Leadership Challenges Intensify as Organizations Confront AI, Talent, and Economic Uncertainty

June 26, 2026 – Organizations are operating in an increasingly complex environment where economic uncertainty, workforce challenges, AI adoption, and digital transformation are converging to reshape leadership priorities. Kestria’s second annual global leadership survey builds on the themes that emerged in last year’s research; highlighting how rapidly the leadership landscape continues to evolve. Based on responses from more than 700 leaders across a broad range of industries, organization sizes and geographies around the world, the findings reveal a leadership environment increasingly shaped by disruption, uncertainty and accelerating change. While economic pressures remain significant, the survey also highlights growing challenges around talent, digital transformation, AI capability and organizational resilience.

What is striking throughout the survey is that organizations are not dealing with isolated issues. Instead, leaders are managing multiple interconnected pressures at once. “Economic uncertainty, competitive intensity, workforce capability, technology adoption and changing stakeholder expectations are all converging simultaneously,” the Kestria report said. “This is creating an environment where leadership is becoming less about managing stability and more about operating effectively amid continuous disruption.”

The survey shows that organizations see economic uncertainty, talent acquisition and retention, digital transformation, operational resilience and competitive pressure as some of the most significant leadership challenges currently facing them.

Importantly, many respondents also indicated that these same challenges have become more problematic over the past year. “This suggests that organizations are not simply experiencing ongoing disruption — they are feeling an escalation in both the pace and complexity of change,” the Kestria report explained. “For leaders, this creates a very different operating context. Traditional leadership approaches built around predictability, long planning cycles and incremental improvement are becoming harder to sustain. Organizations increasingly require leaders who can make decisions quickly, adapt strategy in real time and lead effectively through ambiguity.”

The survey also points to a broader shift in leadership expectations. Leaders are now expected to manage operational performance while simultaneously driving transformation, maintaining culture, responding to workforce pressures and preparing organizations for future disruption. That balancing act is becoming increasingly difficult.

Readiness Has Not Improved at the Same Pace as Awareness

One of the more revealing findings is that while organizations are highly aware of the challenges they face, many do not necessarily feel significantly better prepared to address them compared with a year ago. Indeed over 60 percent of respondents indicated they were either less well or only similarly placed compared to 2025.

This points to a growing gap between awareness and execution, according to the Kestria report. “In many organizations, leaders understand the nature of the disruption,” it said. “They understand the importance of digital capability, workforce transformation and organizational agility. However, translating that understanding into meaningful organizational capability appears to be more difficult. This is a common issue in periods of rapid disruption. Strategy development often moves faster than organizational capability building. Many organizations know what they need to do but struggle to operationalize change at the pace required. As a result, leadership effectiveness is becoming increasingly tied not simply to strategic thinking, but to execution capability — the ability to align people, systems, culture and resources around sustained transformation.”

Leadership Talent Remains a Major Constraint

The survey responses indicate demand for leadership capability has increased, yet almost a quarter of organizations report reduced success in attracting leadership talent. “This reflects broader global workforce trends,” the Kestria report pointed out. “The leadership market has become more competitive, and expectations of leaders have expanded considerably. Organizations are no longer simply looking for technical or operational expertise. Increasingly, they are seeking leaders who can manage transformation, lead diverse teams, navigate uncertainty and integrate technology and people strategies simultaneously.”

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At the same time, according to the survey, even global organizations appear cautious about aggressively pursuing offshore leadership talent, with a significant proportion either preferring local candidates or not proactively sourcing internationally. “This may reflect concerns around cultural fit, labor market conditions or organizational familiarity,” the report explained. “However, it may also unintentionally limit access to broader leadership capability at a time when talent shortages are intensifying.”

The findings suggest that organizations may need to rethink traditional leadership pipelines and adopt more flexible approaches to leadership sourcing and development. Internal capability building, succession planning and broader talent market engagement are likely to become increasingly important over the coming years.

AI has Moved From Technology Issue to Leadership Issue

One of the clearest trends in the survey is the growing strategic importance of AI. Around two thirds of organizations report either having a developing AI strategy or responding to AI in a reactive way. Only a small proportion, or less than 15%, describe themselves as having a fully integrated AI strategy. This highlights the fact that while awareness of AI is widespread, organizational maturity remains uneven.

“The barriers organizations identify are particularly telling,” the Kestria report noted. “Challenges include insufficient internal capability, difficulty translating strategy into execution, cultural resistance and competing organizational priorities. These are not primarily technology problems — they are leadership and organizational change problems.”

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The survey suggests that many organizations understand the strategic importance of AI but are still working out how to embed it operationally. This includes questions around governance, workforce capability, decision-making, risk management and organizational adoption.

Interestingly, around a third of surveyed organizations are relying on external consultants or advisors to support AI capability development, while about half are attempting to upskill existing employees. “Reliance on external support may raise questions about long-term internal capability and organizational learning,” the report said. “The organizations that are likely to succeed in AI implementation will not necessarily be those with the most advanced technology. Rather, they will be those able to integrate technology, culture, leadership and workforce capability into a coherent transformation strategy.”

DEI Remains Important — But Execution is Uneven

The survey indicates that diversity, equity and inclusion continues to remain an important organizational priority. More than eight in 10 respondents reported maintaining or increasing their emphasis on DEI over the past 12 months.  Areas such as gender, race and ethnicity, and generational diversity appear to remain major focus areas for organizations.

However, the findings also suggest that many organizations are still struggling to consistently embed inclusion into leadership systems and accountability structures. While some organizations report holding leaders accountable for inclusive behaviors and outcomes, over a third describe inclusion as encouraged but not consistently measured, while others suggest it depends heavily on individual leaders.

“This highlights an important distinction between commitment and operational integration,” the Kestria report said. “Many organizations appear to have moved beyond seeing DEI as a standalone initiative. However, embedding inclusion consistently into organizational culture, leadership performance and decision-making remains a work in progress. As with AI and broader transformation efforts, the issue is less about awareness and more about sustained execution and accountability.”

The Emerging Leadership Capability Challenge

Taken together, the survey findings point to a broader leadership capability challenge emerging across organizations. “The issue is not that organizations are unaware of disruption or strategic priorities,” Kestria noted. “In fact, most appear highly conscious of the pressures they face. The more significant challenge is whether organizations have the leadership depth, organizational capability and execution discipline required to respond effectively.”

The report said that this is particularly evident in areas such as:

• AI implementation.
• Workforce transformation.
• Leadership attraction and retention.
• Organizational agility.
• Inclusion and culture.

“Across all of these areas, the same underlying theme emerges: execution capability is becoming the defining differentiator,” Kestria explained. “Organizations that can align leadership, culture, workforce capability and strategic execution are likely to be far better positioned than those relying primarily on reactive or fragmented responses.”

What the survey ultimately reveals is that leadership itself is changing. “In a disrupted market, leadership is no longer simply about setting direction or managing performance within relatively stable environments,” the Kestria report concluded. “Increasingly, it is about helping organizations navigate uncertainty, absorb complexity and adapt continuously. The most effective leaders are likely to be those who can balance short-term operational demands with long-term transformation, while also maintaining organizational trust, capability and resilience.”

The data also suggests that many organizations are still in transition. “Awareness of disruption is high. Recognition of the importance of AI, talent, agility and inclusion is widespread,” the report added. “Yet many organizations are still building the systems, culture and leadership capability required to fully respond. Ultimately, the competitive advantage in the years ahead may not come from strategy alone. It is more likely to come from an organization’s ability to execute consistently under pressure, adapt quickly to changing conditions and develop leadership capability that can operate effectively in complexity.”

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Contributed by Scott A. Scanlon, Editor-in-Chief and Dale M. Zupsansky, Executive Editor  – Hunt Scanlon Media