Executive Summary
Overall, we are finding demand for
leadership level skills continues to be subdued, a trend that started in Q3 2023. This ties in with the CSO’s general job vacancy rate which has remained at 1.2% to 1.3% since Q3 2023 down from a high of 1.6% in Q2 2022. ( during covid this figure was 0.6%). Most affected have been large pharma / life sciences sector and the tech sector.
However, the demand for high-quality leadership has remained strong, but the shape of that demand is changing. As organizations
grapple with volatile markets, and the adoption of AI they’re prioritizing leaders who embrace rapid change and who combine expert human-centred skills (high emotional intelligence, talent development) with digital/AI fluency and strategic agility.
Two structural forces — rapid AI adoption and shrinking entry-level pipelines — are creating both immediate gaps at the senior level and a longer-term risk to leadership succession. Employers that invest now in leadership pipelines, lateral leadership models (fractional or
interim executives), and reskilling will have a measurable advantage.
Key Drivers Shaping Demand
· Rapid AI adoption and changing role scope: Organisations increasingly deploy AI across workflow and decision-making; leaders who understand AI’s strategic potential and can integrate humans + AI are highly sought.
· Threatened leadership pipelines: Cuts to entry-level roles and hiring freezes are narrowing the
traditional feed into mid/senior leadership.
· Premium on human skills (EQ, communication, talent development): Despite technical change, soft skills
remain top employer priorities.
· Economic and sectoral rebalancing: Demand will concentrate in sectors undergoing transformation such
as tech, healthcare, and professional services.
· Rise of flexible leadership models: Fractional/interim C-suite models are growing as firms address
capability gaps cost-effectively.
Forecast for 2026
· Higher demand for hybrid leaders combining people skills and digital literacy.
· Competition for experienced transformation leaders in key sectors.
· Short-term spike in fractional/interim leadership engagements.
· Regional variations in demand driven by labor supply and sector transformation.
Risks and Vulnerabilities
· Succession gaps if early-career development is neglected.
· Over-focusing on AI credentials at the expense of people skills.
· Cost vs capability trade-offs from over-reliance on fractional leaders.
Recommendations for Organisations
· Protect and rebuild leadership pipelines through rotational programs and stretch assignments.
· Blend AI literacy with people development in leadership training.
· Use flexible leadership models intentionally with knowledge transfer mandates.
· Prioritise retention for transformation talent via career paths and coaching.
· Measure leadership bench strength with people analytics.
