Steve Pemberton is a managing director at Seramount.
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Something fundamental is changing in how companies develop leaders. For decades, organizations operated with a familiar career pyramid: abundant entry-level roles, a smaller layer of managers and a small executive team. The assumption many HR leaders and I have made for years is that, within this model, employees would learn early and advance through performance, training and loyalty.
It’s no surprise that AI is disrupting that picture, and it all starts at the base of the pyramid.
On one hand, early-career roles are shrinking as the routine, low-complexity work that many new professionals need to develop is being automated or redesigned. On the other hand, technical specialist roles, another reliable entry point, are under pressure as AI tools broaden access to information and skills, limiting the need for narrow expertise.
The result is what Seramount describes as a career diamond: fewer entry points, more pressure in the middle and senior roles increasingly dependent on lateral or external hiring rather than internal progression.
For CHROs, the career diamond is a real reckoning for legacy leadership development and succession planning systems. When these early roles disappear, so do many informal experiences that teach judgment, influence and critical thinking essential to developing the leadership capacity that every business depends on managers to provide.
The middle is where strategy succeeds or stalls.
The C-suite may set direction, but managers translate strategy into team-level action. In other words, they do the thing: They introduce change, adjust processes and connect work to enterprise goals.
In an environment where disruption is constant, employees are increasingly depending on their managers to provide transparency and the “why” behind C-suite demands.
Thirty-nine percent of employees say their manager lacks the skills needed to lead effectively, 78% of managers are disengaged and 42% of workers say they are not interested in moving up. Only 20% of HR professionals expressed confidence in their bench, and fewer than half of senior leadership positions could be filled immediately by an internal candidate.
This is not a problem CHROs can hire their way out of. External hiring may fill a role, but it does not rebuild the internal system that prepares people to lead. Nor is it enough to add another webinar or leadership development cohort.
To truly ensure that our organizations can adapt to the change we all see on the horizon, we need to rethink how we identify, develop and deploy leaders within the career diamond model.
Embrace the new career architecture.
To better navigate this moment, there are four system-level shifts that I would encourage CHROs to focus their attention on:
1. Redefine potential.
Performance reviews aren’t perfect. HR leaders have long known that they don’t have the information we need to make meaningful decisions about an employee’s potential to lead. And in the absence of reliable signals, we may fall back on familiar archetypes that distort perceptions of who is prepared to lead, such as the “mini-me” or “old faithful,” creating further distrust in the leadership development selection process.
In my conversations with leading organizations across the country, we have found that measuring through potential and impact captures contributions beyond the individual role and proves real readiness for management.
2. Test potential in real operating conditions.
Even if we create reliable systems to spot future leaders, leadership development programs rarely test readiness under real operating conditions. To develop the change capacity we need for the AI age, HR leaders should give potential future leaders the chance to gain real experience in bringing change to life.
For example, consider matching employees with business challenges that require them to lead peers and solve current issues, such as return-to-office friction or AI adoption. In practice, that feedback can then serve as evidence in talent reviews.
3. Expand access to leadership experiences.
Development cannot remain limited to a narrowly defined group of high-potential employees. Imagine the leaders that are missed when access depends on outdated signals. Instead, our team suggests broadening access to leadership development with mixed cohorts of high-potential and lower-potential leadership candidates to surface overlooked talent.
In one organization we identified in our research, 90% of employees improved after participating in leadership programs that intentionally mixed high-potential employees with underperforming employees.
4. Stop making management the only path up.
Not everyone wants to manage people, and not every high performer should. Career architectures that equally reward craft excellence and business impact can retain specialized talent while freeing people managers to focus on the work only they can do, such as coaching and mentoring.
For example, one company I work with created a scoring system that triggers a promotion and pay raise for employees who master skills that result in business impact. The program formalized the process for incentivizing individual excellence rather than making management the only path to career advancement.
Capacity is the missing variable.
Even the strongest leadership system will fail if managers are too overloaded to lead. Managers spend significant time on administrative tasks and day-to-day issues, while far less time is devoted to strategic planning and staff development. Yet only 16% of organizations have redefined manager roles to address overload.
CHROs should treat burnout as a design problem, not a wellness problem. Capacity caps, project stop triggers and expectation resets can help teams stop low-value work and refocus their time.
The organizations that lead the next era of work will stop asking managers to absorb endless change and start redesigning the systems that prepare and sustain them.
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