Identifying the areas where organizations need to improve their capabilities most is an important step in any change effort. Such a skill is helpful particularly in times of cost-cutting—where limited training resources must be used to close the critical competency gaps that prevent companies from meeting business objectives.

However, many training programs don’t yield the desired results. One reason is that they are usually launched without sufficient knowledge of where the gaps in employee skills exist. We find that a good way to pinpoint these learning needs is to survey employees and let them evaluate the current skill levels of their peers and estimate the skill level their group must reach in order to be successful. An added advantage of this inclusive approach is that it heightens employees’ awareness of their learning needs and helps break down any resistance to learning new skills.

A manufacturing company that embarked on a major performance transformation was aware of the costs involved in a large-scale capability-building program. It chose to survey site leaders, middle managers, and frontline supervisors. Using a heat map to visualize the results, the company found,...