Why Most Companies Still Fail at Employee Experience: The Leadership Pipeline Crisis
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Most companies say leadership is their biggest workforce challenge. Yet very few can honestly say they have a strong bench of future-ready leaders.
It’s not for lack of effort. Billions are spent each year on training, coaching, and leadership programs. But if you ask boards whether they trust the next layer of leaders to handle disruption, the answer is usually no.
Why? Because organizations are still promoting based on performance, not potential. And that single mistake ripples downstream into engagement, retention, culture, and valuation.
The Fragile Underpinnings of Leadership Pipelines
1. Performance vs. Potential Gap
For decades, organizations have promoted people based on individual performance. But research is clear: being great at your job doesn’t reliably make you a great leader.
- A study analyzing 55 years of professional soccer data found that past performance had low validity in predicting leadership outcomes. (Springer, 2023)
- A large PepsiCo study (9,784 participants) showed that assessed potential added predictive value above performance alone in identifying promotable leaders. (ResearchGate, 2021)
- Corporate Executive Board (now Gartner) found that only 10–15% of high performers are also high potentials. (Forbes, 2025)
When CHROs don’t separate performance from potential, they set their pipelines up for failure.
2. The Risk-Avoidance Culture
Shawn Riegsecker, CEO of Basis Technologies, told me: “The greatest point of growth occurs when you get uncomfortable and step into uncertainty.”
Yet many organizations reward managers who stay inside their comfort zones. Leaders who play it safe get promoted, while those who experiment or take calculated risks get sidelined. The result? A pipeline of cautious executors who collapse when disruption hits.
3. Emotional Intelligence Deficit
As AI takes over technical and repetitive tasks, the currency of leadership shifts to human skills.
Hans Vestberg, CEO of Verizon, put it clearly: “The first skills a leader must master are internal: self-awareness, empathy, emotional balance. Ignore this layer at your peril.”
And Joe Hart, CEO of Dale Carnegie, reminded me: trust, empathy, and connection are becoming more valuable as AI rises. Leaders without EQ won’t just lose influence — they’ll lose the ability to lead at all.
What the Best Leaders Are Practicing Now
- Arm’s AI Adoption — Charlotte Eaton, CPO, shared how their GPT Enterprise rollout worked because adoption wasn’t left to chance. It was tracked, championed, and designed with guardrails to keep human judgment in the loop. Adaptability was measured, not assumed.
- Marriott’s Pandemic Pivot — When travel collapsed overnight, Marriott expanded well-being into mental and financial health. That move reflected leaders who were resilient, not rigid.
- Dale Carnegie’s Human Skills Legacy — For over a century, the same truth has held: as technology advances, it’s human connection that makes leaders indispensable.
5 Moves Future-Ready CHROs Must Make
1. Redefine Promotion Criteria
Being great at a role doesn’t automatically mean someone can lead others. High performance shows you can deliver results. High potential shows you can deliver through others. Without systems that separate the two, companies end up rewarding output over influence — and pipelines collapse.
The fix isn’t complicated: scorecards that measure adaptability, influence, and learning agility. That’s what boards want to see: a process, not a guess.
2. Testing Leadership in Disruption
A calm environment tells you very little about someone’s ability to lead. The real test comes when plans fall apart. Yet most leadership programs still reward smooth execution instead of resilience.
Scenario-based simulations — leading through crisis, uncertainty, and constraint — are the closest proxy for the real world. They reveal who has the judgment and courage to act under pressure. That’s the kind of evidence boards are asking HR to bring forward.
3. Building Risk Into Development
A culture that punishes mistakes quietly punishes growth. Too many managers learn to avoid risks, and the result is stagnation disguised as stability.
Rotations into stretch roles, “safe” experiments, and recognition for smart failures create the muscle leaders need. Without that, they may look steady on paper but crack when disruption hits.
4. Making EQ a Business Metric
Soft skills aren’t soft anymore. Emotional intelligence drives trust, retention, and engagement — and should be tracked the same way turnover or productivity is.
When managers are measured on their ability to coach, connect, and build trust, it stops being optional and starts being operational. That’s how you shift EQ from a “nice to have” into a board-level performance metric.
5. Leadership as a Valuation Issue
Here’s the bigger truth: leadership pipelines aren’t just an HR problem, they’re a valuation problem. Investors already price leadership credibility into how they assess risk.
A weak pipeline lowers credibility. A strong one protects strategy, culture, and shareholder value. Which side of that equation your company lands on comes down to whether leadership development is treated as a checkbox — or as a core growth driver.
Why This Maters at the Top
When pipelines fail, the damage isn’t just cultural — it’s financial. Succession stalls, transformation slows, turnover spikes, and investor trust erodes.
Every outdated leader promoted is a drag on culture and valuation. Every adaptable, emotionally intelligent leader nurtured is an asset the competition can’t easily replicate.
Future-ready CHROs don’t just fill pipelines. They protect them.
