Leap forward with insight

While leaders are focused on maximizing returns from AI investment, they face a looming talent crisis. With employee thriving plummeting, more people planning to quit, and heightened anxiety over AI, workers’ capacity to drive performance is being challenged.

HR leaders foresee talent-related challenges on the horizon: skills gaps, rising labor costs, burnout and low engagement levels.

Transformation depends on talent, not just tech

HR: Top 5 workforce challenges facing businesses in 2026

When people risk is business risk, talent foresight is the best mitigation strategy. Businesses that harness their workforce data will be able to make faster, smarter decisions. Leaders need data-driven talent processes to ensure organization and work redesign are executed with precision, optimizing talent to drive performance and translating workforce insights into action.

Take action on workforce signals

Workforce insights must keep up with shifting business demands, enabling organizations to proactively and precisely reshape themselves. Despite advances in technology, many organizations lack the integration and agility needed to fully exploit workforce intelligence. In fact, 55% of executives say their organization underutilizes the workforce intelligence it has today. Few believe their HR team effectively advises them on human capital risks and opportunities.

People analytics capabilities require strengthening

of investors expect leading firms to prioritize improving people analytics capabilities to deliver the greatest ROI

of the C-suite see improving people analytics capabilities as the people initiative that will drive the most ROI in 2026

of HR leaders see improving people analytics capabilities as a top priority for 2026

of executives believe their HR team effectively advises them on human capital risks and opportunities

Without talent intelligence, leaders can’t plan effectively. But if organizations prioritize the wrong signals, they risk ‘insight theater’ — slick dashboards, little impact. Two-thirds of executives believe their organizational data tells them only what is most urgent, not what is most important. There is a mismatch between the workforce insights executives want and those HR teams are providing, with HR underserving on high-stakes, predictive decisions.

Top 5 workforce insights executives want

What productivity gains can be achieved by implementing AI/automation?
How is AI shifting skills premiums and impacting skill gaps?
Which leadership behaviors contribute to the most thriving/engaged teams?
What is the impact of different pay strategies on business results?
How effective is HR at meeting business needs?

Top 5 workforce insights HR teams are most likely to have available

How productive is each individual, team, department?
What investments related to pay, benefits or retirement have the maximum ROI for different employee groups?
How effective is HR at meeting employees' needs?
How effective is HR at meeting business needs?
Joint:

To what extent are there pay inequities across the workforce?
What is the adoption rate of newly implemented technologies?

Foresight through workforce intelligence

Moving with speed and precision calls for robust, real-time workforce intelligence to support decision-making and proactive work design. But many organizations lack the insight to map skill supply and demand, let alone access predictive insights (e.g., whether someone is at risk of burnout or requires a nudge to expand their skillset).

Talent insight gap

My company recognizes the jobs and tasks I am best suited for

My company is aware of my potential to operate in more complex or senior roles

My company has a clear view of my behavioral skills

Source: Employee sample

Improving talent intelligence is on HR’s radar for 2026. But while AI enables talent-related data ingestion at scale — consolidating real-time insights and validating them against business outcomes — it is not yet mainstream in talent processes.

How HR leaders plan to evolve talent assessment strategy in the next 12 months

AI in talent processes today

use AI in internal talent management

use AI in strategic workforce planning

use AI to support work redesign

use AI in predictive models to forecast how talent will develop

Taking action on workforce signals should become as much of a discipline as taking action on market and financial signals. It is becoming so in high-growth companies, where talent and business planning converge.

Executives in high-growth companies8 are 2x more likely to believe that acting on talent insights is as critical as acting on financial insights

of executives say that ‘having better insights into our talent’s capabilities is key to delivering outsize performance’

Drive agile talent practices

Shifts in hiring patterns, demographics and AI capabilities are eroding talent pipelines. Addressing talent scarcity and knowledge loss requires agile and adaptive talent practices, replacing tenure-based structures with those based on skills and potential. Careers and talent pathways must enable mobility and continuous skills development, moving at pace to keep up with technology.

A ticking talent timebomb

Talent scarcity is executives’ #1 workforce concern

of executives say AI will lead to some headcount reductions within two years

of HR expect 11-20% of their organization’s workforce to be redeployed or reskilled due to AI within two years

of employees are planning to leave their organization in the next 12 months

Pipeline disruption of this magnitude means that identifying and securing the right talent and developing it at pace has never been more business-critical. But in most organizations, traditional talent processes are sluggish at best.

Adoption of skills-powered processes lags behind need

of leaders say talent intelligence systems help hire people, not develop them

of HR leaders believe their talent data enables them to quickly identify who might be most suitable for a role or assignment

of employees say that career progression tends to be based on tenure, not skills

of organizations have a talent marketplace

Only 26% of employees say lateral moves are prevalent in their organization

Organizations must prioritize AI-powered talent velocity, building skills in the flow of work (experiential learning has seen the biggest rise in effectiveness in closing skills gaps) and focusing on learning pathways. Smart moves come from clarity around the skills the organization has and those it needs. Highly agile companies are more likely to agree that their talent processes identify true future leaders rather than today’s top performers.

Skills-powered, dynamic talent practices require leaders to be talent developers and exporters, not hoarders. A lack of lateral moves is symptomatic of a climate focused on short-term gains at the expense of strategic skills growth. Promoting internal mobility through short-term projects and flexible roles must become a priority as business and talent agendas fuse.

Redefine the leadership blueprint

The ability to navigate complexity and manage leadership paradoxes — investing for the long-term while seeking short-term efficiencies, building digital-first cultures while leading with empathy — requires a powerful blend of IQ, EQ and D(igital)Q. As companies plan for an AI-driven future, inspiring change toward new ways of working is ‘make or break.’

Leadership development: The first line of defense

of investors say that organizations led by executives with high adaptability and resilience will outperform their peers during market disruption

Executives believe leadership sponsorship and role modeling is the #1 driver of transformation

of employees say having a leader who sets clear direction helps them thrive at work, up from 21% in 2024

Inspiring and trustworthy leadership is a top 5 reason for people staying with their current employer (#4, up from #11 in 2024)

Yet only 37% of HR leaders believe their high-potential identification and succession planning works well

Building digital fluency

Organizations struggle to develop digitally fluent, resilient leaders who can manage transformation. Executives are focused on building leadership capabilities in risk, strategy, accountability and critical thinking (IQ attributes). Employees feel EQ skills (communication, empathy, integrity and honesty) are most important.

Both IQ and EQ remain non-negotiable, but must be accompanied by DQ: digital know-how. And this is where leaders are lacking. Executives are prioritizing business thinking today as risk, strategy and commercial fundamentals shift at pace. But tomorrow, digital leadership — managing agentic workforces and leading hybrid teams confidently and ethically — will matter as much, if not more.

Digital leadership: The awareness-action gap

C-suite:

Our organization needs to be more digital than it is today to compete

Our digital agility is high

AI fluency will be equally or more essential for executives than financial literacy in the next two years

AI fluency is important for leadership success in our organization today

Digital leadership is important for leadership success in our organization today

Talent science is a business priority

Talent science is no longer a niche HR capability; it is a driver of exponential business performance. Leaders need evidence-based insights to identify high-potential talent early, make confident succession decisions, and invest in leadership capabilities for the future. The result is a stronger, more resilient leadership pipeline — deliberately built to meet tomorrow’s challenges, not yesterday’s job descriptions.