Global uncertainty has been trending upward over the last few decades, driven by both an increase in the severity of shocks and their frequency. In a more interconnected world, events whose impact might previously have been restricted to one region are now being felt globally. According to the International Monetary Fund’s World Uncertainty Index, which measures mentions of uncertainty in Economic Intelligence Unit reports, uncertainty has risen significantly since the 1990s. It is further reflected in remarks from Kristalina Georgieva, the managing director of the fund, who said, “If I had to identify a theme at the outset of the new decade it would be increasing uncertainty.”
This level of uncertainty has profound implications for business strategy, making it simultaneously more important to implement change proactively and more difficult to do so. Greater uncertainty puts more emphasis on flexibility and agility in planning. Paradoxically, it also creates a desire for more “certain” plans. While focusing on creating robust strategies that address current challenges may feel necessary, HR leaders can help their company become better positioned for success in the long-term by prioritizing elements like agility and adaptability in their plans.
Planning for plans to change
Imagine the teams that gathered in January 2020 to develop their strategic plans for the year, only to have them become obsolete less than two months later. While the pandemic is certainly an extreme example, it points to one of the fundamental problems with planning in an environment of high uncertainty: a static five-, three- or even one-year plan can very quickly become outdated and irrelevant. More concerning is that timetable-driven strategic planning and the narrow focus it engenders take away from the ability to spot new threats and opportunities. This inability to assess the need as it is, versus as we thought it would be, and to pivot from the current business plan can be fatal when the market and context undergo a significant shift—which happens more often in uncertain times.
By explicitly articulating the assumptions that underpin the plan and opting for frequent strategizing that evaluates these assumptions in the current context, HR executives can push their companies to have the flexibility to pivot as needed. Testing the assumptions under various economic, policy and market scenarios can help create a greater appreciation for how the key assumptions impact the plan. This will make it easier to make changes if and when those assumptions change. HR leadership can act as liaisons across departments, uniting the company to better adopt shifting common goals. Doing so helps avoid unnecessary restructuring or talent layoffs.
Insulating your organization against fight or flight
Human nature plays a major role in how we respond to uncertainty and ambiguity. Uncertainty triggers our desire for safety and the status quo. Mitigating the anxiety and fear that are inherent in times of volatility is critical to unlocking a positive response from the workforce.
The human biological response to a threat comes from thousands of years of evolution and was initially developed to deal with physical threats in the environment. In today’s world, the same mechanism has been co-opted to respond to non-physical threats to our ego, reputation or sense of stability. A highly active “survive channel” leads to chemicals being released in our bodies that focus our attention on eliminating the threat and creates a tunnel vision that prevents us from finding opportunities within a crisis.
The survive response can be mitigated by helping the workforce see the opportunities, not just the threats, in uncertainty. Volatility creates opportunities by shifting the status quo. History has repeatedly shown that companies that don’t just focus on “hunkering down,” but also look for these opportunities, have prospered in times of great uncertainty. HR leaders can help shift the focus toward opportunities by asking questions like, “What can we do now that we couldn’t before?” In addition to the opportunity focus, reducing the noise in an environment, like inefficient processes or unnecessary meetings, can help remove threat-inducing triggers.
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One of the driving factors behind the survive channel is fear of the unknown. Leaders often try to address this by adding certainty even when there is none. However, this is fraught with danger as employees can often see through this “false certainty.” Even if they don’t, inevitable changes that are needed will feel unexpected. It is far more effective to clarify what is known and what is unknown. By adding certainty where it exists and acknowledging where it doesn’t, leaders can focus the organization on the right threats. HR executives can help other leaders ensure that their messaging is both empathetic and realistic about the realities of the current context. Otherwise, employees fill in the blanks, assume the worst and put themselves into a heightened survival mode.
Fostering curiosity to capture innovation and opportunities
Humans are also innately curious and possess the ability to tap into a “thrive channel.” This mechanism is triggered by perceived opportunities, which are met with higher levels of energy and more innovation, collaboration and curiosity—just what is needed to create agility. In addition to significantly increasing conversations about potential opportunities, HR leaders can help activate more thrive responses by demonstrating success and delegating authority.
To fuel thriving, it’s essential to create proof points and demonstrable wins through proactive changes in response to the external environment. It not only feels good to recognize wins, but also helps to create the belief that productive, beneficial change is possible. Delegating authority and involving more people in decision-making and in executing change will foster greater curiosity and innovation as well. Greater uncertainty requires a greater ability to process information quickly and make rapid decisions, which is only possible when more people are looking out for opportunities and taking action.
Leading through uncertain times without losing talent, sacrificing innovation or destabilizing your organization is a difficult challenge but rethinking the planning process and tapping into human psychology can be tremendously helpful. HR executives can lead their company through volatility and unpredictability by guiding scenario planning, mitigating the impulse to react unproductively to threats and creating an opportunity-focused environment within which employees can thrive.