Gap Analysis

CORE DEFINITION

Gap analysis in management refers to the difference between ideal performance (or potential performance) and actual performance. It can be conducted for an organization or a product. Organizational gap analysis identifies the gap between optimal resource allocation and current allocation, revealing areas for improvement. It involves identifying the gap between business needs and current capabilities, documenting it, and making improvements. As long as expectations for performance in an industry are known, the gap between a company's current performance and ideal performance can be compared; this difference is gap analysis. Similar analysis can be conducted at strategic or operational levels. Gap analysis can be applied at various levels, such as: organization (e.g., human resources), operational direction, business processes, information technology, and compliance with specific standards. Gap analysis can be used to determine the time, money, and manpower needed to achieve a specific goal (e.g., transitioning a payroll process from paper-based to paperless electronic workflow).