Is your talent management approach slowing your business down?

Most organizations have succession plans, nine-box grids, HiPo lists, and development plans. But by their nature, these tools are out of date the moment they’re created. They’re yesterday’s answers to today’s realities, creating friction instead of momentum.

At a glance

Most talent decisions are still based on disconnected snapshots — succession, high potential, learning, and mobility — rather than on a holistic real-time view.
Annual cycles and fixed labels cannot keep up with shifting role demands. This means that emerging capability stays hidden and decisions go stale.
The cost is stalled transformations, failed transitions, and preventable attrition.
Dynamic Talent Management connects talent data and decisions so leaders can identify, develop, and deploy capabilities faster.

Consider this scenario: You named a successor 18 months ago. He was the obvious choice: strong track record, next in line, and “ready now” on every scorecard. Then your business pivoted — through an acquisition, an AI-led restructuring, or a new market move — and the role he was ready for no longer existed. The leader you actually needed was somewhere else in the organization entirely. Your talent system never surfaced her, because it was never built to look.

How dynamic is your talent system?

Answer the questions in the maturity framework to benchmark your organization’s journey to Dynamic Talent Management and pinpoint the key capabilities you need to move forward.

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What’s gone wrong with talent management?

Most talent systems assume performance, potential, and fit are fixed and tied to a specific level or role. They answer talent questions on a need-to-know basis — usually in response to a hiring request or during a cyclical talent process. They are built to measure the current state, and assume today’s performance predicts tomorrow’s success.

But businesses and people are not static and predictable. As a result, many talent management systems do not produce the outcomes organizations need. The irony is that the assessment data these systems collect often contains the signals needed to anticipate how someone might lead through conditions that have not yet emerged. The limitation is not the data itself, but the questions being asked.

AI changes what talent is worth

Anyone can paste ChatGPT outputs into an email or use Claude Cowork to build a presentation deck. However, applying contextual understanding, knowing what’s needed to build trust, and promoting values-led behaviors constitute the human overlays required for positive and lasting impact. This is why, in the current human-AI era, organizations are moving from knowledge work to wisdom work.

This shift from knowledge to wisdom work is twofold:

From human capacity alone to human + AI performance

What an individual can achieve depends increasingly on what they can do in combination with AI.
From process to agency

Human judgment and AI capability enhance, rather than constrain, each other.

Human work shifts from following predefined workflows to framing the right questions, making tradeoffs, and steering AI outputs to align with real-world goals and constraints.

Most talent management systems have not caught up. They are still designed for the world that existed before AI burst onto the scene. This means they reward what people know, how long they’ve been in the pipeline, and how well they performed in conditions that no longer apply. That’s a shaky foundation for making future talent decisions with confidence.

Useful systems stuck in silos

Capability requirements are shifting rapidly, but talent management is still business-as-usual:

Succession planning is an annual exercise
High-potential programs identify a small group of future leaders
Learning operates separately from workforce planning
Internal mobility sits in its own system
Assessment happens at isolated moments in time

Run separately, these talent processes give leaders a fragmented, backward-looking view of the capabilities they have in their organizations.

The numbers from our 2026 Global Talent Trends Study bear this out. Only 37% of HR leaders say their high-potential and succession programs are effective. This is not surprising, given that just 36% have a clear understanding of their organization’s talent development needs. The consequences of this failure are clear — nearly one in three employees who plan to leave their employer point to stalled career progression as a reason.

Traditional world	Dynamic world
Stable jobs Career ladders Leadership expertise Annual reviews Internal workforce Replacement planning	Fluid capability Career ecosystems Leadership judgment Continuous intelligence Extended workforce Workforce readiness

Better decisions, not more process

Leaders make hundreds of talent decisions every year: Who gets promoted? Who could contribute more? Who receives investment? Who moves into critical roles? Who leads transformation? Who do we reward?

But too many of these decisions depend on annual, static, opinion-led, and disconnected data. The cost of getting these decisions wrong shows up in failed transitions, stalled transformations, the wrong people being retained, and the right ones being lost to the competition.

A misjudged senior succession decision is estimated to cost more than two times the departing leader’s salary. That is before factoring in the harder-to-measure cost of lost momentum during the transition.

Organizations need a decision-making approach that stays current — one that is grounded in evidence, tuned to context, and focused on what’s coming next. Dynamic Talent Management offers these strengths and connects previously siloed talent processes, turning them into continuous talent intelligence.

Dynamic Talent Management

A continuously evolving talent intelligence ecosystem that identifies, develops and deploys talent to fuel future organizational impact.

The diagram shows the continuous cycle for dynamic talent management through assessing, understanding, exploring, developing, deploying and learning to identify, accelerate and optimize talent to fuel organizational impact. This process ensures readiness for impact, talent deployment to optimize the workforce for success and dynamic potential to grow.

Dynamic Talent Management: Three shifts every organization needs to make

Dynamic Talent Management is not a new process to be layered on top of old ones. Instead, it involves a broader shift in three familiar areas: How leaders think about potential, how leaders define readiness, how broadly leaders look for talent.

Potential is fixed → Potential continuously evolves

Don’t ask, “Who’s on our HiPo list?”
Ask instead, “Where is future capability emerging?”
Succession planning → Readiness for impact

Don’t ask, “Who can step into this role?”
Ask instead, “Who is best placed to create impact?”
Talent pools → Talent ecosystems

Don’t ask, “Who do we already have in the pipeline?”
Ask instead, “Where can we access the skills/capability we need?”

From fixed HiPo labels to nurturing growth potential

Most organizations can tell you who is on their high-potential list. Far fewer can tell you whether the evidence behind the label still holds. The new definition of potential is multifaceted and evolving. It is shaped by context and developed through learning, challenge, and experience. This new reality requires a fundamental shift from treating potential as a fixed attribute to seeing it as something that needs to be continuously evaluated and actively developed.

In practice, this means replacing infrequent, subjective HiPo nomination exercises with ongoing, evidence-based assessments of growth potential. These assessments should be combined with targeted development experiences, stretch assignments, coaching, and regular reassessment. The benefits are clear: By broadening the focus from identifying today’s stars to systematically growing tomorrow’s leaders, organizations can build a deeper, more resilient leadership pipeline while creating more opportunities for talent to flourish.

From succession planning to readiness for impact

Taking a “ready in two years” approach to succession planning assumes that roles, strategies, and business contexts will be the same in 24 months. Increasingly, that’s an assumption organizations can’t afford to make.

Succession planning has traditionally focused on identifying replacements for key roles. But competitive advantage doesn’t come from having named successors. In a world of constant change, success is driven by leaders who are ready to respond when priorities shift, step into new challenges, and create impact when it matters most.

This requires a shift from planning for vacancies to building organizational readiness. To modernize succession for today’s business realities, the following three steps are key:

Review performance and succession cycles together, not as separate annual exercises.

Define which skills will be most critical to your strategy in the next two to three years (before the market prices them in).

Intentionally connect each succession decision to a specific development action.

From talent pools to capability ecosystems

Traditional talent models often focus on a defined internal pool. This is normally made up of the people already visible in succession plans, leadership pipelines, or formal development programs. But organizations today require a more connected and dynamic view, not just of talent, but of their overall capabilities.

Organizational capability now sits across a much broader ecosystem and includes internal talent, external talent, alumni, contingent workers, partners, communities, and (increasingly) AI-enabled outputs.

In this environment, the challenge shifts from managing isolated pools of talent to cultivating an ecosystem where people can move fluidly across roles, projects, and opportunities as business needs evolve.

This means looking beyond organizational charts and job families to understand the capabilities that exist across the workforce. Done well, this makes it easier to deploy the right human or AI capability where it can create the greatest value.

So, back to the original question: How dynamic is your talent system?

Or, to put it another way: Is your talent management approach slowing your business down?

A simple test should help here: if your talent processes reflect the business you were, not the one you’re becoming, then the answer is yes. So, what will you do to change that?

We’re evolving. Mercer is now part of the new, expanded Marsh brand