Needs Assessment: Definition, Overview and Examples

By Indeed Editorial Team

Updated August 23, 2021 | Published December 12, 2019

Updated August 23, 2021

Published December 12, 2019

A needs assessment is a business tool used to gain valuable insights into your company’s actions or processes to determine efficiency. It can be part of a planning process to determine gaps, or “needs,” and how to address areas for improvement. In this article, we define what a needs assessment is, what steps to take and how it can benefit you at work.

What is a needs assessment?

A needs assessment is the process of identifying and determining how to bridge the gap between an organization's current and desired state. More specifically, the process outlines which processes a team should prioritize, improve or provide resources to meet its goals.

For example, consider a company working to understand who its competitors are to make changes and present a more attractive product to their customers. A needs assessment will help the company discover what their product needs, how they can improve it and how to market it effectively to their audience.

Why is a needs assessment important?

Many workplaces are complex associations made up of a wide variety of people, departments and objectives. Since so many factors are often present in any given situation, it’s not always easy to know what exactly may be keeping the company from reaching its desired goals. A needs assessment removes this uncertainty by exploring the company’s specific needs and the actions it can take to attain them.

When organization leaders understand the company’s strengths and weaknesses, they can more easily create clear and defined goals. A needs assessment takes into consideration the smallest and largest of levels within a business, from the micro to the macro level, to determine a plan of action to elevate the business.

How to perform a needs assessment

Here are some steps you can take to conduct a needs assessment for your company.

1. Search for and identify the needs of your organization

You will first need to find out how your company is doing now. For example, it may need to invest in new technologies or expand its marketing campaigns. You can rank the needs by importance to company advancement and work on them one by one.

2. Collect as much internal information as possible

This will allow you to determine your company’s most urgent needs. You can collect data from different areas in the company, which is considered micro-level research.

3. Gather data from outside areas

You can gather external information from fields outside your company. Your company might choose to assemble any necessary data through methods like surveys, interviews or market research.

4. Use the data you’ve gathered

The data you acquire will guide you toward the changes your workplace can make to meet its needs. Get yourself organized and prioritize what steps should be taken in which order, and get to know which solution is best for each need by comparing the costs and benefits. A report with recommendations on what to do can summarize the data.

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Needs assessment example questions

Below are some questions you might choose to ask while conducting a needs assessment in different areas of business:

Operations area of business questions

  • Are your services and/or products given to the client on time?

  • Do employees and management understand what operation areas have a greater influence on the profits and goals of the business?

  • Is there a system that tracks the product and job costs?

  • Is there a business manual or other documentation that describes in detail the operations of the business?

  • Does the company regularly create and document goals?

Finance area of business questions

  • Has revenue grown recently?

  • Is the company profitable or achieving its financial goals each year?

  • Are expenses being tracked and documented?

  • Is the money transfer of the business being tracked?

  • Are business financials regularly communicated to the team?

  • Does the company stay within an annual budget?

Sales area of business questions:

  • Where are clients located, how do they think and how does the company help them?

  • Are leads regularly generated?

  • Clients from past, present and future are contacted regularly?

  • Are new clients being brought in?

  • Is revenue created from the efforts of different people?

  • Are lead generation activities regularly measured?

  • Is the value proposition of the company well understood so that it is the best fit for clients?

Leadership area of business questions

  • Is there a clear vision for the business?

  • Are employees’ personal and work-life balanced?

  • Are problems and stressful situations changed into solutions or opportunities?

  • Is time used effectively?

  • Do employees know where they are the best fit for the company?

  • Do company goals align with the vision?

Management area of business questions:

  • Is the team clear about the company vision?

  • Does the team know its role within the company and its vision?

  • Can the company properly recruit and train talented employees?

  • Is the company attracting great potential employee candidates, and are they staying with the company?

  • Is the company dependent on its success on a few employees?

Client satisfaction area of business questions:

  • Do existing clients bring in regular referrals?

  • Is the quality of work continuously monitored?

  • Is the number of repeat customers satisfactory?

  • Are the products or services offered by the company something to be proud of and satisfied about?

  • Is the company delivering a satisfactory customer experience?

  • Is the business capacity something that can be managed well?

Tips for completing a needs assessment

Here are some additional tips to consider when completing a thorough needs assessment:

Ask questions

When you’re trying to come up with a comprehensive needs assessment, it’s important to gain a wider perspective from everyone in the company. One way to do this is to create a questionnaire and ask everyone in your company to fill it out. Be consistent and clear with your questions.

Collect data to back up your assessment

While working on a needs assessment, make sure to collect data to back up your conclusions. Each situation needs a particular method of data collection depending on the industry, environment and people involved. 

Plan for the future

Being specific in the ideal state you want for your company can help you visualize where you want to be in the future as not all the answers have to be known during the assessment. Knowing your ideal state will allow you to take the steps in that direction.

Take a neutral approach

The more information you have, the better prepared you will be to perform an unbiased assessment. Work with department leaders, coworkers and anyone who comes into regular contact with your organization to accurately determine which areas may need more help. 

Different solutions

Each situation will require its own unique solution, so take the time to research different approaches for different needs. The solution can include training, changing the method of recruiting new employees or rearranging your organization’s resources.

Related: 22 Most Common Interview Questions and Answers (With Tips)

Every company should perform regular needs assessments. Even if your company has remained profitable and strong for recent years, it’s important to remember that inner and outer forces change. A needs assessment will point your organization in a direction to reach its goals and develop new ones.

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