Three challenges changing leadership in 2025 – and how to prepare. 

In our 'U.S. Workplace Anti-trends of 2025' article, one of our headline predictions focused on leaders and their under preparedness for the year ahead.

Still, "digital acceleration, alternative work models, economic uncertainty – the future of work is a fusion of opportunities and challenges. But tomorrow's leaders aren't ready."

Most organizations are well aware of this problem. Research shows that nearly 1,500 HR professionals ranked leadership and managerial development as their priority for the new year.

But what exactly are the challenges facing leaders? What's pushing your talented people at the top to feel overwhelmed, stressed, and frustrated?  

We give our take on the key trends forcing leadership to evolve, with actionable advice for senior leaders to help you adapt in the year ahead.  

Challenge #1: Digital acceleration is setting the pace

After years of stagnating productivity levels, it's an exciting time for leaders.  

The latest AI Jobs Barometer from PwC illustrated how sectors with high exposure to AI are achieving five times the growth rate in labor productivity compared to markets with lower exposure rates.  

Those who seize the opportunity presented by evolving technologies will be rewarded. But this puts leaders in a difficult position: They need to make complex decisions on tech stacks and operating models, with a varied understanding of the immediate and long-term impacts and the return on investment.  

How to prepare for a tech-first future

Most leaders aren't digital natives. They are potent strategists who are good at managing people and know how to get the best out of their teams. But as technology becomes a key part of this dynamic, leaders must learn to integrate human and machine intelligence seamlessly.  

 As James Milligan, Global Head of Technology, Engineering, and Contracting at Hays, stated, "You will be left behind if you don't embrace new technologies like AI." 

Knowledge is power, so our top tip is to dedicate time to upskilling in technologies such as Generative AI. Satya Nadella, Microsoft's CEO, advocates being a 'learn-it-all' rather than a 'know-it-all'. Make sure you're AI literate, but also get comfortable with not always having the answer - it fosters innovation, trust, and shared learnings.

It can be challenging to make time for learning amid a busy schedule. For Jerrell Moore, the Chief Human Resources Officer at Cadence Bank, it's all about identifying the symmetry between personal and business growth.  

"What I see in many companies is two different paths – one for leadership and the other for business. If I'm a leader, learning can feel like additional work, but if it's aligned to my company goals and it feels like what I'm doing is cohesive, then I'm more likely to dedicate time to it."

Challenge #2: The world of work is more fragmented than ever

The return-to-office debates rumble on, with Amazon and JP Morgan enforcing a full five-day office return in the first quarter of 2025.  

But employees aren't willing to concede their hard-fought flexibility just yet. A recent survey found that 46% of US workers would rather find a new job than give up working from home.  

It's putting many leaders in an unenviable position as they try to marry company expectations with employee preferences.

Location will become an even more complex challenge in the year ahead. With ongoing talent shortages and cost pressures, organizations increasingly explore opportunities to outsource and offshore entire functions.

How to prepare for evolving team dynamics

Many organizations are feeling the pressure as industry leaders lay out their roadmap for returning to the office.

Uncertainty breeds anxiety, so it's important to approach your location strategy with both purpose and visibility. For John Dore, Programme Director, London Business School, leaders who take a "wait-and-see" approach may do their organizations a "disservice" by delaying their conundrum until another day. However, rushing a decision could be as damaging as not making one.

Our advice? Tailor your approach to your specific talent needs. If you're searching for:

• Specialist IT skills.
• Underutilized talent, including caregivers and parents.
• Previously overlooked talent, such as neurodiverse candidates, it's likely you'll need to be more flexible in your offering.

Of our top 10 in-demand tech jobs, flexibility and balance consistently take podium positions in employer value propositions. While compensation and innovation are important, people in high-demand roles including Data Engineers, Business Analysts, and Java Developers are all searching for a good work-life balance.

You need to ensure your value proposition matches the talent you're trying to attract.  

Challenge #3: Another 'Great Resignation' looms

More people are contemplating leaving their jobs than during the mass resignations witnessed in 2022. Cost pressures—a primary focus for leaders—are manifesting for employees in the form of bigger workloads, change fatigue, and pay freezes.  

If you need proof that your teams are feeling the pressure: 

• Nearly a third of UK workers aged 18-24 took time off due to stress in 2024, according to Mental Health UK.
• In the US, 68% of millennials left their jobs for mental health-related reasons in the last 12 months.
• Globally, it's estimated that 12 billion working days are lost every year to depression and anxiety.

Given the challenges faced over the last few years, your workforce's fatigue level is high. But as an organizational leader, you're likely looking at 2025 with the hope of implementing new technologies, new team structures, and new processes to get work done more effectively.  

How do you retain top talent while transforming your organization?  

How to prepare for a possible exodus

You can't win the 'talent war' if you keep losing your best people. But how do you plug the gaps? Ongoing economic uncertainty adds another challenge, given that tight budgets won't always permit you to increase salaries as an incentive to stay. 

You'll need defined development and retention strategies that nurture your organization's health, success, and stability. These will need to be tailored to your organization, but your foundations should include the following: 

• Opportunities to upskill: Career development is a key driver behind many departures, artificial intelligence (AI), with almost 70% stating professional development as their reason for leaving. You need to demonstrate how their ambition is best suited to your organization.
• A focus on well-being: Randall S. Peterson explains, "We used to be able to see if someone was struggling, but now we often have to rely on what people choose to show us, oftentimes over a screen." Given the skyrocketing rates of employee burnout and stress, your efforts must go beyond social events and free food.

Is leadership losing its attraction?

Digital acceleration, fractured workforces, and looming resignations are just the tip of the iceberg. Look across the C-suite, and individual functions are facing their own battles.

CHROs are tasked with succession planning when 'ambition' is changing. Our recent edition of the Talent Blueprint explores how Gen Z favors personal growth, focusing "on the day job and getting results" rather than climbing the organizational hierarchy.

For CFOs, the move to mandatory sustainability reporting and assurance is proving complex. The digital mandate for reporting under the Corporate Sustainability Reporting Directive is due to come into effect this year, creating a standardized digital format to allow for more straightforward checking and comparison across businesses.

The challenges facing leaders this year make clear that traditional forms of authority will not be effective. "The command-and-control style of leadership is over." 2025 will require leaders who practice both active listening and learning, show empathy, build trust, and can motivate and engage people "in the ways they want to be engaged.”

Good organizations are built on the actions of good leaders. Could you make a difference with our support?