Four talent management challenges that keep coming back – and what to do about them
Written by Sharon Peake, CEO & Founder, Shape Talent
In my 10+ years heading up talent management teams in global organisations, I experienced both economic downturns – including the 2009 global financial crisis – as well as periods of genuine stability and growth. Each brought its own distinct pressures. What I’m observing now, however, feels different: AI disruption, geopolitical instability, a rapidly shifting EDI landscape, and economic uncertainty are all landing at the same time. The compounding effect of these pressures is creating a set of talent challenges that are not entirely new but are more acute and more interconnected than anything I’ve seen before.
There are four that I think deserve serious attention right now.
- (Re)defining succession and leadership for the future
AI is changing workplaces faster than most succession frameworks were designed to handle. The skills needed in future, the roles they will shape, and the leadership capability required to navigate this are all currently in flux – which makes traditional succession planning genuinely difficult. As I see it, the central question talent leaders need to grapple with is not “who is ready for the next role?”, but “succession for what?”
I remember watching, more than a decade ago, the shift from linear succession of named roles to succession pools. But even succession pools are premised on a degree of skills predictability, and that feels harder to sustain when the roles themselves are evolving so rapidly.
This is particularly relevant when it comes to reviewing existing leadership frameworks. Many were built for a different era of leadership. Organisations need to audit whether their succession criteria still reflect what leading effectively will actually require, rather than what it has required historically.
At Shape Talent, we’ve spent close to a decade developing leaders across a wide range of sectors and organisations globally, both women-only programmes and mixed gender accelerators. That experience has given us a close-up view of what separates leaders who thrive in complexity, from those who struggle. In our recent report, Rethinking leadership for an AI-driven world, we identified seven capabilities that will distinguish effective leaders in an AI-shaped environment:
- The ability to create a vision and mobilise teams
- Proactive curiosity and the ability to manage ambiguity
- Organisational transformation and design
- Adaptive learning
- Emotional and social intelligence
- Ethical leadership
- Inclusive, evidence-based decision-making.
What distinguishes this set from a traditional leadership model is the emphasis on navigating uncertainty, leading distributed and AI-augmented teams, and making decisions in conditions of incomplete information. These are capabilities that sit alongside, rather than replace, the relational and human skills that have always mattered.
A practical starting point for talent leaders is to audit your current leadership development offering against these seven areas: what is already being built, and where are the gaps? That audit is the foundation for a more future-proof succession approach.
- Talent pipeline gaps and readiness
It follows from the above that organisations are already facing specific capability gaps, and will face more. AI-related technical and leadership skills are an obvious area, but the pipeline challenge is broader than that. Roles in cyber security, for example, remain in high demand and are likely to grow further – the UK government has identified it as a priority area within its Industrial Strategy.
Even where we cannot predict the future with certainty, there are capabilities that will remain critical regardless of how technology evolves: people leadership, relationship-building, collaboration, cultural leadership, and the ability to influence across complex organisations. These endure precisely because they cannot be automated.
There is, however, a more specific question that I think talent leaders need to address and are not yet naming openly. As EDI teams are scaled back, restructured, or merged into broader HR functions in some organisations, who takes ownership of the cultural leadership capability that those teams have typically held? The skills involved in building inclusive cultures, managing diverse teams effectively, and creating conditions where all talent can progress are not going away as a business need, even where the organisational home for them is shifting. If the Talent function doesn’t actively re-home and resource this capability, it risks becoming a genuine pipeline gap – one that won’t show up clearly until the consequences are already visible. In some organisations, this represents an opportunity for Talent teams to step up and take ownership of an important piece that may well need stewardship.
- Talent pipeline bottlenecks
A perennial challenge in talent management is maintaining a healthy flow of talent through the pipeline. Most large organisations operate with a pyramid structure (more junior roles at the base, progressively fewer as you move up) which means managing bottlenecks at key transition points is always important.
During periods of economic uncertainty, as we are experiencing now, a familiar dynamic takes hold. People stay put. The logic is understandable: better to remain in a role that may not be fully engaging you than to risk a move in an uncertain environment. What some call “job hugging” reduces the natural openings that allow high-potential talent to progress. And the problem with that is straightforward: your high potentials are also your most mobile and most poachable talent. When opportunities fail to materialise internally, the most ambitious and capable people are more likely to find them elsewhere.
I’ve navigated this before. In a previous Head of Talent role, facing exactly this kind of structural bottleneck, one approach that worked well was looking at how to create movement without losing talent. We identified experienced, senior leaders who were approaching the end of their careers in post, and worked with them to transition into mentoring, advisory, and project-based roles where their institutional knowledge remained genuinely valuable. That opened up coveted roles for succession and got the pipeline moving again, while retaining expertise that would otherwise have walked out of the door.
More broadly, organisations are increasingly looking at internal talent marketplaces and skills-based deployment as a structural response to bottlenecks – making project openings and short-term stretch assignments visible across the business through internal platforms, so that professional development can continue even when permanent role openings are constrained. This is worth considering not just as a crisis response, but as a standing practice.
- Diverse talent representation
There has historically been significant focus on women’s representation in senior leadership, and that focus is rightly broadening to include a wider range of demographic groups. From a gender perspective, however, the underlying challenge is far from resolved. Women represent a substantial proportion of the workforce, and in many regions, particularly across the EU, growing legislation and stakeholder expectations are maintaining pressure on organisations to improve representation at senior levels.
Our own research at Shape Talent makes this concrete. Across more than 2,400 data points gathered from professional women across Europe, we find that 78% face workplace barriers to progression[i]. Our Three Barriers® framework identifies these as operating at a societal, organisational, and personal level – and critically, our data shows a direct correlation between these barriers and intention to leave. More than one in five women in our study said they would leave if they had another job offer. The talent retention risk embedded in unresolved representation gaps is real and measurable.
The external environment is also adding a new layer of complexity. Organisations with EU operations are navigating the EU Pay Transparency Directive, which came into force in June 2026 and introduces new accountability requirements around gender pay reporting. That will sharpen scrutiny of the link between pay equity and talent retention in ways that many organisations are not yet fully prepared for.
Beyond legislation, I’m observing considerable variation in how organisations are responding to the broader EDI backlash, particularly in light of the US anti-EDI executive orders. Some organisations – particularly those that are US Federal contractors, or that operate in sectors with a strong risk-averse culture – are scaling back visibly and waiting. Others, particularly those with strong values-led cultures and high external profiles, are continuing to invest in programmes targeting women in leadership and other under-represented groups and treating this moment as a point of differentiation rather than retreat. A significant proportion of Shape Talent’s talent acceleration work continues to involve development, sponsorship, and progression programmes for women, and these remain highly viable and relevant. The question each organisation needs to answer is not whether the business case exists, it does, but what approach is right for their context right now.
These challenges don’t sit in isolation
What stands out to me, looking across these four challenges together, is how much they amplify each other. A pipeline bottlenecked by job hugging makes the representation problem harder to solve. Skills gaps in cultural leadership compound the inclusion challenge just as EDI teams are being restructured. Succession frameworks built on yesterday’s leadership models leave organisations exposed precisely when the pace of change is fastest.
The organisations I see navigating this well are the ones treating these as interconnected, not separate workstreams – and they are staying the course on talent investment even when the macro environment is pressing for short-term caution. The cost of getting this wrong is not abstract: it’s the high-potential talent that quietly starts looking elsewhere, the leadership pipeline that gradually hollows out, and the capability gaps that become visible only once the moment to address them has passed.
If you’d like to explore how Shape Talent can support your organisation to address any of these challenges – whether through our Leadership in the AI Era development programme, our talent acceleration programmes, or our Three Barriers® diagnostic work – get in touch
FAQs
Q. What are the biggest talent management challenges facing organisations in 2026?
A. Four talent management challenges are converging in 2026: redefining succession and leadership capabilities for an AI-driven world; addressing talent pipeline gaps, including in cultural leadership as well as specific technical skills; managing pipeline bottlenecks caused by “job hugging” during economic uncertainty; and sustaining progress on diverse representation as the EDI environment shifts. What distinguishes this moment is not that these challenges are new, but that they are compounding one another – and the organisations navigating them well are treating them as interconnected, not as separate workstreams.
Q. What is “job hugging” and how does it affect the talent pipeline?
A. “Job hugging” describes the tendency of employees to stay put during periods of economic uncertainty, choosing the security of their current role over the risk of a move. While an understandable phenomenon at an individual level, an organisational consequence is that it reduces the natural openings that allow high-potential talent to progress. The consequence is significant: high potentials are also the most mobile and most poachable segment of the workforce – when internal opportunities fail to materialise, ambitious people look elsewhere. Addressing this typically requires deliberate strategies to create movement without losing expertise: transitioning long-tenured senior leaders into mentoring, advisory or project-based roles, and using internal talent marketplaces to make stretch assignments visible across the business.
Q. What leadership capabilities will matter most in an AI-driven world?
A. In Shape Talent’s research report Rethinking Leadership for an AI-Driven World, seven capabilities are identified as distinguishing effective leaders in an AI-shaped environment:
- The ability to create a vision and mobilise teams
- Proactive curiosity and the ability to manage ambiguity
- Organisational transformation and design
- Adaptive learning
- Emotional and social intelligence
- Ethical leadership
- Inclusive, evidence-based decision-making
What distinguishes this set from traditional leadership models is the emphasis on navigating uncertainty, leading distributed and AI-augmented teams, and making decisions with incomplete information – capabilities that sit alongside, not replace, the relational and human skills that have always mattered.
Q. How should organisations respond to the EDI backlash while maintaining a healthy talent pipeline?
A. The evidence base for investing in diverse talent has not changed. Shape Talent’s Three Barriers® research shows that 78% of professional women in Europe face workplace barriers to progression, and more than one in five say they would leave if they had another job offer. What has changed is the external environment. Some organisations – particularly US Federal contractors or those in risk-averse sectors – are scaling back visible EDI activity and waiting. Others, especially values-led cultures with high external profiles, are continuing to invest and treating this as a point of differentiation. The question is not whether the business case still exists (it does), but what approach is right for each organisation’s context. Retention risk, legislative obligations such as the EU Pay Transparency Directive, and the future ownership of cultural leadership capability as EDI teams are restructured are all factors organisations should be actively planning against.
References
[i] Shape Talent, 2024. The reality gap: Three barriers to women’s advancement in European corporates. The reality gap: Three Barriers to women’s advancement in European corporates – Shape Talent