In January 2025, 222 CEOs from some of the world’s largest companies stepped down. That was the highest total for any January on record. The top reasons cited for leaving include digital disruption, AI advancements, and shifting investor expectations according to Challenger, Gray & Christmas. As senior leaders retire or move on, many companies are scrambling to fill their gaps… realizing they lack a strong pipeline of people ready to step up. So, what is driving this leadership gap? Our research points to three key culprits:
1. Leadership Pipeline Challenges
2. Escalating Business Complexities
3. Shifting Employee Expectations
Leading companies are not standing still. They’re proactively shaping their next generation of leaders by recognizing the facts, applying smart strategies, and learning from real examples. Let’s explore each major challenge and see how organizations are tackling them.
Leadership Pipeline Challenges
Fact: The retirement of senior executives is one of the biggest contributors to the leadership gap.
In 2025, the U.S. has reached ‘Peak 65,’ the highest-ever number of individuals turning sixty-five in one year. Roughly 10,000 baby boomers retire each day, taking with them invaluable knowledge and leadership experience. As a result, many organizations report a weak pipeline of leaders and question whether they have enough ready-now leaders to step into key roles.
This wave of retirements among senior executives highlights the urgent need for effective succession planning and leadership development programs. Without a robust pipeline of prepared leaders, businesses struggle to maintain continuity and drive their strategic objectives forward.
What Smart Companies Are Doing:
Industry leading organizations are proactively addressing these challenges by developing a leadership pipeline. Here is how they’re doing it:
- Succession Planning: Companies are prioritizing succession planning to help ensure a seamless transition when senior leaders retire or move on. This involves identifying key roles and potential successors early and creating tailored development plans to prepare these individuals for future leadership positions.
- Leadership Development Programs: Leadership development programs are being developed and implemented to build a strong pipeline of future leaders. These programs often include workshops, seminars, and hands-on projects to help emerging leaders develop critical thinking, decision-making, and strategic planning skills.
- Mentorship Programs: Implementing mentorship programs enables the transfer of knowledge from retiring executives to emerging leaders. These programs pair experienced leaders with high-potential employees to build experience and foster a culture of continuous learning and development.
By taking these steps, smart companies are not only addressing the current leadership gap but also solidifying long-term organizational success and stability.
Case in Point:
A healthcare organization recognized its urgent need for next-generation leaders. Securing grant funding, they partnered with The CARA Group to identify essential leadership competencies and create a 12-week virtual development program. The curriculum included supervisor check-ins, mentorship, interview practice, and a group capstone project. More than twenty participants have already stepped into new roles within the hospital system.
Escalating Business Complexity
Fact: AI, automation, and digital transformation are reshaping industries, adding to business complexity, and requiring new leadership capabilities.
Experts predict 2025 could be the most disruptive year in decades, as rapid tech innovation, the need to upskill for AI, supply-chain instability, and evolving consumer expectations test executive agility. A recent Forbes Coaches Council report highlights twenty key challenges CEOs are likely to face, ranging from heightened cybersecurity risks to urgent workforce planning.
As technology advances quickly, leaders must learn new skills while also managing everyday demands. With so much innovative technology emerging so rapidly, leaders find their skills lagging. This growing gap between leaders’ current capabilities and what their businesses will soon require could limit their future effectiveness and the organization’s overall success. Ongoing global economic and social shifts further increase pressure on leaders, making adaptability and ethical practices crucial for driving organizational success.
Leaders today are being asked to do more than ever before. To be successful, they must shift from traditional leadership models toward more resilient and adaptive approaches. Leaders must skillfully manage technological innovation, uphold ethical standards, and create a supportive environment for their teams.
What Smart Companies Are Doing:
Leading organizations are taking proactive steps to address these complexities:
- Identifying Leadership Gaps: Organizations first assess their current leaders, pinpointing critical skill gaps and areas for development. Common areas of focus include Emotional Intelligence (EQ), adaptability, and strategic thinking.
- Developing Agile Leadership Programs: Based on identified gaps, companies design flexible and responsive training programs aimed at upskilling both current and emerging leaders. These initiatives ensure leaders can quickly adapt to changing business requirements.
- Integrating Digital and Data Literacy into Leadership Programs: Companies are incorporating digital proficiency and data-driven decision-making into their leadership training. They leverage immersive training, hands-on experiences, and interactive virtual learning to equip leaders with the practical skills needed to manage rapid technological changes and increasingly complex business environments.
- Preparing Leaders for Economic and Social Uncertainty: Finally, organizations help leaders build resilience through scenario planning, adaptability training, and stress-management techniques. Leaders practice crisis response, learn methods to maintain composure under pressure, and foster continuous learning to confidently navigate uncertainty.
By prioritizing these leadership competencies, organizations are better equipped to manage business complexities and drive sustainable success in an increasingly digital world.
Case in Point:
A client needed managers to proactively engage their teams and boost both customer and employee retention. The CARA Group developed a three-year leadership plan anchored by three core capabilities: Create Community, Inspire Action, and Drive Growth. The first phase was a 12-week virtual program for more than seven hundred managers, resulting in a 94% satisfaction rate among participants.
Shifting Employee Expectations
Fact: Employees want leaders who prioritize inclusion, well-being, and corporate purpose, not just productivity.
Over half of today’s workforce say they are more likely to stay with a company that supports their mental and emotional health. Hybrid work and people-focused leadership have replaced rigid management methods. Employees want leaders who prioritize inclusion, well-being, and a compelling corporate purpose, over productivity or profit alone. This shift in expectations is driven by the recognition that a supportive and inclusive work environment and mission enhances overall job satisfaction and performance.
Today’s workforce includes diverse, multi-generational teams often dispersed across multiple locations, which presents new challenges in communication, collaboration, and management. With remote and hybrid models set to remain a core part of work culture, effective leadership is less about top-down directives and more about empowering everyone.
What Smart Companies Are Doing:
Future-focused companies are responding to these evolving expectations by:
- Developing Emotional Intelligence (EQ) in Leaders: Companies assess and develop emotional intelligence in their leaders through focused training and coaching. Leaders with high EQ understand people, stay calm under pressure, and handle relationships effectively, helping them lead diverse and remote teams with empathy and confidence.
- Aligning Leadership Development with Core Values: Companies embed core organizational values such as purpose, ethics, and inclusion into their leadership programs. This approach ensures leaders embody these values, creating workplaces that are not only productive but also ethical and inclusive.
- Adapting Ways of Working to Support Diverse and Remote Teams: Companies adapt their working methods to support diverse teams, including remote or hybrid models. This includes leveraging technologies to enhance communication (video conferencing, messaging apps) and collaboration tools (centralized document storage, collaborative editing tools, virtual white boards, and project management applications).
By adapting to the new realities of today’s workforce, winning organizations create supportive workplaces. This strengthens engagement and contributes to long-term success.
Case in Point:
A global manufacturing client wanted leadership training that promoted allyship and advocacy. No off-the-shelf program met their needs, so CARA developed a 10-week, multi-format curriculum specifically for HR leaders. Elements included self-assessments, a playbook, micro-learning, eLearning modules, and group discussions. Every learning goal was met, and the curriculum will soon expand to Europe, Latin America, and North America.
Time to Proactively Narrow the Leadership Gap
Closing the leadership gap is essential for organizations to secure future success. Companies that fail to address this gap risk significant talent loss, weaker innovation, and lower overall performance. The absence of strong leadership can also lead to disengaged employees, reduced competitive advantage, and an inability to navigate complex business challenges.
Leading organizations are taking a proactive approach to closing leadership gaps by identifying high-potential talent, providing them with the necessary training and mentorship, and creating opportunities for real-world leadership experiences. Investing in leadership development delivers results: improved readiness for future demands, consistent operational performance, and stronger employee engagement.
Ready to explore strategies for your own leadership pipeline? CARA helps organizations build strong pipelines of adaptable, innovative, and ready-now leaders. Contact us to discuss how we can support your leadership development strategy.
