CHROs Prioritize Internal Talent Development Amid AI Skill Gap

Human resources leaders are increasingly turning inward to fill leadership roles within their companies, driven by a shift in attitudes toward leadership and the challenges posed by the AI skill gap. This trend is evident as chief human resources officers (CHROs) face not only the need to bridge the AI skill gap but also a broader change in how leadership is perceived and developed.

The traditional talent pipeline, which relied heavily on external recruitment, is now seen as broken. Companies are recognizing the value of nurturing internal talent to fill leadership positions. This approach not only addresses immediate skill shortages but also fosters a culture of growth and development within the organization. By promoting from within, companies can ensure that their leaders are deeply familiar with the company's culture, values, and strategic goals.

This shift is part of a broader movement within the HR community to focus on internal talent development. CHROs are investing in training and development programs designed to prepare employees for leadership roles. These programs often include mentorship, coaching, and targeted training initiatives that help employees acquire the skills and knowledge necessary to excel in leadership positions. By doing so, companies can create a more sustainable and resilient leadership pipeline that is better equipped to navigate the challenges of the future.

The benefits of this approach are manifold. Internal promotions can boost employee morale and engagement, as they provide clear pathways for career advancement. This can lead to higher retention rates and a more committed workforce. Additionally, promoting from within can save companies the time and resources associated with external recruitment, allowing them to focus on other strategic priorities.

However, this shift also presents challenges. Companies must ensure that their internal talent development programs are effective and that they are identifying the right candidates for leadership roles. This requires a robust talent management system that can accurately assess employee skills, potential, and readiness for leadership positions. Companies must also be prepared to address any resistance to change from employees who may feel overlooked or undervalued in the promotion process.

According to a survey of 2,185 HR professionals and 10,796 leaders, around 60% of CHROs say they are tapping existing succession pools when leadership opportunities come up. This is likely fueling other trends—developing talent is the top priority for CHROs right now, ahead of hiring, building culture, and even driving profitability. Most leaders (58%) say hiring from the outside is their toughest challenge.

Looking inward for the next generation of business leaders, however, comes with its own challenges. Only 20% of HR leaders say they have internal candidates ready to fill many or almost all of their critical top roles. That means that CHROs need to think hard about their own leadership talent pipeline, rather than banking on the “expectation that someone will be ready.” That includes things like mapping the profiles of people who could make future leaders, prioritizing growth opportunities for them, and focusing on cultivating softer people skills among this group, along with technical expertise.

It’s worth noting, however, that most workers aren’t particularly interested in being the boss. Around 80% of Gen X and 76% of millennials view these higher-up roles as outdated, and associate them with stress and burn out. Priming the next generation of talent to take on leadership roles will require HR to go back to the basics, focusing on building emotional intelligence and trust.