The Growing Executive Talent Gap: Risks and Insights for Employers Amid Economic Uncertainty

Understanding the Executive Talent Gap

In recent years, the landscape of executive talent has undergone a significant transformation, primarily driven by economic uncertainties and changing demographic patterns within the workforce. According to the 2025 NFP U.S. Executive Compensation and Benefits Trend Report, released by NFP, a prominent property and casualty brokerage and consultancy under Aon, organizations are now compelled to recalibrate their executive benefits strategies. This trend reflects a broader recognition that sustaining a robust talent pipeline is crucial amid the imminent retirements of many baby boomers.

NFP's survey revealed that an alarming 85% of employers feel the pressure to retain top talent, particularly as a substantial number of baby boomers transition into retirement. This shakeup has prompted companies to focus more sharply on nurturing future leaders and investing in talent development and retention strategies. Tony Greene, president of NFP's Executive Benefits division, emphasizes that the departure of experienced senior executives represents not just a loss of human capital but also a tangible threat to business continuity. The challenge before many employers is to proactively plan for this executive talent void while simultaneously navigating the complexities of employee expectations and financial sustainability.

Economic Concerns and Customized Benefits

The current economic landscape has introduced a level of anxiety among employers. A staggering 97% of survey respondents expressed concern about economic conditions affecting their operational stability. This sentiment translates into a shift in how companies approach executive compensation, adjusting it from a once-generous framework to a more sustainable and financially sound model. One in five companies indicated that the prevailing economic uncertainty prompts them to reconsider the scope and type of executive benefits offered.

Greene notes that "financial discipline" has become as paramount a concern as retention. The once-open-handed nature of executive compensation packages is being replaced with a focus on long-term value creation and flexibility that aligns with a company's fiscal health. This strategic pivot represents a significant re-evaluation of executive compensation dynamics in challenging economic times.

The Retirement Preparedness Dilemma

Interestingly, while many baby boomers are stepping away, others are opting to stay in the workforce longer than initially intended. The report found that 57% of executives are delaying their retirement. However, this extended tenure often does not correlate with improved retirement planning. Alarmingly, only 29% of baby boomers surveyed felt they fully understood their benefits — a clear gap that could impact employer-employee relations.

Greene highlights the importance of benefit comprehension, stating, "Engagement is directly tied to employees' understanding of their benefits." If employees lack clarity regarding their benefits, the perceived value diminishes, hindering workplace morale and loyalty. Thus, fostering financial literacy becomes critical, with companies encouraged to simplify benefits communication and enhance access to financial planning resources.

The Strategic Role of Nonqualified Deferred Compensation Plans

Among the various benefits strategies, Nonqualified Deferred Compensation Plans (NQDCPs) emerged as a key tool for fostering executive retention. The report revealed that nearly 68% of companies utilize NQDCPs as part of their executive benefits to retain talent, while 53% use them to compete effectively within their industry, and 52% recognize their potential to aid in retirement savings.

The satisfaction level with deferred compensation plans is notably high, with 87% of participants affirming that NQDCPs positively impact their retirement readiness. Greene asserts that these plans not only afford tax-advantaged options for employees but also offer employers an opportunity to strengthen their competitive stature through effective communication and onboarding processes.

Conclusion: Navigating the Future of Executive Talent

The findings from NFP’s report accentuate the pressing need for businesses to innovate their executive benefits strategies amid shifting employee demographics and financial pressures. As organizational landscapes evolve, companies that prioritize clarity, adaptability, and comprehensive talent management will inevitably position themselves ahead of their competition. The imperative is clear: fostering a deep understanding of benefits among executives could be the key to engaging and retaining top talent critical for future leadership roles.