The Workforce Is Struggling — and Leadership Is at the Center of It
A sweeping new dataset is confirming what many HR leaders have quietly known for years: the workforce is in trouble, and the root cause traces back to leadership. The Marsh and Mercer People Risk 2026 report, built on responses from 4,517 HR and Risk professionals spanning 26 global markets, paints a sobering picture of employee wellbeing, organizational alignment, and the mounting cost of leadership gaps across industries.
The findings do not exist in isolation. They serve as a powerful data layer on top of qualitative concerns raised at the recent What's Not Working @ Work summit, where CHROs, CEOs, and workforce experts gathered to name the real problems confronting today's organizations. The numbers and the lived experiences point in the same direction — and HR leaders would be wise to take both seriously.
Employee Wellbeing Has Fallen Off a Cliff
Perhaps the most alarming headline from the People Risk 2026 report is the dramatic decline in employee wellbeing over a remarkably short period. In 2022, 66% of employees reported that they were thriving at work. By 2026, that figure had collapsed to just 44% — a drop of 22 percentage points in four years, erasing nearly all of the steady gains organizations had worked hard to build following the disruptions of the pandemic era.
That decline does not represent a gradual drift. It signals a structural breakdown in how organizations are supporting, engaging, and retaining their people. Workers are not simply burning out — they are becoming fundamentally disconnected from the organizations they work for, and from any sense of purpose or progress within them.
The data makes the picture even more complex when examining worker intent. One in four employees report being unsatisfied at work but feel that leaving is not a realistic option for them — whether due to financial pressures, limited market opportunities, or personal circumstances. An additional 12% say they plan to leave within the next six months. Together, these groups represent a workforce that is either trapped or on its way out, neither of which bodes well for organizational stability or productivity.
Disengagement, Exhaustion, and a Broken Connection to Organizational Goals
Summit attendees described a workforce that is exhausted, deeply disengaged, and increasingly disconnected from the goals and mission of their organizations. This is not a fringe problem affecting a handful of companies — it is a widespread pattern that the Marsh data now quantifies at scale across 26 markets.
What makes this particularly challenging for HR and business leaders is that disengagement rarely announces itself dramatically. It accumulates quietly. Employees show up, complete minimum requirements, and disengage emotionally and intellectually over time. Organizations lose institutional knowledge, creative momentum, and collaborative energy without always having a clear metric to attach to the loss.
When employees do not believe their leaders understand them, communicate transparently, or make decisions that reflect a coherent vision for the future, the emotional contract between worker and organization begins to erode. The People Risk 2026 data suggests that erosion is now measurable — and accelerating.
AI Is a Human Transformation Challenge, Not Just a Technology One
One of the most provocative reframings to emerge from the What's Not Working @ Work summit came from Josh Greenwald, Chief People Officer at Sword Health. Speaking to attendees, Greenwald challenged the dominant narrative around AI in the workplace.
"This is more about human transformation," he said. "We put too much emphasis on technology."
It is a deceptively simple observation with enormous implications for how organizations plan and execute their AI strategies. Most organizations invest heavily in the technical infrastructure of AI — tools, platforms, integrations, and workflows. Far fewer invest equivalently in preparing their people for the mindset shifts, skill development, and cultural change that sustainable AI adoption actually requires.
The Marsh report reinforces this point with data. Mindset barriers to AI adoption currently rank sixth among people risks globally. However, when the view is narrowed to specific regions or industries where AI rollout is most aggressive, that ranking rises sharply to third. In other words, the more an organization pushes into AI transformation, the more the human barriers begin to dominate the risk landscape.
This has direct implications for leadership. If leaders are not actively modeling curiosity, building psychological safety around learning and failure, and communicating honestly about how AI will reshape roles and responsibilities, resistance and anxiety will fill that vacuum. The technology does not transform organizations — leaders do, and right now too many are under-equipped to lead that transformation effectively.
Leadership Gaps as a Systemic Risk Factor
Running beneath all of these findings is a consistent throughline: leadership gaps are not a soft, secondary concern. They are a primary driver of people risk across multiple dimensions simultaneously — from wellbeing and engagement to AI adoption and attrition.
When leadership development is underfunded, deprioritized, or disconnected from actual business strategy, the effects ripple outward across every workforce metric that matters. The People Risk 2026 data does not just identify symptoms; it connects those symptoms to structural causes that organizations have the agency to address.
What HR Leaders Should Do Now
The convergence of summit insights and Marsh data creates a clear call to action for HR and business leaders heading into the second half of the decade.
- Audit your leadership pipeline honestly. Not against ideal competency frameworks, but against the specific challenges your workforce is facing right now — including AI change management, employee wellbeing, and psychological safety.
- Treat AI adoption as a culture project first. Invest in helping leaders and managers build the mindsets and communication skills needed to bring their teams through transformation, not just the technical tools to execute it.
- Intervene early on disengagement signals. The gap between employees who are unsatisfied and staying versus those planning to leave represents a window of opportunity. Organizations that act on that window with meaningful leadership attention and structural support will fare better than those waiting for exit interviews to tell them what went wrong.
- Connect wellbeing investment to business outcomes. The drop from 66% to 44% thriving is not simply a wellness story — it is a productivity, innovation, and retention story. Framing it that way in the boardroom may unlock the resources needed to address it.
The data is clear. Leadership gaps are no longer a background risk that organizations can manage at the margins. They are a central, compounding driver of the workforce challenges that will define organizational performance through the remainder of this decade. The leaders who recognize that — and act on it — will be the ones who pull ahead.