Reflections on the talent market in 2025

Talent, confidence and capability: reflections on a shifting market

In late 2025, I was assessing the state of the market across organisations. Although there was a warming sentiment as the year progressed, a sense of hesitation remained: a constant desire for more clarity before committing to significant talent or leadership investments.

As we moved into 2026, though, that caution began to shift. What started as tentative conversations about ‘waiting to see’ gradually turned into more proactive discussions about capability, leadership and future readiness.

Looking back now, that change in tone feels like a genuine turning point.

Across the sectors we work with, there has been a steady move away from reactive decision-making towards more deliberate, strategic thinking about people. Leaders are asking not just how to manage the present, but how to prepare their organisations for what comes next.

I recall numerous conversations with CEOs and HR executives towards the end of last year who were understandably cautious. Six weeks into the new year, and those same leaders are asking a different question: how do we get ahead rather than simply keep up?

More leaders are now recognising that to ensure the long-term health of their organisations, they need to build depth and resilience in their teams. Indeed, they are coming to the realisation that selecting and, perhaps more importantly, developing the right talent is fundamental to performance and not something that can be constantly deferred, or worse, ignored.

Budgets remain under pressure, but investment continues

While there are positive signs of recovery in parts of the economy, cost pressures have by no means disappeared. Rising operating costs and ongoing global uncertainty mean that budgets for people and talent-related programmes remain under close scrutiny.

Recent ONS data showed that in the three months leading up to November 2025, 35% of UK businesses reported increased staffing costs. That reality is still being felt across sectors and is sharpening the focus on demonstrating the value of any talent-related investment.

What we are seeing in response is not a withdrawal from investment, but a more disciplined approach to it.

Organisations that are moving forward with confidence are those able to clearly articulate:

• Why are they investing in talent and leadership?
• What outcomes do they expect to see?
• How will those outcomes support performance and growth?

Talent decisions are increasingly being supported by data, evidence and clearly defined success measures. The conversation has moved beyond instinct alone and towards more structured, outcome-focused decision-making.

Preparing leaders for what comes next

Alongside this more disciplined investment approach, demand for initiatives with medium- and long-term impact has grown. Succession planning, leadership development, coaching and capability assessment are returning to the agenda.

Such action is a must for organisations that want to commit to future success rather than simply manage within the short-term uncertainty of the wider economy, which is set for modest UK GDP growth of 0.9% for 2026, according to the EY ITEM Club.

At the centre of this sits leadership.

Organisations recognise that performance and growth are ultimately delivered through their leaders, and that leadership capability cannot be left to chance. The focus now is on building depth: ensuring there are strong pipelines, clear succession options and leaders who are prepared to step into more complex roles as businesses evolve.

Leading in an environment of constant change

It has become commonplace to describe change as the ‘new normal’, but for many organisations, the reality is more nuanced. Leaders are operating in environments where ambiguity is high, conditions shift quickly, and decisions often need to be made with imperfect information.

Recent data suggests that concern about the broader economic outlook remains significant, with over half of business leaders citing global slowdown as a key risk. Against that backdrop, the emphasis on adaptability, judgement and resilience is understandable.

What has been encouraging is the tone of many of the conversations we are now having with clients. There is a sense of cautious optimism, grounded in realism, but forward-looking nonetheless.

The most effective organisations are not attempting to eliminate uncertainty entirely. Instead, they are investing in leaders who are capable of operating within it: people who can adapt, make considered decisions and maintain momentum even when the environment is unpredictable.

Looking ahead

As we move further into 2026, I expect this more proactive mindset to continue. Organisations are increasingly shifting away from reactive approaches to talent and towards building leadership capability with intention.

The focus is no longer solely on filling roles or responding to immediate challenges. It is on building resilient, future-ready leadership teams that can sustain performance over time.

For me, that has been one of the most positive market developments of the past year. Despite ongoing uncertainty, many organisations are choosing to invest in their people, not only to navigate the present, but also to build something stronger for the future.