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5 Challenges AI Brings to Leadership

business leaders discussing how to manage an human team enhanced with AI

According to the World Economic Forum’s 2025 Future of Jobs Report, businesses have increased their investment in artificial intelligence (AI) eightfold in the past two years. While the majority of companies are still experimenting with how to utilize AI, research from BCG suggests that 22% of businesses have made the leap from “proof of concept” into generating value from implementing AI. 

As more companies integrate AI into their workflow, the question is not if AI will change the workplace, but how. People-leaders will face new challenges managing their teams, including addressing conflicting attitudes surrounding the use of AI and equipping team members to use the technology effectively. Beyond the initial steps of integrating AI, leaders will be tasked with ensuring work produced or assisted by AI is accurate and valuable, and maintains company standards. Managers may often find themselves within a state of ambiguity, and will need to rely on key leadership capabilities to navigate their teams towards strategic objectives.

Challenges AI Brings to Leadership

1. A Conflicted Workforce

Attitudes towards AI can vary dramatically depending on their age, level of exposure and their current profession, according to Pew Research Center. For example, overall, 52% of Americans are more concerned than excited about AI in daily life and less than 20% predict that it will be more helpful than harmful to their job, but workers who have a higher exposure to AI, such as in the information and technology sector, are more likely to view AI in a positive light. 

However, even for teams that are eager to leverage AI, the World Economic Forum projects the growing technology will displace 9 million jobs globally within the next 5 years. While the number of jobs it’s projected to create is higher (11 million), any worker could be reasonably anxious over the possibility of losing their livelihood to AI.

As with any transformation initiative, to assuage the fears of resistant employees, leaders will need to become agents of change. Leaders must be able to empathize with their human team while also championing AI integration. 

To successfully manage change in the age of AI, leaders must draw upon these capabilities:

  • Self-Awareness
    Leaders who have developed their self-awareness are attuned to how their actions are perceived by others and the impact of those perceptions. A leader with a high level of self-awareness will be able to understand how implementing Ai into the work environment may affect the team, its engagement and morale. 
  • Interpersonal skills
    Interpersonal skills and emotional intelligence will become increasingly important as AI becomes used more broadly, but especially so during the initial adoption phase. Leaders with poor interpersonal skills risk further alienating workers who may already be resistant to adopt AI. 
  • Influencing others
    To bring the entire team on board, leaders will need to adjust their approach and communication style to meet members where they are. Doing so helps to establish trust and ease resistance to change.

An effective leader will recognize potential barriers to change and work to mitigate negative perceptions by addressing them. Meanwhile, they must also clearly communicate and garner support for the strategic vision.

2. Establishing New Standards

Generative AI tools can analyze large sets of data quickly, but their ability to provide accurate and useful information relies heavily on the data it uses and on the prompts given by users. Failure to verify a genAI’s answers have led to costly and even deadly results. Likewise, if teams use third-party genAI tools, they risk leaking proprietary information based on their input. 

Guardrails must be put in place to ensure personal and organizational data remains protected and outputs from genAI tools are both accurate and relevant to the organization. It may come as a shock then, that in a survey conducted by The Wharton School of the University of Pennsylvania over half of the companies responded had “few or no restrictions of (AI) usage at work.”

Leaders must establish new standards on who can use AI and for what tasks, as well as how to structure prompts, how to interpret and analyze the results, and how to apply the output. Leaders must also decide how to maintain accountability amongst team members who work closely with AI. In short, managers will need to develop their capability of leading high-performing teams.

Leading High Performing Teams

Leaders of high performing teams are able to set clear standards and group ‘norms’ for the workplace. This is partly achieved by communicating clear expectations and metrics for performance, but it also requires inviting and considering feedback and concerns from the group. These leaders also understand each team member’s strengths and how to delegate work fairly and equitably to enhance the team’s performance overall. Now that AI will be a member of the team, leaders will have to evaluate its strengths and weaknesses and how it fits into the existing workflow.

business leaders discussing challenges AI brings to leadership

3. Reskilling and Upskilling

The World Economic Forum projects that in the next 5 years, 59% of workers will need training as nearly 40% of today’s skills are expected to become transformed or obsolete. 

As it relates to AI specifically, two subsets of skills will need to be developed. The first will be a basic understanding of how AI and large language models (LLM) work, including their limitations and when human intervention is needed to produce the best outcomes. As Wharton researchers recommend in MIT Sloan Review, any employee who interacts with AI “should have simple training to understand the tools’ quirks — especially their ability to hallucinate — and how to evaluate AI-generated documents and reports.”

The second subset of skills will depend on which tasks are reassigned or enhanced by AI, freeing workers up to focus on other tasks. As leaders decide which tasks can be handled by AI and which can be enhanced, they must also decide who from their team needs re- or upskilled. To do this, they’ll need to grow their capability of developing others.

Developing Others

Leaders adept at developing others go beyond assigning training for direct reports. They understand the strengths of their team and how it could be improved within the broader context of the company. These leaders work to identify professional development opportunities for their team members that align with the company’s strategic goals and objectives. They are actively engaged in their team’s development journeys and provide timely, constructive feedback that is specific and actionable. 

By focusing on the learning and development of their team, leaders can establish trust, easing resistance and garnering greater engagement from members.

4. Seemingly Endless Possibilities

Data-driven decision making has been a buzzword for over a decade and one of the driving forces for the increased adoption of AI. While it is true that genAI and LLMs can summarize large data sets, the insights they provide will unlikely be contextualized to the organization, its needs, or its strategy. Further, LLMs have been found to provide different outputs based on the same data and even the same prompt. 

Leaders looking to utilize AI for data-driven decision making may find themselves with conflicting opinions all derived from the same source, using the same data, without insights into how those opinions were formed. As the aforementioned MIT Sloan Review article points out, “LLM tools’ input and output can vary, and the process through which the response is produced is a black box,” into which leaders have a very limited view.

Leaders must be able to evaluate work produced and enhanced by AI while contextualizing it for their team, company, and strategy. This requires keen strategic thinking as well as developing their capability for decision-making.

Decision-Making

Effective leaders weigh data, experience, and intuition into their decision-making. They remain curious about solutions while also seeking to verify their validity and relevancy. 

Strategic Thinking

Similarly, leaders who think strategically are able to examine and assess conflicting information with curiosity and an open mind. By reframing information and problems from various perspectives, they can anticipate potential drawbacks and benefits from the possible solutions set before them. 

Leaders with strongly developed capabilities in decision-making and strategic thinking will more likely succeed in leveraging AI because they will seek to understand the outputs beyond face value and will instead investigate them for their potential impact on the organization.

5. Working in Ambiguity

While many are making predictions on how AI will change the workplace, not everyone agrees, even when it comes to job displacement or possible use cases for LLMs. If anything, AI represents another large unknown for leaders and their teams, who have already experienced so many uncertainties within the past five years.

Leaders must become comfortable with ambiguity, not just when it comes to AI, but for the countless uncertainties that will inevitably arise in the future. To do so requires leadership to build an internal compass through developing core capacities: flexibility, velocity, pattern-recognition, and self-regulation. Capacities enable leaders to adapt as necessary to changing environments and challenges

These capacities rely on various leadership capabilities, such as the ones mentioned above. Unlike skills, leadership capabilities cannot be developed through traditional training methods. Instead, they require vertical development. Vertical development does not work to upskill a leader but to change the leader’s mindset — the way in which they think and perceive challenges.

Ready Your Leaders for the Age of AI

Sounding Board provides leadership coaching, a highly personalized form of vertical development that works to build leaders’ capabilities and capacity. Paired with our software, we make it easy to build, manage, track, and scale vertical development across your organization. 

Request a demo today to see how we can help prepare your leaders for the challenges that await them in the Age of AI.

5 Challenges AI Brings to Leadership and the Capabilities Needed to Navigate Them 1
business leaders discussing how to manage an human team enhanced with AI
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By Mary Carder

5 Challenges AI Brings to Leadership and the Capabilities Needed to Navigate Them

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