A newly released HR Trends Report warns that many organizations are facing a growing disconnect between the pace of change and their leadership capacity to manage it effectively. As companies accelerate digital transformation, integrate artificial intelligence and respond to shifting employee expectations, human resources professionals are increasingly spotlighting a critical workplace risk: leaders aren’t ready for the intensity and complexity of today’s organizational challenges.
The HR Trends Report 2026, published by McLean & Company, surveyed 1,626 HR and leadership professionals and found that leadership development remains the top priority for 2026, and for good reason – leadership capability continues to lag behind organizational demands. The implications are significant, touching every aspect of workplace effectiveness, from innovation and agility to culture and employee experience.
A Leadership Gap at the Heart of Transformation
Organizations across industries are introducing change faster than their internal systems and people can absorb. At the heart of this dissonance lies a basic reality – while technologies like AI and automation continue to be embedded into daily work life, leaders are being asked to manage far more than just operational performance. They must also lead through cultural shifts, technology adoption, and evolving workforce expectations, all while maintaining strategic focus.
The McLean & Company report reveals that although innovation has risen in organizational priorities, from tenth place in 2025 to second place in 2026, many leaders are not equipped to guide teams through the disruption that innovation itself creates. Leadership development is an area in which only a minority of HR teams feel highly effective. In fact, only about 35% of HR teams describe their leadership development efforts as highly performing. Leaders who excel at people leadership are 2.3 times more likely to be part of organizations that perform strongly in innovation and agility, underscoring the gap between investment and impact.
Why Leadership Capacity Matters
At its core, leadership capacity encompasses not only the technical skills needed to manage teams but also the emotional intelligence and change management capabilities required to sustain engagement, trust, and direction during complex organizational shifts.
Cultivating adaptability is essential as companies adopt new technologies and business models. Consider the example of AI transformation: McLean & Company’s analysis indicates that while many organizations are moving beyond pilot stages into full AI integration, the people side of that transition is lagging. Many HR teams are not yet equipped to enable technology adoption in ways that support employee readiness, reduce fatigue, and foster strategic use of AI, making leadership effectiveness a central bottleneck to meaningful outcomes.
This dynamic is echoed in leadership research from other analysts, who find that most executives struggle with change leadership. For example, a separate analysis of global leadership data revealed that only a small percentage of leaders demonstrate strong change leadership capability, and middle and frontline leaders also lag significantly in this area. This suggests a systemic challenge that goes beyond any one company or industry.
Culture, Values, and Strategic Alignment
Another dimension of the leadership capacity gap lies in cultural alignment. While organizational values are often established as part of strategic visioning, fewer than half of organizations hold leaders accountable for acting consistent with those values, creating a disconnect that employees easily recognize. Where culture, values, and strategy are aligned, firms are significantly more likely to innovate successfully and adapt rapidly to evolving conditions. When alignment breaks down, trust weakens, decision‑making slows, and organizations become less cohesive in execution.
This gap has tangible consequences. In workplaces where leaders fail to model core values or communicate a clear direction, employees may experience change fatigue, disengagement, and mistrust – conditions that directly erode performance, retention, and well‑being.
Scenario Planning and Structured Foresight
Part of the leadership gap also stems from how organizations approach uncertainty. A relatively small minority of organizations report using structured, documented scenario planning to prepare for multiple future outcomes. Those that do are significantly more likely to outperform peers in both innovation and strategic execution. Structured foresight helps leaders anticipate potential disruptions and set priorities that are adaptable, reducing the risk of reactive management that can destabilize teams.
Where change is continuous and unpredictable, leaders who can think ahead, model possibilities, and guide others through ambiguity are at a premium. Yet few organizations have embedded this capability within leadership development frameworks or performance expectations.
AI Adoption Outpacing Human Readiness
Another striking theme in the report is the gap between technological adoption and human readiness. Many organizations are embedding AI into daily operations, shifting from experimentation to reliance on automation, predictive analytics, and machine learning for workflow efficiency. Yet the human aspects of that transition, training employees, restructuring processes, and managing psychological impacts, remain underdeveloped.
The report finds that change fatigue is rising, with both leaders and employees struggling to keep pace with evolving tools, workflows, and expectations. This reinforces a broader truth: technological readiness does not automatically translate into organizational readiness. AI projects may fail not because of the technology itself, but because leaders lack the capacity to shepherd teams through the cultural and behavioral changes associated with implementation.
The Cost of Underdeveloped Leaders
The repercussions of a leadership capacity gap are wide ranging. Organizations where leaders lack change management skills, cultural alignment expertise, and the interpersonal tools to navigate complex dynamics are less likely to achieve strategic goals. This manifests in slow decision cycles, missed innovation opportunities, declining engagement scores, and higher turnover, issues that translate directly to financial performance and competitive positioning.
Research supports this linkage: organizations with strong people leadership are more likely to excel in growth and adaptability metrics, indicating that leadership effectiveness can be a multiplier for overall performance. When leaders engage and empower teams, employees are more receptive to change, more productive, and more innovative. Conversely, leadership shortfalls can trigger disengagement, reduced morale, and resistance to change – outcomes that strain organizational health.
Why HR Plays a Strategic Role
The 2026 HR Trends Report reframes HR’s role from reactive support to strategic leadership partner. With leadership development as the top priority, HR is increasingly positioned as the function that can close the gap between organizational ambitions and leadership capacity.
To succeed, HR must go beyond traditional training programs and embed continuous learning into everyday work. This includes coaching, structured development pathways, and integrating leadership expectations into performance metrics. HR also plays a key role in anchoring strategy to organizational values, ensuring cultural alignment remains front and center as companies evolve.
Effective HR functions also help organizations anticipate disruption through structured scenario planning and change management initiatives, rather than relying on ad hoc responses. When HR collaborates closely with IT, finance, and operational leaders, organizations are better positioned to adopt technology in ways that are strategic, human‑centric, and sustainable.
Opportunities and Imperatives
The widening gap between organizational change and leadership capacity presents both a risk and an opportunity. Organizations that fail to strengthen leadership capability risk stagnation, disengagement, and erosion of competitive advantage. Those that invest intentionally in people leadership development, coupled with culture alignment and structured foresight, are better equipped to navigate disruption and innovate with confidence.
As 2026 unfolds, leadership capacity will continue to be a defining factor in organizational performance. While technology such as AI will remain a catalyst for change, long‑term success depends less on tools and more on people who can guide teams through uncertainty, maintain trust, and translate vision into action.
In an environment defined by rapid transformation and heightened complexity, the leaders of tomorrow are those who can blend strategic clarity, emotional intelligence, and adaptability into their approach. Strengthening leadership capacity isn’t a nice‑to‑have; it’s a strategic imperative for organizations that want to thrive in a world where change is constant and resilience is a competitive edge.
