Are We Failing Our Future Leaders? How AI is Impacting Succession Planning

Is the future of corporate leadership being sacrificed on the altar of short-term efficiency gains?

Here in the mid-2020s, fresh graduates are getting a rough deal.

In the UK, graduates are facing the worst job market in seven years. The number of roles advertised for recent graduates is at its lowest level since 2018, with analysts suggesting a correlation with employers using AI to cut costs.

In the US, the unemployment rate among college graduates is on the rise, with JP Morgan reporting that AI is already affecting the white collar labour market and that AI adoption could be suppressing job growth.

I’m no luddite – I absolutely see the potential of AI to increase throughput and productivity.

But the tough job market that is being created for entry-level workers isn’t a problem we can just brush off.

Today’s entry-level workers are tomorrow’s C-Suite. In order to save money, or chase the never-ending goal of AI-hype-tinged “efficiency”, employers are completely obliterating their future leadership pipeline.

This short-sighted approach means that yes, the future of corporate leadership is at stake. It’s not an issue where we can kick the can down the road – we need to act now.

The Pipeline Problem

We’re all aware of the current ideal leadership pipeline (nepobabies notwithstanding). The entry-level recruit becomes a middle manager; who in turn becomes a department head; a director; and eventually a part of the C-Suite.

Just as some of the best Army Generals were once mere foot soldiers, there’s unshakeable leadership value in once having marched in the boots of the “lower” ranks.

Yet bizarrely, with influence from LLM AI tools (and their marketing teams) we’re seeing entry-level corporate positions being repainted as expensive headcount overstuffing. But entry-level roles will always have to be a part of the ecosystem.

Because the corporate ladder is like any ladder – when you go hacking away at the lower rungs, the whole thing is bound to collapse.

Matt Garman, CEO of Amazon Web Services (AWS), said it particularly succinctly:

[Replacing entry-level staff with AI tools is] one of the dumbest things I’ve ever heard. They’re probably the least expensive employees you have. They’re the most leaned into your AI tools. How’s that going to work […] 10 years in the future [when] you have no one that has built up or learned anything?

HR software provider SkillCycle were even less forgiving in their assessment:

Organizations automating entry-level work face a brutal reality in about five years. They’ll have a cohort of senior leaders approaching retirement, a thin layer of middle managers who never developed anyone, and no pipeline of emerging talent who understand the business from the ground up. The succession plan becomes a succession crisis.

The Nearing Storm of “Efficiency at Any Cost”

Alongside this, leaders are getting younger. Nearly a third of newly appointed S&P 500 CEOs in 2022 were younger than 50, more than double 2018 levels. The percentage of CEOs in their 30s and 40s at Russell 3000 organisations is rising.

On its face, this seems like great news from an upward mobility standpoint. Younger talent is being recognised and fast tracked for bigger and better things.

However, surely, this makes our problem of winnowing down entry-level hires all the more acute. As leader age trends downwards, that crunch point (from having stemmed the flow of young talent) will hit us all the sooner.

Time is not on our side here. Former US Secretary of Transportation Pete Buttigieg recently issued a stark warning:

We’re talking about whole categories of jobs, where — not in 30 or 40 years, but in three or four — half of the entry-level jobs might not be there. It will be a bit like what I lived through as a kid in the industrial Midwest when trade in automation sucked away a lot of the auto jobs in the nineties — but ten times, maybe a hundred times more disruptive.

When it comes to corporate trends, voluntary change tends to happen at a slow pace – unless it involves saving money. The switch to replacing entry-level roles with AI happened at light speed – but investing in a pipeline of young leadership talent? I worry that that change might become agonisingly, glacially slow.

That’s why we need to start having these conversations about short-sighted entry-level hiring decisions now.

Once Bitten, Twice Shy

Let’s come at this from another angle. Put yourself in the shoes of a recent computer science or cybersecurity graduate. You know – our future of tech leadership.

They likely chose this path out of a passion for the field and saw opportunity in the now somewhat ever-present tech talent shortage that’s been rumbling on in various forms for years.

So they sought out an educational track in IT. They put in the work. Many accrued student debt. They pulled all-nighters ahead of key deadlines. And eventually, after expending varying levels of blood, sweat, and tears, they emerge as newly minted, qualified individuals.

And what happens after all of that effort? They get told “Sorry, we’re cutting down on entry-level roles. Y’know, because of AI,. There’s a Miccy D’s around the corner though. Try there.”

These individuals, who previously would have been prime candidates for future tech leadership, are now cut adrift by the industries they were once told badly needed them.

So there’s not just the pipeline issue at play here – there’s a real risk of “once bitten, twice shy”. These grads put in so much work, only to find themselves fighting over AI-decimated scraps within an already tightly competitive market.

So they struggle. Many may become economically inactive for some time. Or they might just go into another, more AI-resistant field. It’s such a waste of good, qualified, potential.

Young Blood, Fresh Thought, and Innovative Ideas

But let’s zoom back out of tech leadership and focus back on the leadership pipeline issue as a whole.

Younger workers undoubtedly bring a lot of value to the table, regardless of sector. Gen Z workers are the most digital native generation that the workforce has yet seen. They can bring fresh and dynamic perspectives, not bogged down with the “way things have always been”. They are often enthusiastic and willing to engage in learning and development.

That’s not to say that all organisations should be preoccupied with a Logan’s Run-esque pursuit of youth, but organisations should be aware of the value of generational diversity. Contrary to the current rhetoric that pits the different generations against each other, an age diverse workplace is provably a more productive and resilient one. Minimising the youth within an organisation strongly limits this essential diversity of thought.

Stemming the upward flow of youth within the corporate ecosystem runs a real risk of recruiting the same kind of people with the same kind of ideas. No fresh perspectives, just “yes people” up and down the chain of command.

What impact is that going to have in your business model? What impact is that going to have on the products and services you bring to market? What impact is that going to have on your ability to navigate new, dynamic risks and crises? Words like “stagnation” definitely spring to mind.

Succession Planning: Now More Essential Than Ever

Despite AI’s onward rumble, and the hype-riddled aftershocks it brings with it, succession planning remains a critical business function. Companies who fly by the seat of their pants without it are creating significant operational risk for themselves.

And I’m not just talking about having someone ready to slot into position should your C_O get hit by that proverbial bus, hypothetically tomorrow. C-Suite roles are all about buy in, relationship building, and influence just as much as they involve technical sector specialisms. Throwing someone in at that particular deep end with no coaching or preliminary toe-dipping can also present its own operational risk.

Basically, anyone who manages anyone needs to work on a documented succession plan – one that’s being actively developed today and ready to deploy in any potential future emergency.

Where Do We Go From Here?

There is one corporate bad habit that I think we corporate leaders need to train ourselves out of: short-termism.

We are constantly buffeted by the urgency of the “now”: tech hype cycles, the latest shiny new framework, the quarterly targets, and the tug-of-war between immediate loss aversion and future gain. I’m not judging here – we’re all working with 300,000 year old mental software that creates cognitive biases like hyperbolic discounting, recency/availability bias, stability bias, and more. This much is fairly hardwired.

However, being aware of these biases gives us space to question them, and eventually train ourselves out of short term habits and “shiny thing syndrome”.

If you want to explore some excellent ideas around corporate longevity, look no further than the Japanese concept of Shinise (literal meaning “old shops”) which are businesses that have been in operation for at least a hundred years – some over 1,000! They have a very particular philosophy about benefitting the seller, the customer, and wider society. They’re an absolutely fascinating, 100% recommended research rabbit-hole.

It’s Time to Act

So this is my call to action for all leaders, managers, and talent folks: if you want your business to last and succeed, you need to craft and maintain strong leadership onramps, pipelines, and succession processes.

Also, approach hiring strategically throughout the chain of command. No single level of seniority is immune from being a strategic investment.

Because leadership isn’t just a “now” problem – it’s something you’ll always need for as long as the organisation exists. No leadership? No organisation. Simple as that.

Now nobody’s expecting you to round up your office juniors and pick your future CEO, 30 years in advance. But think carefully about the future routes to leadership that you are creating – or actively destroying – with today’s decisions.

After all, short term actions always have long term implications – for better or worse.