Are We Heading for a Leadership Skills Crisis?

March 17, 2026

The Skills We Need

The World Economic Forum's Future of Jobs Report 2025 draws on over 1,000 global employers representing more than 14 million workers. Its findings show that Leadership and Social Influence has seen a 22 percentage-point rise in the share of employers identifying it as a core skill since 2023.

This is consistent with broader research. While technology skills in AI, big data, and cybersecurity are expected to see the fastest growth in demand, human skills such as analytical thinking, resilience, and collaboration will remain critical, and a combination of both will increasingly be required.

Yet, though these skills are becoming more valuable, some of the main routes through which they are built are stealthily being removed.

The Pipeline Squeeze: AI and Early Careers

Entry-level roles at global professional services firms have long served as a significant training ground for future leaders. Structured graduate programmes at firms like KPMG, Deloitte, EY and PwC did not just produce accountants and consultants. They developed people who learned to communicate, manage upwards, handle complexity, and take responsibility. That pipeline is getting smaller.

KPMG has made the steepest cuts, reducing its graduate intake from 1,399 to 942. Deloitte reduced its scheme by 18%, while EY and PwC followed with 11% and 6% cuts, respectively. City AM

Generative AI tools are increasingly being used to automate tasks that were previously performed by junior employees, replicating their work more cost-effectively.

What fresh graduates used to do, including compliance checks, document summaries and internal reporting, is increasingly being managed by AI tools. This raises a genuine question. How will people develop the foundational skills of professional life if the roles that once provided them are shrinking? The Finance Story

Leadership capability develops through experience, through making decisions, through managing people and receiving feedback over time. Removing the early career stages where that process begins has consequences that will take years to become fully visible.

The Government's Decision to Defund Leadership Qualifications

This week, the government confirmed the removal of funding for 16 apprenticeship standards as part of a wider strategy to redirect Skills England funding toward younger learners and entry-level routes, ultimately to tackle the one in eight people aged 16 to 24 in the UK, who are considered NEET. Among those removed are some of the most used employer-backed leadership development pathways in the country.

Standards being defunded include the Level 3 Team Leader, Level 5 Operations Manager, Level 5 Coaching Professional, and Level 6 Chartered Manager. The Team Leader standard alone recorded 12,670 starts in the last full academic year across 450 training providers. FE Week

This follows the earlier removal, from January 2026, of government funding for Level 7 apprenticeships for most learners aged 22 and over. These programmes include the Senior Leader standard, often integrated with MBA routes, which have provided structured, work-based pathways into advanced leadership and management education.

Leadership and management skills are consistently linked to firm-level productivity. Studies such as the World Management Survey have shown that effective management correlates strongly with higher productivity and competitiveness. HEPI

Some major employers are already raising concerns. Asda has urged the government to reconsider, warning that proposed reforms could restrict progression from the shop floor into management roles and limit long-term career development in retail. Asda

What are the Consequences?

Removing these development pathways is short-sighted at best and creates very real concerns around future leadership capability in the UK, leading to skills gaps and limited routes to progression.

Organisations that are cutting early career intakes today are reducing the pool from which their next generation of managers will be drawn. The cohort that would typically move into first and second-line management roles over the next five to eight years will be smaller and less formally developed than previous generations.

Mitigating the Risk

Organisations that recognise this risk early are likely to invest in internally funded, privately commissioned leadership development. Demand for coaching, in-house management programmes, and executive education is likely to increase among those with the budget to be able to do so. For SMEs it’s not so simple. Investing in leadership development requires both resources and forward planning that not every employer can commit to, particularly in the current economic environment.

The practical questions for any HR director, L&D professional or senior leader are straightforward. If your organisation currently relies on publicly funded apprenticeships to develop Team Leaders, Operations Managers or Coaching professionals, what replaces them? If your graduate intake is shrinking because automation is absorbing the work they once did, how are you developing the people who remain?

Leadership development is fundamental to the success of any organisation but tends to get treated as a “nice to have”. The investment is invisible until gaps appear, and those gaps in leadership capability can be too late to undo the damage done.

Organisations investing in their leadership pipeline now, will be in a stronger and more stable position in five years’ time than those who do not.

 I work in leadership development and believe in the power of investing in people. What are you seeing in your organisation? Are you already planning for this, or is it still feeling like a future problem?