A recent MIT Sloan Management Review study found that most leadership programs do not meet business needs. Similarly, Deloitte’s 2023 Global Human Capital Trends Report found that only 23% of business and HR executives believe their leaders have the capabilities to navigate today’s challenges. Specifically, fewer than 15% consider their leaders “very ready” to inclusively lean on and expand their workforce or to factor broader societal and environmental risks into workforce decisions, and just 16% believe their leaders are adequately prepared to leverage technology to improve work outcomes.
Despite significant and growing investment in leadership development – the global corporate leadership training market is estimated to grow by $31.4 billion from 2025 to 2029 – organizations still struggle to build effective leadership pipelines.
A study of business school leadership centers coauthored by Hannes Leroy of Rotterdam School of Management exposed a credibility gap: business schools that advocate for evidence-based approaches rarely apply such rigor to their own leadership development programs and rely primarily on positive participant feedback instead of measurable improvements in leadership capabilities.
The leadership capability gap shows itself significantly in terms of gender equity. According to McKinsey, for every 100 men promoted, only 87 women advance. At the director level, women are more likely than men to leave their roles, further widening the disparity. In their Women in the Workplace report, McKinsey highlights that women represent 29% of C-suite roles and 30% of corporate board seats in the Russell 3000.
It’s important to note that these leadership shortages are not simply about filling empty positions. Organizations need highly capable leaders with adaptability, vision, and strategic thinking. Yet, macroeconomic pressures complicate leadership development. PwC’s 2024 survey of global CEOs underscores the urgency, with 45% admitting their companies won’t be sustainable in 20 years without decisive action. Organizations that fail to act risk falling behind in an increasingly competitive landscape.
Despite acknowledging its importance, most organizations still treat leadership training as an afterthought. Randstad Enterprise’s 2025 Talent Trends research shows that only 36% of companies provide leadership training aligned with evolving business needs—a slight improvement from 35% last year, but still maintaining a major gap.
Leadership development demands serious investment. Putting AI and coaching together can offer solutions, including more precise talent identification, personalized development paths, and scalable training programs. But leadership development has always been historically exclusive because of how it can drain resources (time and money) and this means many workers are simply not presented with the opportunity to advance to leadership positions. Employers often default to hiring from the outside rather than cultivating talent from within. AI is changing this dynamic by democratizing learning and development – advanced analytics help organizations map employee skills, create personalized development paths, and provide targeted coaching at scale.
The most effective coaching relationships are built on trust, clear goals, mutual commitment, and actionable feedback.
Early applications of AI in leadership development already show promise. AI is helping companies identify high-potential talent by analyzing performance data, behavioral patterns, and leadership traits—a process known as skills inference. This data-driven approach empowers organizations to make informed, equitable talent decisions. This integration is accelerating. Nearly half (48%) of talent acquisition leaders anticipate deeper collaboration with learning and development (L&D) teams, signaling a future where hiring and upskilling efforts are seamlessly connected.
Organizations are prioritizing this transformation. According to Randstad, more organizations are investing in L&D each year: 57% increased their budgets in 2023, and 65% in 2024, with 70% planning increases for the coming year. Companies are also putting money behind equity initiatives – about 40% of talent leaders are now using AI tools to identify and reduce bias in internal mobility decisions, especially in technology firms. Rather than relying on traditional promotion paths, these organizations are using data to spot and remove specific obstacles to advancement.
It’s clear what’s at stake. Companies falling behind in leadership development face specific risks: losing top talent, missing market opportunities, and struggling to adapt to technological change. Strong leadership development, enhanced by AI and coaching together, is now essential for competitive survival. Organizations that embrace these innovations will build resilient leadership pipelines, ensuring long-term success in an unpredictable business environment.
To implement these changes effectively, organizations need a comprehensive approach that addresses several key areas:
Democratize Leadership Development: Access to leadership development must extend beyond traditional hierarchies. Companies that invest in coaching and mentorship at all levels, especially for emerging leaders, build stronger organizational capabilities. Data analytics, for example, can be used to identify high-potential talent early on and ensure personalized development when it can have the most impact.
Enhance Coaching Quality: The quality of coaching matters as much as its availability. Organizations must take the time to match employees with the right coach for each team or individual. By focusing specifically on unique development needs, coaches can help current and future leaders focus on building strategic thinking, adaptability, and empathy. AI assists with aligning these coaching relationships with business priorities – improving the outcome for individuals and organizations alike.
Aside from AI aligning coaching relationships with business priorities, the most effective coaching relationships are built on trust, clear goals, mutual commitment, and actionable feedback. Yet often Learning and Development leaders struggle to measure what makes coaching truly successful.
Data such as engagement metrics (session attendance, participation), sentiment analysis (feedback surveys, NPS scores), and goal attainment tracking (performance KPIs) can reveal patterns that distinguish high-impact coaching from ineffective interventions. By applying a data-driven approach, companies can move beyond intuition and create coaching programs that truly drive transformation. The key is focusing on what matters to the organization, refining approaches to coaching based on insights, and ensuring coaching relationships are as strategic as they are personal.
Address Equity Gaps: As mentioned, women and underrepresented groups often face systemic barriers to advancement. Structured mentorship and sponsorship programs, informed by careful analysis and analytics, can help identify where and how these development initiatives can make the greatest impact and foster a more inclusive leadership pipeline.
Align with Business Evolution: Leadership programs must, of course, evolve with business demands. By analyzing workforce trends and anticipating future skills requirements, organizations can align development efforts with strategic goals. This forward-looking approach helps prepare leaders for increasingly complex and unforeseen challenges, from managing hybrid teams to navigating rapid technological change.
Embed Continuous Learning: Successful leadership development requires embedding learning into organizational culture. Regular peer coaching, workshops, and training programs help employees develop their skills continuously (rather than sporadically). Digital platforms can personalize these learning pathways, adapting to individual strengths and career aspirations, as well as aligning with company objectives.
Strengthen Internal Mobility: Perhaps most importantly, effective leadership development strengthens retention and internal mobility. Organizations that create clear pathways for growth are able to keep their talented employees engaged and thus reduce turnover. AI-powered analytics can help companies match workers with other, perhaps more appropriate opportunities within the institution – ensuring that development efforts translate into career growth for workers and stability for the organization.
It is critical for organizations to take a new approach to leadership development, one that combines rigorous evaluation with the technology that is now readily available thanks to AI. Those companies that invest in evidence-based programs that are supported by analytics and personalized coaching will experience better retention, wider and more diverse leadership pipelines, and leaders who are equipped to handle complex challenges. The tools and insights are available. Will organizations begin to use them effectively?
© IE Insights.
