That’s the gap worth closing. Recent research from the DSG Global Workforce Power Index, a survey of more than 300 HR leaders conducted with The Harris Poll, found that succession planning and leadership pipeline development are now the two most-cited pain points facing HR executives, ahead of budget and compliance concerns (HR Dive, 2025). Broader industry research continues to show that organizations are struggling to build leadership benches capable of supporting growth, transformation, and increasingly complex workforce demands. The leadership shortage many firms are bracing for isn’t a future risk – it’s already showing up as delayed initiatives, slower decision-making, and stretched teams.
For financial services firms, where regulatory fluency, commercial judgment, and institutional memory take years to build, that shortage is compounded by senior retirements and slower lateral mobility. Building a bench of future leaders – wherever they enter the function – is no longer optional.
That bench draws on several sources at once: talent hired directly into HR at the graduate or early-career level, professionals who move into HR from the business, external hires brought in mid-career, and existing HR staff identified for stretch and promotion. Early-career talent is one important entry point into that pipeline, not the whole of it. Here’s what matters most in building it deliberately.
The instinct is to think about leadership development only once someone is already a manager. That’s too late. The more useful question is: across every level and entry point into your HR function, who has been identified as future-leadership material, and what are you doing about it? Firms that name this cohort explicitly, rather than leaving it to informal reputation, tend to invest more intentionally in developing them and lose fewer of them to competitors.
The HR leadership role itself is changing faster than most development plans account for. Commercial acumen – understanding how the business makes money and where HR decisions affect it – is increasingly the differentiator between HR professionals who get invited into strategic conversations and those who don’t. Alongside it, data literacy (reading trend lines on attrition, mobility and engagement, rather than just producing reports), influencing and change management skills, and a working fluency in AI tools are now considered core competencies for HR leadership rather than “nice to have” extras, according to recent research from AIHR (AIHR, 2026). Notably, only around a third of HR professionals currently say they feel equipped to use AI tools with confidence, which means firms building this into development plans now, at every level, are building a real edge.
Formal mentoring remains one of the most reliable levers for accelerating readiness, but it works best paired with stretch assignments – real projects with real stakes, not shadow work. Give rising HR talent a seat in workforce planning conversations with the businesses they support, well before they’re “ready” on paper. Reverse mentoring, where junior employees brief senior leaders on things like AI tools or shifting workforce expectations, is also gaining traction as a two-way development tool rather than a one-directional one.
Ambiguity about “what’s next” is one of the fastest ways to lose strong HR talent to consulting firms or in-house roles with clearer, faster-moving ladders. Mapping a visible pathway, however someone entered the function, gives people a reason to stay through the less glamorous years, and gives managers a concrete framework for development conversations rather than vague reassurances about “opportunities down the line.”
CHROs increasingly need to justify leadership development investment in the same terms as any other capital allocation decision. Framed as training cost, it’s a hard sell. Framed as a pipeline investment – one that reduces future external executive search costs, protects institutional knowledge, and de-risks succession for critical roles – it becomes a business case that boards take seriously. Given that a large share of HR decision-makers now say company boards are exerting more influence over talent strategy than before, having that commercial framing ready is more important than ever.
The bottom line: the question worth asking HR leaders isn’t “how do we hire more junior talent?”, it’s “how do we build a sustainable pipeline of future HR leaders, wherever they come from?” That’s a strategic, board-level conversation – and one where deliberate development, not any single hiring channel, is the foundation.
If you’d like to talk through succession planning or leadership development for your HR function, get in touch with Ellie.
