The Hidden Leadership Gap Undermining Performance in 2026

As organisations move into 2026, leadership is being tested in ways that few anticipated even a decade ago. Not because of a single disruptive force, but because of the compounding speed at which change is now unfolding across every industry.

Futurist and author Ray Kurzweil has long argued that humanity is on track to experience the equivalent of tens of thousands of years of progress within a single century, driven by accelerating technological innovation. That pace is no longer theoretical. It is shaping how work is done, how value is created, and how people assess their place within organisations.

Most leaders understand this at an intellectual level. They are investing in technology, talking about transformation, and preparing their organisations for an AI-enabled future. Yet beneath these strategic conversations, a more fragile issue is emerging. A human one.

People are questioning their relevance.
They are uncertain about which skills matter.
They are wondering whether they still belong in the future being built around them.

In 2026, the most underestimated leadership challenge is not technology adoption. It is the growing confidence gap inside teams.

The data leaders cannot ignore 

The global data is clear. Gallup’s 2025 State of the Global Workplace report shows that only 21 per cent of employees are engaged at work. Just 33 per cent describe themselves as thriving, while half of the workforce is watching for or actively seeking a new role. Stress levels remain high, with 40 per cent of employees reporting significant stress the previous day.

When engagement, wellbeing and confidence decline together, performance follows.

PwC’s 2025 Hopes and Fears Survey adds another dimension. Employees who trust their direct managers are far more motivated and committed than those who do not. Yet the same research highlights a significant gap between how much trust leaders believe they have earned and how much trust employees actually feel.

That gap becomes a material risk in an environment defined by disruption.

McKinsey’s 2025 research into AI readiness reinforces the point. While most organisations have invested heavily in AI, only a small proportion believe they are prepared to lead people through AI-driven change. The constraint is not technological capability. It is a leadership capability. 

Employees are not asking leaders to predict the future. They are asking for clarity, direction, and steadiness while navigating it.

Why yesterday’s leadership playbook no longer works 

Many leaders are still relying on the behaviours and strategies that served them well in more predictable environments. Those qualities may still matter, but they are no longer sufficient.

In fast-changing contexts, confidence erodes when people do not understand how change affects them personally. When effort is no longer translating into recognition or progression, even high performers begin to question their value. When leaders cannot articulate where roles are heading, uncertainty fills the gap.

In 2026, leadership must evolve. Three shifts have become essential.

1. Leaders must become translators of change, not announcers of it

Most leaders communicate what is changing. Far fewer communicate what that change means for the people doing the work.

Gallup’s research shows that only a minority of employees strongly agree that communication within their organisation is clear. When clarity is missing, people speculate. Anxiety rises. Engagement falls.

Leaders who act as translators do something different. They turn complexity into plain language. They explain why change is happening, how it connects to strategy, and what it means for individual roles and expectations.

This is not about oversharing or offering certainty where none exists. It is about providing enough context for people to feel grounded rather than adrift.

Clarity reduces fear. It builds trust. In an environment defined by disruption, clarity is not a communication skill. It is a leadership advantage.

2. Leaders must reduce the invisible load their people are carrying

Today’s workforce carries a heavy mental load. Fear of redundancy. Uncertainty about skill relevance. Constant shifts in priority. Ongoing change fatigue.

Because much of this load is internal and unspoken, leaders often underestimate its impact.

Gallup’s data points to a workforce under sustained strain. High stress. Low thriving. Declining engagement. Under these conditions, confidence becomes fragile, even among high performers.

Reducing the invisible load does not mean lowering expectations or avoiding accountability. It means creating space for honest conversations, acknowledging the emotional reality of change, and ensuring people feel supported, not just measured.

PwC’s findings show that trust between leaders and their teams directly influences motivation and performance. When leaders recognise and address the load their people are carrying, performance improves rather than declines.

3. Leaders must build skill pathways that make people feel future ready

One of the strongest drivers of workforce anxiety is uncertainty about skill relevance. Research from Deloitte and McKinsey shows that employees are unsure which skills will matter in an AI-enabled environment and whether they can keep pace.

Organisations talk often about upskilling, but many employees do not know what that means for them in practical terms.

Leaders do not need to be technical experts. They need to be guides.

People want clarity on which skills are durable, which are becoming baseline expectations, and which are losing relevance. They want to understand how their role is evolving and how they can continue to contribute meaningfully.

Clear skill pathways do not need to be complex. Leaders can co-create 12 to 24 month development paths, design stretch opportunities, and connect people to projects that build future capability.

When people feel future ready, confidence rises. So does initiative, engagement and optimism.

The leadership opportunity in 2026 

These shifts do more than support teams. They protect organisational capability. They reduce burnout. They strengthen leadership credibility.

In a fast-moving world, confidence becomes as valuable as competence. When people feel confident, they collaborate more effectively, innovate more readily, and contribute more consistently.

The role of a leader is changing. It now requires greater clarity, stronger trust, and deeper intentionality.

At the height of my corporate career, I held one leadership belief above all others. People should leave a better version of themselves because they worked with me. That belief shaped decisions, conversations and culture. 

In 2026, that belief is no longer aspirational. It is essential.

Leadership is no longer about keeping pace with the future. It is about helping people feel confident they have a place in it.

Written by Julie Hyde.