When you hear the word “audit,” you might think of the IRS and financial investigations. It may cause you to feel a certain level of anxiety. However, auditing skills meaning at work is less threatening, and a potentially lucrative business move. Skills audits can help identify a company’s skills gaps, a rising challenge in the world of work.

In fact, 87% of firms worldwide say they already suffer from a skills gap or expect to within a few years, according to research by McKinsey & Co. Skills gaps are typically due to a lack of much-needed skills to meet present and future business demands. Leaving skills gaps to continuously widen can mean revenue loss and losing to rivals.

Throughout my career, I’ve repeatedly observed companies strive to become a skills-based organization, with check-the-box training and no clue of what outcomes to evaluate. In my professional experience, the reason for this failure is because of vague goals and an absence of a structured plan. A skills audit can create this structure for them.

How To Start a Skills Audit: A 5-Step Plan

For a skills audit to be beneficial to the business, a company must take a systematic approach and commit the time, energy and money to effectively conduct a skills audit that highlights employee skills gaps. You must also communicate to C-suite and human resources (HR) personnel that we’re not solely auditing knowledge, skills and abilities to spot gaps, but also to highlight the specific skills needed to lead to higher productivity, thus higher profitability.

For leaders interested in doing it right, here’s my approach: Start the process with some pre-work using this five-step plan.

Pre-work for conducting a skills audit.

1. Understand the actual business challenge. What problem are you trying to solve, and with what business unit? For example, is the sales team falling behind on their sales quotas? Has productivity gone down in the contact center? Do some departments lack the understanding to leverage the newest technology, preventing productive work? Leaders must pinpoint the exact problem(s) they want to solve, before trying to determine what skills are required to solve those problems.
2. Be ready to treat the sickness, not the symptom.This has to do with addressing challenges that actually move the needle. Is it a lack of skills or poor morale that is causing skills gaps in your workforce? Perhaps a product-market fit is being overlooked in favor of a more obvious problem that ultimately won’t lead to higher revenue or profits even if it were solved.
3. Create a baseline of competencies. The best people in your company should serve as the baseline, or the benchmark. Find out why they’re outperformers and use their attributes as the standard to which other employees must aspire to. Industry benchmarks will drive you to the median. Focus on the best, and build your workforce based on that standard.
4. Pick a focus area.Which departments, when fully skilled up, are likely to generate the largest returns for the company? It may not be the sales department but instead, engineering or procurement, for example. Avoid casting a wide net in search of improvements, as that’s not only a waste of resources but also cumbersome. That’s not to say that all departments don’t matter. But you need to start with what matters most aka what will lead to higher revenue and/or profits.
5. Get role specific.After you’ve identified the departments, get down to the details. Which positions don’t measure up? It could be management, but it could also very well be a bottleneck in an otherwise inconsequential business practice.

Starting the Skills Audit After Pre-Work

To do this, you’ll want to:

1. Collect data on specific roles in key departments that lead to a solution to your company’s challenges. Asssessment tools can include surveys, performance reviews, quizzes and other means of acquiring information.
2. Hire a diverse portfolio of skill providers with expertise on the gaps you’re looking to plug. Those providers could range from traditional universities, certification providers, bootcamps, etc. Though that adds complexity, remember that a quick fix rarely fixes anything. And one size surely does not fit all.
3. Devise an action plan for learners with external providers. Set a deadline and stick to it. Follow up so that, at the end of the training, employees’ skills match those of their most successful peers.

A skills audit is more crucial today than it’s ever been. Not only is the job market tight, but artificial intelligence (AI) and new technologies are ramping up competition. As a result, a company can now be measured against a bigger universe of rivals. What was once necessary skills have become vital skills. In the next 10 years, failure to come to grips with a skills gap may not mean only smaller profits but also business viability itself.