With employee turnover decreasing amid economic volatility, HR executives are turning their focus from recruitment and hiring to building internal capabilities, according to an HR insights report from global leadership consulting firm DDI.
Three-quarters of senior HR leaders reported stagnating or decreased turnover over the past year, as tariff uncertainty, market volatility and AI job insecurity have caused employees to stay put rather than searching for new jobs. As such, half of CHROs ranked developing talent capabilities as their top business priority, while hiring fell to the lowest priority level. Notably, most organizations indicated succession planning is a struggle, with HR leaders saying they could fill only about half of critical business leadership roles immediately with internal candidates.
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“Leadership is becoming a tougher job every day, and CHROs are uniquely positioned to help leaders rise to the challenge,” said DDI’s CEO, Tacy M. Byham. “While organizations can’t control the deluge of external challenges they face this year, strategic HR executives can build resilience by using trusted people analytics to forecast needs, build their bench, and reinvigorate the next generation of leaders.”
As organizations grapple with AI adoption and an accelerated pace of change, 86% of HR respondents expect an increased need to develop new leadership skills and capabilities over the next five years, the report said. However, HR teams say their biggest challenge to implementing leadership development programs is measuring success, with 78% looking to behavior change as their preferred indicator. The impact on talent outcomes from learning programs follows at 61%, while only 38% prioritize measuring knowledge retention and 21% value learning certifications.
“The message is clear,” said DDI. “Development must show up in how leaders act, not just what they know.”
The study, which included responses from nearly 13,000 HR professionals and organization leaders, also found that poor leadership can drive some employees to leave. Gen Z in particular is less likely to tolerate poor leadership, with half of employees in this age group saying they plan to leave their organization in the next year due to low-quality leadership, compared with 19% of employees from other generations. The report referred to this phenomenon as “conscious unbossing.”
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Kristen Smithberg
Kristen Smithberg is a Colorado-based freelance writer who covers commercial real estate, insurance, benefits and retirement topics for BenefitsPRO and other industry publications.
