly despite limited practical experience.

Manager assessment

Managers can assess capability using observations, work outcomes and relevant performance evidence.

However, manager assessments can also be affected by limited observation, inconsistent expectations or bias.

Practical evidence

Where appropriate, consider:

• Work samples.
• Completed projects.
• Practical demonstrations.
• Observations.
• Relevant qualifications.
• Competency assessments.
• Technical evaluations.
• Feedback from appropriate stakeholders.

The assessment method should reflect the nature and importance of the skill.

Example: employee and manager assessments

Skill	Employee rating	Manager rating	Discussion needed?
Communication	4	3	Yes
Data reporting	2	2	No
Problem-solving	3	4	Yes
Project planning	2	2	No
Coaching	3	3	No

Illustrative assessments using the four-level framework.

The differences are not automatically evidence that one person is wrong.

They provide opportunities to discuss expectations and supporting evidence.

For example, an employee may feel highly confident in communication, while their manager believes further development is needed in written stakeholder updates.

The discussion should establish what effective performance looks like and what evidence supports the assessment.

Step 4: build your team skills matrix

A skills matrix brings individual assessments together.

It provides a practical overview of capability across a team.

Example team skills matrix

Employee	Data analysis	Communication	Project planning	Coaching
Employee A	4	3	3	2
Employee B	2	4	2	3
Employee C	3	3	4	3
Employee D	1	3	2	2
Required level	3	3	3	3

Illustrative data. The example assumes these requirements apply equally to all four employees.

From this matrix, the manager can identify several potential issues.

• Two employees are below the required level in data analysis.
• Three employees are below the required level in project planning.
• Two employees are below the required level in coaching.
• All four meet the communication requirement.

However, this doesn't mean every employee needs the same development programme.

Individual circumstances and role requirements should determine the appropriate response.

Step 5: calculate the skills gaps

A simple approach is to compare the required proficiency level with the assessed level.

Skills gap = Required proficiency level - Current assessed proficiency level

For example:

Required data analysis level: 3

Current assessed level: 1

Skills gap: 2 levels

This identifies a potential development need.

However, the numerical difference should be interpreted carefully.

Proficiency levels are usually ordinal categories, not precise measurements.

A two-level difference doesn't necessarily represent twice the development effort of a one-level difference.

The gap is a useful indicator, but not a complete measure of competence.

Example individual skills gap analysis

Skill	Required	Current	Gap	Priority
Data analysis	3	1	2	High
Communication	3	3	0	None identified
Project planning	3	2	1	Medium
Coaching	3	2	1	Medium

Illustrative example.

This information can support an individual development plan.

Step 6: prioritise gaps according to organisational risk

Not every skills gap requires the same response.

An employee who would benefit from improving presentation confidence may have a useful development need.

An employee who lacks a capability essential for safely performing their role may present a more urgent issue.

A useful prioritisation framework considers four factors.

1. Compliance and safety risk

Does the gap affect a legal, regulatory, contractual or safety-critical requirement?

Where a significant risk exists, appropriate action may be required immediately.

2. Operational importance

How important is the capability to everyday delivery?

A gap affecting a critical process may deserve higher priority than one affecting an occasional activity.

3. Single points of failure

How many employees possess the capability?

If only one employee can perform a critical task, the organisation may be vulnerable to absence, turnover or changes in responsibilities.

4. Future organisational needs

Will the skill become more important because of new technology, services, projects or strategic priorities?

A capability that is not essential today may become a significant requirement within the next year.

Example prioritisation matrix

Identified gap	Potential impact	Priority	Possible response
Required safety competence	Safety or compliance exposure	Critical	Immediate risk assessment and appropriate controls
Only one employee knows a key system	Operational disruption	High	Cross-training and knowledge transfer
Upcoming data reporting requirements	Future capability shortfall	High	Targeted development programme
Limited presentation confidence	Individual development opportunity	Medium	Coaching and practical experience
Interest in an additional specialist skill	Longer-term development	Lower	Include in future development planning

The priority categories are illustrative.

Organisations should establish their own risk criteria.

Step 7: turn skills gaps into development actions

A skills audit has limited value if it produces a report that is never used.

Each significant gap should lead to an appropriate decision.

Not every gap requires a training course.

Possible responses include:

• Formal training.
• Coaching.
• Mentoring.
• Job shadowing.
• Supervised practice.
• Practical assessments.
• Stretch assignments.
• Process improvements.
• Knowledge-sharing.
• Recruitment or external specialist support.

Example development action plan

Capability gap	Development action	Owner	Review point	Evidence of progress
Data reporting	Complete targeted training and produce a report independently	Employee and manager	8 weeks	Reviewed work sample
Project planning	Shadow project lead and coordinate a small project	Employee	3 months	Project outcomes and reflection
Coaching	Undertake coaching development and practise during one-to-ones	Manager	3 months	Observations and feedback
Key system dependency	Train a second employee in the critical process	Team leader	6 weeks	Demonstrated capability

Illustrative actions and timeframes.

Development actions should be realistic, relevant and supported by appropriate resources.

How to evaluate development

Completing an activity does not automatically mean the skills gap has closed.

For example, an employee may complete a data analysis course but still require support to produce accurate reports.

The organisation should review whether the required capability has been demonstrated.

This might involve observation, work samples, practical assessment or another appropriate method.

Step 8: analyse skills data across the organisation

This is where skills audits become particularly valuable for HR, L&D and senior leadership.

Individual assessments help managers understand their teams.

Aggregated skills analytics can help organisations understand workforce capability at scale.

Rather than examining hundreds of individual records, leaders can identify patterns across roles, departments and capability areas.

Metric 1: skills coverage

Skills coverage can indicate the proportion of applicable employee-skill assessments meeting the required proficiency level.

Skills coverage rate = (Applicable assessments meeting the required level ÷ Total applicable assessments) × 100

For example:

An organisation has 400 applicable skill assessments.

Of these, 300 meet or exceed the required level.

Skills coverage = 75%.

This provides a broad indicator of capability coverage.

However, the measure should not be treated as a direct assessment of organisational competence.

Its usefulness depends on the quality of the underlying assessments and how requirements are defined.

Metric 2: skills gaps by department

Department	Skills coverage	Priority development area
Operations	82%	Project planning
Customer service	76%	Digital systems
Finance	91%	Data visualisation
Technology	69%	Stakeholder communication
HR	85%	Workforce analytics

Illustrative data.

This allows leaders to identify where development needs may be concentrated.

However, departmental comparisons require caution.

Different roles have different skill requirements, and some capability frameworks may be more demanding than others.

A lower coverage rate does not automatically mean that one department is performing poorly.

Metric 3: skills concentration risk

Skills concentration analysis identifies capabilities held by a small number of employees.

For example:

Critical capability	Employees assessed as independently capable	Risk consideration
Specialist payroll processing	1	High dependency
Advanced data reporting	2	Limited cover
Core customer support system	12	Wider capability coverage
Contract management	3	Review resilience requirements

Illustrative data.

A capability held by only one employee may create operational risk.

However, the level of risk also depends on how frequently the capability is needed, whether alternative support exists and how critical the activity is.

Metric 4: future capability readiness

Organisations can compare current capability with anticipated future requirements.

For example:

A business plans to introduce a new digital reporting platform.

Its skills audit identifies that:

• 40 employees will need to use the platform.
• 12 already possess relevant capabilities.
• 18 have transferable skills but need development.
• 10 require more substantial training.

This can inform implementation planning, training budgets and timescales.

Metric 5: development progress

Once development actions are agreed, organisations can review progress.

For example:

Development action status	Number
Completed and capability demonstrated	45
Development in progress	32
Awaiting assessment	18
Not started	15

Illustrative data.

Separating training completion from demonstrated capability provides a more useful picture of development progress.

How skills audit analytics can improve training budgets

Many organisations allocate learning budgets based on historical spending, departmental requests or available courses.

A skills audit provides another source of information.

It can help answer:

• Which capabilities are most urgently needed?
• How many employees require development?
• Can learning be delivered collectively?
• Which gaps require specialist support?
• Where would cross-training reduce operational risk?
• Which capabilities are needed for future projects?
• How will we evaluate whether investment has worked?

Example: prioritising a £10,000 development budget

Imagine an organisation has identified three priorities.

Development priority	Estimated investment	Reason
Digital reporting development	£4,000	Capability required across several departments
Leadership coaching	£3,500	Common development need among new managers
Specialist system cross-training	£2,500	Reduces dependency on a single employee
Total	£10,000

Illustrative budget.

The important point isn't the specific allocation.

It's that each investment can be linked to an identified capability need and an intended outcome.

The organisation can then review whether the development achieved its purpose.

How to connect skills audits with employee appraisals

Skills audits and performance appraisals should complement each other.

A skills audit identifies capabilities and gaps.

An appraisal provides an opportunity to discuss performance, development and future objectives.

For example:

Skills audit finding: Employee requires further development in project planning.

Appraisal discussion: Manager and employee agree that project coordination is a relevant development priority.

Development action: Employee shadows an experienced project manager and leads a small project.

Progress review: Manager evaluates the employee's planning and coordination against agreed expectations.

Updated skills assessment: Capability is reviewed using relevant evidence.

This creates a development cycle rather than an isolated assessment.

Employee self-assessment and manager assessment

Allowing employees and managers to contribute independent assessments can provide useful perspectives.

Differences should prompt constructive discussion.

They should not automatically be interpreted as evidence of overconfidence or poor self-awareness.

A manager may have limited visibility of certain skills, while an employee may be unfamiliar with the expected proficiency standard.

Clear criteria and appropriate evidence remain essential.

How to connect skills audits with CPD records

CPD records can provide information about learning activities undertaken to address identified development needs.

For example:

Identified gap: Limited confidence in data visualisation.

Development objective: Produce clearer visual reports.

CPD activity: Complete relevant training and practise using workplace data.

Application: Develop a revised reporting dashboard.

Assessment: Manager reviews the dashboard against agreed quality criteria.

Outcome: Skills assessment updated where evidence supports the change.

This connects development needs, learning activity and demonstrated capability.

However, CPD hours should not be treated as a direct measure of skill proficiency.

An employee who completes ten hours of training is not necessarily more capable than someone who completes five.

How WorkplaceHero supports workforce development

WorkplaceHero's Passport for Teams brings organisational training and development processes together.

Its organisational tools support role-based training requirements, employee development objectives, appraisals and relevant workforce reporting.

This allows organisations to connect different parts of the development process.

For example:

• Identify development needs during appraisals.
• Agree objectives and development actions.
• Assign appropriate training.
• Monitor relevant learning and completion.
• Review progress during one-to-one conversations.
• Use organisational reporting to identify broader trends.

Individual professionals can also maintain their own CPD history through WorkplaceHero's personal development tools.

Explore WorkplaceHero's team development and workforce management tools

A 30-day skills audit implementation plan

You don't need to assess every capability across your entire organisation immediately.

Start with a manageable pilot.

Week 1: define the scope

• Select a team or department.
• Identify the purpose of the audit.
• Agree the relevant skills.
• Establish required proficiency levels.
• Explain the process to employees.

Week 2: gather assessments

• Invite employee self-assessments.
• Complete relevant manager assessments.
• Gather supporting evidence where needed.
• Clarify assessment differences.
• Check data quality.

Week 3: analyse the gaps

• Compare current and required capability.
• Identify priority gaps.
• Review single points of failure.
• Consider future requirements.
• Agree which findings require action.

Week 4: create the development plan

• Agree appropriate development actions.
• Assign owners and review points.
• Identify resource requirements.
• Establish how progress will be assessed.
• Schedule follow-up reviews.

After the pilot, review what worked and refine the approach before extending it.

How often should you conduct a skills audit?

There is no universal frequency.

A full annual review may be appropriate for some organisations.

However, capability information should also be updated when relevant circumstances change.

For example:

• An employee completes significant development.
• A new system is introduced.
• Job responsibilities change.
• An employee joins or leaves.
• A new service is launched.
• Regulatory requirements change.
• A critical capability gap is identified.

A skills audit is most useful when it contributes to an ongoing picture of workforce capability.

Common mistakes when conducting a skills audit

Assessing too many skills

An excessively detailed framework can become difficult to maintain.

Focus on capabilities that genuinely matter.

Using unclear proficiency levels

If employees and managers interpret ratings differently, the results may be unreliable.

Define observable expectations.

Relying only on self-assessment

Self-assessment provides useful insight but may not demonstrate actual competence.

Use appropriate supporting evidence.

Treating every gap equally

Prioritise according to risk, operational importance and future needs.

Assuming training closes the gap

Evaluate whether the required capability has developed.

Comparing departments without context

Different roles and assessment criteria may produce results that are not directly comparable.

Failing to follow up

A skills audit should inform development actions and future decisions.

Collecting unnecessary personal information

Gather only information relevant to legitimate workforce development purposes and apply appropriate privacy safeguards.

Skills audit checklist for managers

Use this checklist when planning your audit.

• Define the purpose and scope.
• Identify the roles being assessed.
• Agree the skills required.
• Define clear proficiency levels.
• Involve employees and relevant specialists.
• Gather employee self-assessments.
• Complete manager assessments.
• Review appropriate supporting evidence.
• Compare current and required proficiency.
• Identify critical capability gaps.
• Review skills concentration risks.
• Consider future workforce requirements.
• Agree development actions.
• Assign owners and review dates.
• Establish how capability improvements will be evaluated.
• Schedule the next review.

Frequently asked questions

What is a skills audit?

A skills audit is a structured assessment of the capabilities available within a team or organisation, usually compared with current or future requirements.

How do you conduct a skills audit?

Identify required skills, define proficiency levels, assess current capability, compare results with requirements and develop appropriate actions.

What is a skills matrix?

A skills matrix is a table showing employees' assessed proficiency against relevant skills or capabilities.

How many skills should a role have in a skills audit?

There is no fixed number. Focus on the capabilities that are important to the role and manageable to assess.

What is the difference between a skills audit and a training needs analysis?

A skills audit establishes existing capabilities and potential gaps.

A training needs analysis examines what learning or other development may be required to address relevant needs.

Can employees assess their own skills?

Yes. Self-assessment can provide useful insight, but it should be supported by appropriate evidence and discussion where necessary.

How do you measure a skills gap?

One approach is to compare required proficiency with current assessed proficiency. The results should be interpreted alongside relevant evidence and organisational context.

How often should a skills audit be updated?

Review frequency depends on organisational needs. Many organisations may benefit from periodic full reviews and updates when significant changes occur.

Can skills audits help with workforce planning?

Yes. They can help identify future capability requirements, development priorities, recruitment needs and operational dependencies.

Can CPD records be used in a skills audit?

Yes. They can provide relevant evidence of learning and development, although completing CPD does not automatically demonstrate proficiency.

Final thoughts: turn workforce capability into a development plan

A skills audit should do more than produce a list of employee strengths and weaknesses.

It should help your organisation understand the capabilities it has, the capabilities it needs and the most effective way to address the difference.

Start with the work that matters.

Define clear expectations.

Assess capability using appropriate evidence.

Prioritise the gaps that create the greatest risk or opportunity.

Then connect those findings to meaningful development actions.

When skills information is maintained consistently and analysed responsibly, it can support better decisions about training, recruitment, succession planning and workforce development.

Explore WorkplaceHero's team development and performance management tools

Related reading

• How managers can track employee development without drowning in admin
• Skills gap analysis: find the gap between you and your next role
• Preparing for a staff training audit: a calm manager's checklist
• The manager's guide to supporting team CPD