What is Needs Analysis?

Learn everything about needs analysis, its value, and how to capitalize on this to improve the organization’s workflows and revenues.

Needs Analysis

What is Needs Analysis?

Needs analysis is the process organizations use to identify deficiencies or problems of an organization and pinpoint the root cause to provide the most appropriate solution. This practice helps in numerous ways, improving employee performance, finding opportunities, yielding better revenues, and serving the target audience better.

Analyzing needs was first used specifically to improve methods of teaching English in schools. Today, companies across industries regularly use and benefit from a needs analysis.

Why Perform Needs Analysis?

All companies experience hitches in their processes that prevent them from approaching their goals. What sets thriving businesses apart from unproductive ones is how they get to the bottom of issues to develop strategies for success. Here are specific reasons why conducting a needs assessment is a must.

  • Improves decision-making – The process requires laying out all the factors affecting the deficiency or failure in the organization. With the help of insightful analytics, you can make definite and logical conclusions that help inform better decisions.
  • Targets priorities – Companies have numerous problems. Finding remedies for everything all at once is both labor-intensive and expensive. Business needs analysis allows managers to rank these issues and deal with the most pressing ones first.
  • Drives better performance – More often than not, organizational difficulties are brought about by a lack of knowledge and skills. This activity points out who in the team struggles and what specific training or additional studies are needed to be more effective at work.
  • Enhances workflows – Organizational needs analysis can determine deficient operational elements or deteriorating equipment. Work efficiency is restored or increased through targeted interventions.
  • Creates a proactive culture – If done regularly, this practice fosters forward-thinking. Instead of being reactive to issues, employees are empowered to take initiative to benefit the whole organization.
  • Increases customer satisfaction and revenues – Gaining insights into your targeted audience helps you serve them better.


Whether you run a small start-up or a huge conglomerate, identifying and evaluating the needs of the organization and its stakeholders is a must. Understanding requirements will help businesses reap more benefits. Listed below are the kinds of needs analysis companies need to consider:

  • Training or Learning – Possibly the most common kind of needs analysis, this is focused on the employees. By comparing job descriptions and performance data, managers identify skills and knowledge their workers require so they can do their job efficiently.
  • Performance – This determines the gap between current performance and expected performance in providing services, creating products, or accomplishing tasks in the operation.
  • Compliance – Often used in highly-regulated industries like healthcare and finance, this reviews the organization’s compliance with industry standards and government regulations. This involves going over policies and standard operating procedures and conducting audits.
  • Organizational – This type of needs analysis evaluates the organization as a whole and looks at ways to improve resource management and daily operation. It takes into consideration the structure, culture, assets, and current workflows.
  • Financial – Here, businesses figure out how to reduce costs, increase revenues, and locate investments. Managers review financial statements, analyze market trends, and conduct customer surveys to complete their needs analysis.

Upholding Best Practices in the Process of Needs Analysis

Different companies have specific methodologies for identifying and evaluating their needs. Listed below are needs analysis questions that should be asked throughout the activity. The best practices are also described per step to ensure success in this endeavor.

What is your desired performance?

This step identifies the purpose and the scope of the evaluation. This is also the part where company managers set goals for improvement.

Best Practice: The devil is in the details, so company leaders must specify the purpose and delineate the scope of the activity. Objectives should also be clearly defined and achievable so stakeholders can feel valued when they fulfill them.

What is the current performance?

The second phase of the process is information gathering. This involves collecting data from various sources like employee interviews, past performance evaluations, customer surveys, financial reports, and market research.

Best Practice: Managers can acquire accurate information through reliable collection methods. Digitizing and automation help in this matter because results are more precise. These also cost little time and effort.

What are the gaps and corresponding causes?

The third step involves detailed data analysis to characterize the gaps identified and detect their causes. Use quantitative and qualitative methods, such as statistics, content analysis, and in-depth reviews of case studies.

Best Practice: Stakeholders must be involved in this phase of the needs analysis process to voice their concerns about the identified deficiencies and state reasons for the possible causes. Engaging relevant team members prevents finger-pointing and presents a more comprehensive view of the problem.

What are the solutions offered?

This phase involves presenting the findings to relevant stakeholders and developing solutions to benefit them and the organization.

Best Practice: Managers should ensure actionable results. Stakeholder participation is also essential. Employees should be able to suggest solutions since they are involved in this task.

How effective are the solutions?

Many companies stop at the fourth step, thinking that providing solutions would end their problems. That shouldn’t be the case because monitoring employee training or new operating systems is crucial in ascertaining real progress.

Best Practice: Digitization and automation are critical in this process. Managers would not have a sweeping view of the whole operations and will surely miss important details without the help of these digital solutions.

FAQs about Needs Analysis

Companies call for needs analysis when these are observed:

  • Suboptimal employee performance
  • Stagnating operations
  • Declining outputs
  • Diminishing resources
  • Bad service reviews

It’s better to do needs analysis periodically to ensure the optimum performance of the employees and the organization as a whole.

Usually, managers perform this function. But there are some cases wherein multiple raters are required, as in the case of needs analysis for training.

Companies often encounter numerous problems or gaps, but it is hard and expensive to deal with all of them at once. That is why deciding which need should be prioritized is the most important element of this activity.

Admittedly, this can be time-consuming and costly. Assigning skilled personnel, using the right tools, and getting priorities straight will ensure a smooth-sailing process that won’t require too much of your resources.

Eunice Arcilla Caburao
Article by

Eunice Arcilla Caburao

SafetyCulture Content Contributor
Eunice Caburao is a content contributor for SafetyCulture. A registered nurse, theater stage manager, Ultimate Frisbee athlete, and mother, she has written a wide range of topics for over a decade. Eunice draws upon her rich, multidisciplinary background to create informative articles about emerging topics on health, safety, and workplace efficiency.