Just 32% of employees believe their organisation recognises their potential for more senior roles, as new analysis warns traditional succession planning may be overlooking future leaders already inside the business.
Only one in five organisations is confident in its leadership pipeline for critical roles, while just 32% of employees believe their company recognises their potential for more complex or senior positions, new analysis reveals. The findings come from a new whitepaper from Workhuman, featuring insights from global professional services firm Marsh, which warns that traditional approaches to identifying future leaders are failing to keep pace with changing skills, career paths and the impact of artificial intelligence on work.
The report, The Leadership Crisis You’re Already In, argues that many of the people organisations will need to lead them in future may already be working inside the business, but remain invisible to the processes designed to identify leadership potential. The analysis also highlights a disconnect between senior leaders and HR.
Some 68% of C-suite executives believe better identification of high-potential talent could unlock greater performance, yet only 37% of HR leaders say their current approach works well. The findings raise an important question for employers: are organisations genuinely short of future leaders, or are they simply failing to see the talent they already have?
AI IS CHANGING WHAT LEADERSHIP REQUIRES
The challenge comes as the definition of effective leadership itself is changing. Some 78% of executives say successful leadership increasingly requires the ability to navigate competing priorities and paradoxes, according to Marsh research cited in the report.
AI adds another layer of complexity. Leaders increasingly need to balance productivity with workforce impact, innovation with governance, speed with judgement and automation with continued development of human capability. That makes traditional methods of identifying future leaders largely through hierarchy, tenure, individual performance or visibility increasingly questionable.
A recent report highlighted how only four in 10 managers feel prepared for difficult workplace conversations involving AI anxiety, layoffs and workplace conflict. The research found that organisations are expecting managers to lead through AI adoption and workforce transformation without necessarily giving them the preparation required.
The challenge is therefore not simply producing more leaders. It is identifying and developing people with the capabilities organisations will actually need next.
LEADERSHIP PIPELINE
“Many companies will need to change the trajectory of their organizations if they don’t take a more deliberate approach to their leadership pipeline,” Tara Cooper, Lead Global HR Tech Analyst at Marsh. “Future leaders are likely already in the organization. The opportunity is to find them earlier and invest in them deliberately, rather than waiting for the next succession review to catch up.”
That distinction matters. Traditional succession processes are often periodic and heavily influenced by employees who are already visible to senior leadership. But leadership potential may exist much further across an organisation, among people leading projects informally, connecting teams, solving difficult problems, adapting quickly or consistently influencing others without holding a senior title.
If those contributions are not captured through conventional talent processes, capable future leaders may remain overlooked until they leave.
RECOGNISING LEADERSHIP POTENTIAL
Perhaps one of the most significant findings is that only 32% of employees believe their company recognises their potential for more complex or senior roles. That makes the leadership pipeline problem a progression issue too. Employees who cannot see how their contribution translates into future opportunity may be less likely to remain engaged, invest in their career internally or stay with the organisation.
The issue also has significant implications for inclusion. Leadership pipelines have historically not provided equal access to opportunity, and succession processes can reinforce existing inequalities if employers repeatedly identify future leaders from the same networks or profiles.
That is why widening the talent pool matters. Recent research showing the 50 Women to Watch for Boards 2026 highlighted how organisations are being encouraged to identify and develop future directors well before vacancies arise, rather than relying on narrow networks once a position opens.
SUCCESSION PLANNING
Who gets recognised as having leadership potential can be influenced by proximity to senior leaders, personal networks and access to prestigious assignments. That risks disadvantaging employees whose contribution is significant but less visible. Remote and flexible workers, caregivers, employees outside headquarters and people from historically underrepresented groups may be particularly vulnerable when succession decisions rely heavily on informal visibility.
The issue can be seen at board level too. Women’s representation on Russell 3000 boards fell for the first time in more than a decade in 2026, despite more board vacancies becoming available. The research highlighted the need for organisations to make succession planning continuous and widen candidate pools before searches begin. The lesson applies throughout organisations. Having qualified talent in the pipeline does not automatically mean that talent will be selected.
HIDDEN LEADERSHIP POTENTIAL
One of the more distinctive arguments in the Workhuman report is that companies may already hold underused information about who influences and supports others. Workhuman argues that continuous peer-generated recognition data can reveal patterns around:
- influence;
- adaptability;
- cross-functional contribution;
- collaboration;
- organisational values; and
- emerging leadership behaviour.
Combined with other workforce and talent information, those patterns could help organisations identify employees with leadership potential earlier. The theory is that leadership behaviour often appears in everyday work long before somebody receives a leadership title. An employee may repeatedly help others solve problems, bring teams together, influence colleagues or build trust across functions without those contributions appearing prominently in a conventional succession process.
RECOGNITION PATTERNS
There is, however, an important responsible-business consideration. Recognition data should not simply become another algorithm determining who gets promoted. Employees receive recognition differently. Some roles are more visible than others.
Some organisations have strong recognition cultures, while others do not. Location, working patterns, personality and bias can also influence who receives praise and whose contribution gets recorded.
Recognition patterns can therefore provide another signal of leadership potential, but should sit alongside structured assessment, performance evidence, career aspirations and accountable human judgement. Any system used to infer leadership potential also needs to be assessed for bias. The purpose should be to make previously invisible contribution more visible, not create a new form of invisible gatekeeping.
SUCCESSION PLANNING NEEDS TO BE CONTINUOUS
The whitepaper also argues that organisations need to move beyond the traditional annual succession review. Businesses change too quickly for leadership pipelines to be reconsidered only once a year. Roles evolve. New skills become important. Employees take on different projects. AI changes workflows. Potential leaders emerge. Others leave.
Workhuman and Marsh therefore recommend building a pipeline that updates continuously, drawing on multiple workforce signals rather than waiting for a periodic talent-review exercise. That turns succession planning from an emergency replacement process into a longer-term capability strategy.
IDENTIFYING POTENTIAL IS ONLY THE FIRST STEP
Finding future leaders is not enough. Organisations then need to give them meaningful opportunities to develop. The report recommends focusing on:
- stretch assignments;
- sponsorship;
- structured feedback; and
- practical leadership development.
That matters because leadership ability cannot be built solely through formal training. People need opportunities to make decisions, lead projects, handle ambiguity, influence others and learn from more experienced leaders.
AI makes that increasingly important because automation may reshape some of the traditional experiences through which future leaders previously learned. Recent research has already highlighted how organisations are struggling to prepare managers for those changes, with only four in 10 managers saying they have sufficient preparation for increasingly complex workplace conversations.
MANAGERS UNDER PRESSURE
Leadership pipelines cannot be strengthened without considering the experience of today’s managers. Recent research found one in four UK managers regularly think about quitting, with difficult conversations, rising stress, administrative burden and unrealistic expectations among the pressures affecting them.
That creates another succession risk. Organisations may be trying to identify tomorrow’s leaders while failing to support the people already occupying leadership positions today. If management itself becomes increasingly unattractive, organisations could struggle not only to identify future leaders but to persuade talented employees that leadership is worth pursuing.
SPONSORSHIP MATTERS
Formal leadership development has value, but access to opportunity is equally important. A training programme can teach leadership concepts. A sponsor can put somebody forward for a role. A stretch assignment can allow them to demonstrate capability. Structured feedback can help them improve.
This becomes particularly important for employees who have historically had less access to informal leadership networks. The broader principle is straightforward – leadership potential only becomes leadership experience when somebody is given an opportunity to demonstrate it.
That means employers need to look beyond who appears ready today and ask who could become ready with the right exposure, support and sponsorship.
WILL AI REDUCE NEED FOR HUMAN LEADERSHIP?
The report also arrives amid wider debate over whether AI will reduce the need for managers and leaders. The emerging evidence suggests that technology may instead change what organisations value in their leaders. As AI handles more routine analysis, administration and information processing, human leaders may become increasingly important for, such as judgement, influence, adaptability, trust, empathy and navigating competing priorities.
At the same time, managers increasingly need to help employees navigate the human consequences of AI transformation. Fair Play Talks has reported that managers are already being asked to deal with AI anxiety, organisational change, new skills demands and rising workforce uncertainty. The question for employers therefore becomes not simply who performs their current job best, but, who has the potential to lead effectively in a workplace that may look very different five years from now?
LEADERSHIP PIPELINES AN INCLUSION ISSUE
Succession planning has important consequences for workplace inclusion because being labelled “high potential” affects who receives development, visibility, sponsorship and ultimately access to power. If organisations repeatedly select future leaders from similar backgrounds and established networks, senior leadership teams can reproduce themselves even when the wider workforce is diverse.
The recent reversal in US board diversity provides one warning. Recent reports found that women received just 22.7% of new Russell 3000 board appointments in the latest year, down from 29.1% previously and around 40% in 2022.
By contrast, initiatives such as 50 Women to Watch for Boards demonstrate the value of deliberately widening the pool of visible, board-ready talent. A stronger succession strategy therefore needs to consider not only who could lead, but whether different groups have equitable access to the experiences that allow their leadership potential to become visible.
TURNING RECOGNITION INTO LEADERSHIP INTELLIGENCE
“Future Leaders turns everyday recognition into a clear signal of where leadership potential sits,” said Tom Libretto, President at Workhuman. “It gives organisations a stronger basis for one of their most consequential decisions: who to put into critical leadership roles before succession gaps widen, high-potential talent is overlooked, or the wrong appointment creates years of downstream cost.”
Workhuman has a commercial interest in this argument because its technology provides employee-recognition and workforce-intelligence services. Employers should therefore assess independently which signals genuinely predict future leadership capability rather than assuming any single source of workforce data provides the answer.
The broader principle, however, is important. Organisations may need richer and more varied evidence when deciding who gets the opportunity to lead.
WHAT EMPLOYERS SHOULD DO
The findings suggest organisations should move from periodic succession planning towards a more continuous and inclusive approach to developing leadership capability. Employers should:
- define what future leadership success looks like, rather than relying on historic leadership profiles;
- identify potential earlier instead of waiting for critical vacancies;
- use multiple sources of evidence, including performance, contribution, peer feedback and employee aspirations;
- examine whether “high-potential” processes disproportionately favour already-visible employees;
- audit leadership pipelines for representation gaps;
- provide stretch assignments before employees reach senior roles;
- formalise sponsorship rather than relying solely on informal networks;
- give emerging leaders structured feedback and coaching;
- ensure remote and flexible workers have equitable access to development;
- continuously refresh succession data rather than relying only on an annual review;
- examine how AI is changing the capabilities future leaders will need; and
- ensure technology supports rather than replaces accountable human talent decisions.
THE LEADERSHIP GAP MAY ALSO BE A VISIBILITY GAP
The headline statistic – that only one in five organisations feels confident about its bench strength for critical roles – appears to suggest a shortage of future leaders. But the other findings point to a more complicated possibility. Only 32% of employees believe their potential is being recognised.
Most C-suite leaders believe better identification of high-potential talent could improve performance. Yet fewer than four in 10 HR leaders believe their current approach works well. That combination suggests organisations may not simply need to create more leadership talent. They may need to become much better at seeing the talent they already have.
As AI reshapes work and changes what effective leadership requires, relying on yesterday’s succession signals risks preparing organisations for yesterday’s leadership needs. The companies best positioned for what comes next may therefore be those that broaden where they look, identify potential earlier and give more employees a genuine opportunity to demonstrate what they can do.
Download the full report here.
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