Gap analysis helps companies identify areas where they can improve efficiency and increase productivity and profit. Methods include reviewing goals and responsibilities, procedures, and performance management. Companies can use multiple methods simultaneously, but must act on negative information to make the analysis useful.
Gap analysis allows a company to assess its actual performance against its potential performance. This process often allows a company to find areas where efficiency improvements can increase productivity and profit. Some different methods of gap analysis include a review between a company’s goals and related responsibilities, review of procedures and staff available to fulfill them, and an analysis of actual outcomes of desired outcomes. Each gap analysis method provides a piece of a larger overall puzzle. Gap analysis can be an ongoing process for the lifetime of the business.
Most companies have a variety of objectives set out by their mission statements, owners, and executives. These objectives can be company-wide, department-specific, or based on a position within the organization. Certain individuals are typically responsible for achieving the goal or leading the company in the right direction. The methods of this gap analysis technique are designed to find areas where there are weak links as a company tries to meet its internal expectations. In most cases, a company focused on its objectives will have few gaps in terms of responsibilities.
Procedures can represent the specific guides or rules that a company uses to ensure that workers complete tasks in a specific way. Each employee or employee must be aware of the procedures and which ones are most applicable to each individual. The gap analysis methods here seek to identify which individuals do not follow procedures. In some cases, the procedures themselves can be the problem. Improper procedures can prevent or restrict an individual from completing tasks or activities in a timely manner, resulting in poor overall business results.
Performance management presents another method of gap analysis. For example, a company might want a net income of five percent for the month of June, based on the formally prepared income statement. If not, the company can use gap analysis to find where the budgeting process has stalled and is preventing the company from achieving the desired results. Gap analysis methods also work to assess the output or productivity of each employee. In this way, a company can perform a monthly gap analysis.
Companies can use several gap analysis methods at the same time. This allows a company to do many assessments on different operations simultaneously. A key point here, however, is to have a purpose behind the analysis. Not acting on negative information and correcting operational issues can result in a gap analysis that is useless.
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