Your organization is moving faster than ever. AI initiatives are launching, market conditions are shifting, and strategic priorities are evolving. Yet according to McLean & Company's 2026 HR Trends Report, 70% of organizations struggle with managing change (McLean & Company, 2025): Too many priorities pile up, leaders don’t consistently follow through, and the organization just isn’t very good at change yet.
That's the leadership readiness gap, and it's widening. The same research reveals an even sharper insight. Organizations with highly effective people leaders are 2.3 times more likely to excel at innovation and agility (McLean & Company, 2025). Capable leaders make transformation possible.
So why aren't more organizations closing this gap?
The Pace of Change Has Accelerated Beyond Traditional Development Models
The transformation we're experiencing today is driven by AI, economic uncertainty, and rapidly shifting employee expectations, and it is fundamentally different from past periods of change. It's faster, more complex, and requires leaders to keep moving forward even when things stay unclear for longer than anyone would like.
Traditional leadership development wasn't built for this reality. Annual training programs, classroom-style learning, and competency frameworks that take months to roll out are all approaches that assume leaders have time to learn, reflect, and then apply new skills when the moment arrives. But the moment has already arrived, and it keeps arriving.
Recent research from UKG found that two-thirds of organizations are culturally unprepared for AI transformation (UKG, 2025). Only 53% of frontline employees believe their employer is preparing them for an AI-driven workplace (UKG, 2025). The technology is moving faster than the people side of the equation.
Leaders are being asked to navigate ambiguity without clear playbooks, communicate strategic direction amid constant pivots, build trust and psychological safety during disruption, and develop others to lead change themselves.
A single workshop is not enough to build these skills. They're capabilities that require repeated practice under realistic pressure.
The Cost of the Gap Is Showing Up in Your Organization Right Now
When leadership capacity lags behind the pace of change, the consequences are measurable:
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Change fatigue is rising. Employees push back when change is mismanaged. When priorities are unclear, leaders aren't aligned, and change skills are lacking, people get exhausted instead of seeing progress. According to Glassdoor's 2026 Worklife Trends Report, mentions of "misalignment" in employee reviews, particularly regarding senior leadership, surged 149% year over year.
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Innovation stalls. Despite innovation surging to become HR's second-highest priority in 2026, which is up from 10th place in 2025 (McLean & Company, 2025), organizations can't execute on innovative ideas when leaders lack the skills to guide teams through ambiguity and experimentation.
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Trust erodes. UKG's research shows that high-trust cultures generate 42% more discretionary effort (UKG, 2025), yet two in five employees lack decision-making authority for even basic tasks (UKG, 2025). When leaders don't empower their teams or communicate transparently during change, trust and performance suffer.
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Top talent leaves. Work schedules and limited career growth are the top reasons frontline employees quit, according to UKG (2025). Leaders who can't provide clarity about the future or create development opportunities in the midst of change lose their best people when they can least afford it.
The leadership readiness gap is a performance problem hiding in plain sight.
The Skills That Scale: What Leaders Actually Need
The good news is that the leadership behaviors that help teams thrive through transformation are identifiable and developable. They include:
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Navigating ambiguity. Leaders need to make sound decisions with incomplete information, adjust course when circumstances change, and help teams stay focused when the path forward isn't clear.
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Communicating strategic direction clearly. During transformation, leaders must translate high-level strategy into actionable direction, explain the "why" behind decisions, and maintain consistent messaging even as details evolve.
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Building trust and psychological safety. Teams perform best when they feel safe to ask questions, surface concerns, and take intelligent risks. Leaders create this environment through transparency, follow-through, and genuine empathy.
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Developing others to lead change themselves. Sustainable transformation requires leaders who scale their impact by building capability in others: coaching, delegating meaningful work, and creating space for team members to lead initiatives.
These are practical behaviors that show up in how leaders run meetings, make decisions, give feedback, and respond to setbacks.
How do you develop these capabilities at the speed and scale your organization needs?
From Knowing to Doing: Why Practice Matters
Here's what we know about building leadership capability that actually sticks:
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Awareness isn't enough. Most leaders can articulate what good leadership looks like. They've attended workshops, and they've read the books. But knowing what to do and being able to do it under pressure are entirely different things.
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Traditional lecture-based training creates a false sense of readiness. When leaders learn in low-stakes, passive classroom environments, they often overestimate their ability to apply those skills when real consequences are on the line (tight deadlines, skeptical stakeholders, and ambiguous information).
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Real capability comes from realistic practice. Just as pilots use flight simulators before flying passengers, leaders need opportunities to practice high-stakes decisions in environments where the pressure is real but the consequences are contained.
This is where business simulations create a different kind of learning experience.
In simulations, leaders run into the same challenges they’ll face in real transformation work: strategy changes midstream, stakeholders pulling in different directions, tight budgets that make trade-offs unavoidable, and team dynamics that demand trust and clear communication on the fly. Leaders navigate change in real time. They build psychological safety and see what it unlocks. They balance short-term performance with long-term capability building, watching their decisions ripple across multiple business cycles.
The learning happens through doing, with structured reflection that helps leaders connect their experience to the real challenges waiting back at work.
Building Leadership Capability Before It's Critical
Organizations that invest in developing leadership capability before the next major transformation have a significant advantage. They build what McLean & Company calls "change resilience" (McLean & Company, 2025), the organizational muscle memory that allows teams to adapt quickly rather than resist or burn out.
This requires a shift from event-based development to continuous learning. Leaders need opportunities to practice new skills in context, not in isolation; receive immediate feedback on their decisions; learn from peers who are navigating similar challenges; and connect their learning directly to their current business reality.
When leadership development is designed this way, it integrates with real work and amplifies it. Leaders return from learning experiences with insights they apply immediately, with increased confidence in their ability to guide teams through whatever comes next.
What This Means for Your Organization
If you're an L&D or HR leader reading this, you likely recognize the leadership readiness gap in your own organization. You see leaders struggling to keep pace, you hear about change fatigue in employee surveys, and you watch innovation initiatives stall because leaders lack the skills to execute them effectively. You might wonder how to develop leadership capability at the speed and scale transformation demands.
Consider:
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Where is the gap most acute? Are your mid-level leaders the bottleneck? Are senior leaders struggling to lead AI transformation? Are frontline managers burning out?
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What skills are most critical right now? Is it change communication? Strategic decision-making under uncertainty? Building trust with distributed teams?
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How quickly do you need capability to improve? Do you have six months before your next major initiative? Or six weeks?
The organizations that will thrive in 2026 and beyond close the leadership readiness gap now. They build readiness early, so leaders can act decisively when change arrives.
Want to explore how business simulations can accelerate leadership capability in your organization? Let's talk about building the skills that scale before your next transformation begins.
References
Glassdoor Economic Research. (2025, November 12). Glassdoor's worklife trends 2026. Glassdoor. https://www.glassdoor.com/blog/worklife-trends-2026/
McLean & Company. (2025, December 9). McLean & Company releases HR trends report for 2026: Highlights growing gap between organizational change and leadership capacity [Press release]. PR Newswire. https://www.prnewswire.com/news-releases/mclean--company-releases-hr-trends-report-for-2026-highlights-growing-gap-between-organizational-change-and-leadership-capacity-302636789.html
UKG. (2025, December 9). UKG reveals 2026 trends reshaping the workforce: AI without trust fails, talent models must flex, and the employee enablement era begins [Press release]. Business Wire. https://www.businesswire.com/news/home/20251209045522/en/UKG-Reveals-2026-Trends-Reshaping-the-Workforce-AI-Without-Trust-Fails-Talent-Models-Must-Flex-and-the-Employee-Enablement-Era-Begins
