The Real Cost of Not Developing Your Leadership Pipeline

By Cade Murphy · Remergent

Picture a large organization three months out from losing a senior leader — retirement, a competitor’s offer, doesn’t matter which. The room fills up fast: a search firm on retainer, an interim plan, a timeline nobody likes. That scramble is expensive, and it’s the cost most organizations actually track. Recruiting fees. Onboarding time. The productivity dip while the new hire finds their footing.

But that’s the visible bill. Some of the most consequential costs accrued for years before the vacancy ever opened, and almost nobody was watching them.

The Cost You Can See vs. the Cost You Can’t

The visible cost of a leadership gap is a line item. It shows up in a budget, gets approved, gets paid. The less visible costs are harder to point to — not because they’re smaller, but because they accumulate over time and rarely appear in one budget line.

DDI’s 2025 Global Leadership Forecast puts a number on this. Only 20% of HR leaders say they have leaders ready to fill their most critical roles, and on average, organizations can fill just 49% of critical positions internally on short notice — even though roughly three-quarters say they’d rather promote from within than hire externally. The intention is there. The readiness isn’t.

The cost of that gap shows up in a few places at once: high-potential people leave because they can’t see a path forward, and the people who stay lose engagement and institutional knowledge alongside them. Vacancies slow decisions and strain the trust the new leader inherits from the team and stakeholders around them. And urgency drives rushed promotions or hurried external hires that introduce another layer of risk, while the development budget keeps getting spent without the bench actually getting deeper. The organization ends up depending on a handful of senior leaders it can’t afford to lose, because there’s no one else ready to step in.

I see a version of this gap show up individually, one leader at a time, long before it shows up on an org chart. Someone gets promoted because they were excellent at the job before the promotion. The skills that earned them the new title — deep expertise, strong individual output — aren’t quite the skills the new role needs, and nobody tells them that clearly. So they keep doing more of what worked, just with more people watching. Some of what happens next really is developmental: new judgment calls, new relationships, a bigger scope they haven’t had to manage before. What follows is rarely just a skill gap or a confidence gap. It’s usually some combination of incomplete preparation, limited opportunity to demonstrate readiness, and uncertainty about operating at the new level.

Why the Gap Persists

Most organizations don’t lack ambition for their bench. Pipeline weakness can come from several directions at once: insufficient exposure to enterprise-level decisions, untested people-leadership capability, unclear expectations for the next role, thin sponsorship, inconsistent talent decisions, or simply not identifying readiness early enough. Confidence is one piece of that picture. Treating it as the whole picture oversimplifies a genuinely complex organizational problem.

Training addresses part of it. A course on delegation, a new framework, a shared vocabulary for the next level — these matter, and thoughtful programs already build in application and manager reinforcement. What training alone doesn’t do is create readiness. Readiness develops when leaders apply what they’ve learned to real decisions, real relationships, and real pressure over time, not in the weeks immediately following a workshop.

Succession and leader development should be parts of the same conversation, even though most organizations still run them separately. A strong bench isn’t built by identifying high-potential people earlier and then waiting. It’s built by giving them the experience, feedback, sponsorship, and development required to convert potential into role-specific readiness — and for some leaders, that also means helping their confidence catch up to capability they’ve already demonstrated.

How Readiness Gets Built

Closing that gap at the individual level matters, but it isn’t the whole system. A credible pipeline also requires clear definitions of readiness, role-specific success criteria, calibrated talent reviews, differentiated development, meaningful stretch experience, active sponsorship, and regular reassessment of the bench.

Assessment and coaching can’t replace that architecture. What they can do is make it sharper. Assessment can clarify likely strengths, risks, motives, and development priorities, but it can’t determine readiness on its own — that still requires evidence of performance, experience, and fit against the actual role. Instruments such as the Hogan Leadership Forecast Series are one useful source of that evidence. So is an ongoing coaching relationship that continues past a single debrief, rather than ending when the workshop does.

None of this automatically requires a larger program. It does require clearer ownership, stronger integration, and consistent attention before a vacancy becomes urgent — and recognizing that many organizations have more potential already inside the building than their succession data suggests. That potential only becomes readiness through deliberate preparation, real opportunity, honest evidence, and support along the way.

The cost of a weak pipeline was never really about the eventual search fee. It accumulates whenever capable people lack the experience, sponsorship, evidence, or support required to become credible successors. By the time a vacancy makes that gap visible, the organization has often been paying for it for years. If you’re looking at your own bench and wondering how much of the gap is capability, how much is opportunity, and how much is confidence, I’d be glad to talk it through.

Cade Murphy is the founder of Remergent and an ICF Professional Certified Coach. He works with leaders and organizations navigating the gap between who they’ve named as their next leaders and who is actually ready to step in.

Interested in writing for Remergent? If you have a perspective on leadership, coaching, or assessments worth sharing, I’d love to hear from you. Reach out at inquiry@remergent.ca.