Skip to main content

Performance gaps occur all the time, the trick is quickly identifying and closing them before the walls start to crumble.

Use this guide to help you mitigate performance gaps as much as possible and identify and close them quickly and efficiently.

What Is A Performance Gap?

A performance gap is the difference between the current performance level of an individual, team, or organization and the desired or expected level of performance. It represents areas where goals or standards aren't being met, whether in productivity, skills, quality, or results.

Identifying performance gaps helps organizations target areas for improvement, such as training, resources, or process changes, to enhance overall proficiency and achieve strategic objectives.

Performance Gaps Examples

Performance gaps can occur at any level or department. Here are some examples of performance gaps in an organization:

  1. Skills gap: An employee lacks the necessary skills to perform tasks effectively, such as a salesperson who struggles with using new CRM software.
  2. Productivity gap: A team's output is below the expected level, like a manufacturing team producing fewer units per hour than the industry benchmark.
  3. Quality gap: Products or services consistently fail to meet quality standards, such as a customer support team with a high rate of unresolved customer complaints.
  4. Compliance gap: Employees do not follow regulations or standards, for example, when data privacy protocols are not strictly adhered to by staff handling sensitive information.
  5. Engagement gap: Employees show low levels of engagement or motivation, leading to high turnover or absenteeism, such as a department experiencing frequent employee burnout.
  6. Technology utilization gap: Available technology is underused or misused, such as a company investing in an advanced software system that employees rarely use due to a lack of training.
  7. Financial performance gap: The company's revenue growth is below projections, possibly due to ineffective sales strategies or market conditions.

Common Performance Gap Causes

Common causes of performance gaps in an organization include:

1. Skills and knowledge deficiencies

  • Workers lack the necessary skills or knowledge to perform their tasks effectively or contribute to achieving company objectives.

2. Unclear expectations or goals

  • Performance goals are not clearly defined, leaving employees unsure of what is expected.
  • Lack of alignment between individual, team, and organizational objectives.

3. Insufficient resources

  • Employees don’t have access to the tools, technology, or materials needed to perform well.
  • Limited budget, time, or staffing levels hinder productivity.

4. Lack of motivation or engagement

  • Employees are disengaged due to poor workplace culture, lack of recognition, or burnout.
  • There may be inadequate incentives or rewards for meeting performance standards.

5. Ineffective processes or workflows

  • Outdated or inefficient processes slow down productivity or reduce quality.
  • There are bottlenecks, redundancies, or unnecessary steps in workflows.
Get weekly insights and how-tos on leadership and HR’s biggest and most pressing topics—right to your inbox.

Get weekly insights and how-tos on leadership and HR’s biggest and most pressing topics—right to your inbox.

6. Poor communication

  • Information is not shared effectively, leading to misunderstandings and errors.
  • Feedback on performance is irregular or unconstructive, making it hard for employees to improve.

7. Inadequate training and onboarding

8. Misalignment with organizational strategy

  • Employees’ tasks and priorities don’t align with the broader organizational strategy.
  • The company’s goals and values are not effectively cascaded down the organization to the team and individual levels.

9. External factors

  • Market changes, economic conditions, or regulatory updates can impact performance.
  • Competitors’ actions create new challenges or raise the bar for standards.

10. Leadership issues

  • Ineffective leadership or management styles fail to inspire or guide employees.
  • Poor decision-making at the leadership level can cause resource misallocation or unclear priorities.

Performance Gap Analysis: 3 -Step Process

Identifying performance gaps involves a systematic approach to assess current performance levels, compare them against desired outcomes, and pinpoint areas that need improvement. 

Here are some steps to help you identify performance gaps:

1. Set clear goals and performance standards

The core of managing performance is having clear goals and expectations/targets. 

There are a number of approaches to take here, but here at People Managing People we’re fans of the cascading goals method.

This is a top-down approach to goal setting that starts with setting a high-level theme for the year, key organization-wide goals, goals for leaders, departments, and teams, and, finally, individual employee goals.

cascading models infographic
Cascading goals model.

The recommended cadence for goal setting in an organization often depends on the nature of the work, the team's dynamics, and the organization's overall strategy.

However, some general practices can be applied across different teams, with adjustments made based on specific needs.

Setting goals on a quarterly basis is a common approach, allowing enough time for meaningful progress while still being agile enough to adjust to changes.

While goals may be set quarterly, monthly check-ins are helpful to monitor progress, address obstacles, and make necessary adjustments.

When implemented successfully, this model means individuals’ and teams’ goals, behaviors, and skills are aligned with those of the organization. Everyone knows what they’re responsible for and how they’re contributing to the organization’s success.

The same method can also be used for implementing new technologies, processes, and partnerships.

2. Identify performance gaps

Now clear goals and expectations are in place, those responsible for them should be properly equipped to identify any performance gaps.

This step involves collecting both quantitative and qualitative information from various sources to get a comprehensive view of how work is being performed.

Quantitative data might include metrics like sales figures, productivity rates, or customer satisfaction scores.

These numbers give a clear, measurable indication of whether performance is meeting, exceeding, or falling below the established standards. For example, tracking how many units a team produces each day against their target provides direct insight into their efficiency.

Qualitative data is equally important and often comes from feedback mechanisms such as employee performance reviews, peer evaluations, and customer feedback.

These sources provide more nuanced insights into how well individuals or teams are executing their roles, what challenges they face, and any areas where improvement is needed.

Gathering qualitative feedback might involve conducting interviews, sending out customer or employee surveys, or holding focus groups to understand the perspectives of employees, managers, and other stakeholders.

Additionally, observing work processes in action can help identify performance gaps. 

Managers may monitor day-to-day activities or review workflows to see where inefficiencies or errors are occurring.

For instance, a manager might notice that a team consistently struggles with a specific task due to a lack of training or outdated technology. This kind of direct observation helps capture real-time performance issues that data alone may not reveal.

Combining these various sources of information allows for a well-rounded view of current performance, highlighting strengths, weaknesses, and trends.

This data becomes the foundation for identifying performance gaps and developing strategies to address them.

3. Close the gap

A gap between current and desired performance has been identified, let’s try and close it! 

1. Analyze the root causes

The first step in closing a performance gap is to conduct a thorough skills gap analysis to understand why the gap exists. Is it due to a lack of skills, inadequate resources, unclear expectations, or external factors?

Identifying the root causes helps avoid surface-level solutions and targets the actual problems. 

This analysis might involve discussions with the employees involved, reviewing past performance data, and assessing workplace conditions.

2. Assess the best method(s) to close the gap

Depending on the root cause, an assessment now needs to be made on how best to close the gap.

This could be re-clarifying expectations, adjusting targets, implementing training and development programs, tweaking processes, assessing partnerships, or introducing new tools.

For example, if a recruitment team is underperforming because they aren’t as proficient at candidate sourcing as they could be, in-depth training on searching for and contacting potential candidates might help, as might a new applicant tracking system.

5 Ways To Mitigate Performance Gaps

No system is perfect and our old friend entropy will mean that performance gaps are opening all the time—it’s part of business.

Having said that, here are some best practices to help mitigate against them and ensure they’re closed quickly and efficiently.

1. Clear goals and expectations

We’ve mentioned this above, it really is fundamental for effective performance management. 

2. Maintain good data hygiene

Maintaining good data hygiene is crucial because decisions based on faulty or incomplete data can exacerbate performance issues. Some best practices here are:

  • Regular data audits
  • Standardized, potentially automated data entry
  • Training workers on data handling
  • Implement access controls.

For HR teams, Liam Reese’s article on HR metrics is a great starting point.

3. Continuous performance management

Continuous performance management (CPM) is a modern approach to employee appraisal and development that focuses on ongoing communication and feedback between managers and employees.

It’s a departure from traditional performance management systems, which often rely on annual performance reviews, toward a system of ongoing, regular feedback that’s instructive, constructive, and celebratory.

CPM will help identify performance gaps earlier and boost employee performance and retention. It’s facilitated by regular check-ins, a feedback culture, and modern performance management tools and performance appraisal software.

For more, read Eric Grant’s excellent article on implementing continuous performance management.

4. Effective employee listening

Continuous performance management will help create a healthy dialogue between leaders and their direct reports to identify any issues and improve performance.

But there are numerous ways to gather employee feedback

Your overall employee listening strategy might include 1:1 meetings, town halls, skip-level meetings, stay interviews, exit interviews, and internal social platforms to gather feedback on an ongoing basis.

Also key is encouraging a culture of open communication where employees feel comfortable discussing challenges and asking for help.

5. Recognize and reward progress

Recognizing and rewarding progress is a powerful tool in mitigating performance gaps as it fosters a positive feedback loop that encourages continuous improvement.

Some employee recognition ideas include:

  • Give shout-outs in team meetings and via internal communication channels
  • Mentioning employee achievements in social media posts (Twitter, LinkedIn)
  • Rewards such as extended lunch breaks or additional leave
  • Implement a formal employee recognition program using a dedicated employee recognition system.

How To Approach Performance Gaps In Appraisals

This section is for managers when noting performance gaps in appraisals. The main takeaway is that it’s essential to be clear, constructive, and solution-oriented.

Here’s how you can effectively document and address performance gaps:

1. Be specific

  • Clearly identify the performance area where there is a gap, such as missed targets, quality issues, or skill deficiencies.
  • Provide concrete examples or data to illustrate the gap. For instance, "The sales target was missed by 15% for Q2" or "Customer complaints about service quality increased by 20% this year."

2. Compare against standards or goals

  • Explain the expected performance level versus the actual performance. This could be benchmarks, goals, or specific metrics.
  • For example, "The expected monthly report submission time is within three days after the month-end, but reports have consistently been submitted with a delay of one week."

3. Address the impact

  • Describe the consequences of the performance gap on the team, department, or organization.
  • For example, "The delay in project delivery resulted in a 10% increase in costs and affected the client’s timeline."

4. Acknowledge contributing factors

  • Consider any external or internal factors that may have contributed to the performance gap. This could include workload, lack of resources, or unclear expectations.
  • Mention these factors to provide context, such as "The project delays may be due to insufficient staffing during peak periods."

5. Be constructive and focus on solutions

  • Offer recommendations for closing the gap, such as additional training, setting more realistic goals, or adjusting workflows.
  • For example, "To improve accuracy, we recommend training on the new software" or "Regular check-ins can help ensure tasks stay on schedule."

6. Set follow-up goals

  • Establish measurable and realistic targets for improvement.
  • Outline the steps or support needed to reach these goals, such as "Achieve a 95% on-time delivery rate over the next quarter with bi-weekly progress reviews."

7. Maintain a balanced approach

  • Pair the discussion of performance gaps with recognition of the employee’s strengths or accomplishments to keep the appraisal constructive.
  • Use phrases like, "While there is a gap in [specific area], strengths in [other area] indicate the potential for improvement."

By following these steps, you can address performance gaps transparently while promoting growth and development.

Subscribe To The People Managing People Newsletter

For further support on performance management, subscribe to your weekly newsletter for HR and business leaders. You’ll receive all our latest content to help you grow in your career and make greater impact in your organization.

Finn Bartram

Finn is an editor at People Managing People. He's passionate about growing organizations where people are empowered to continuously improve and genuinely enjoy coming to work. If not at his desk, you can find him playing sports or enjoying the great outdoors.