Leading in Volatile Economic Times: What Today’s Leaders Need to Succeed

Though industry pundits disagree on whether the US will or won’t experience a recession any time soon, there is no disputing that we’re living in volatile economic times. The Fed’s quantitative tightening is removing liquidity from the markets and increasing the cost of capital, while wage inflation and higher cost-of-goods are putting a damper on corporate profits. And while US GDP rose modestly for the first half of 2023, many analysts expect it to decline in the latter half of the year and early 2024. 

These volatile economic times place greater pressure on organizational leaders, requiring them to respond to fast-changing conditions in new and different ways. The most successful leaders navigate a volatile, uncertain, complex, and ambiguous (VUCA) world by developing and enhancing their skills in four critical areas. 

Resilience 

In times of great change and uncertainty, resilience is a must-have skill for any leader, enabling them to adapt in sync with their environment. Many leaders rely strictly on willpower as the primary strategy for personal and organizational resilience. But science repeatedly tells us that willpower is the most ineffective strategy to develop personal and organizational resiliency.   

What exactly does resilience look like in an organizational leader?  

Several characteristics and capabilities are hallmarks of resilience, including: 

• Pivoting quickly and decisively in the face of change. This is primarily achieved through leaders developing their teams to be strategic as a way of life in order to effectively lead through change

• Seeing beyond current obstacles and limitations to create a vision and drive its execution 
• Staying focused and strategic even while under pressure 
• Adapting old approaches and models to better fit new conditions 
• Remaining positively engaged with teams even amidst times of chaos and stress 
• Avoiding the temptation to dwell on past mistakes or setbacks, instead finding ways to move forward effectively 

• Projecting a sense of positivity and confidence even in difficult times 

Agile Decision-Making 

When economic conditions are uncertain and the environment is constantly shifting, leaders must make decisions that are rarely easy. But they often don’t have the luxury of time on their side. In volatile times, leaders need to be agile and nimble in their decision-making, while still weighing all the factors that are vital to making optimal choices. Their teams must develop within themselves to embody this agility. 

In today’s economic environment, those decisions might include cost-cutting measures, risk-reduction efforts, or changes in how resources are allocated, for example. In any of those areas, hasty decisions based on assumptions or gut instinct can have disastrous consequences…but leaders can’t drag their feet, either.  

It’s vital to assess the risks and benefits of various options, leveraging analytics and generative AI to make data-driven decisions. While the tools and technologies might provide the data and insights to guide agile decisions, leaders also need to be open to new ways of assessing choices and willing to make decisions faster amidst volatility. Following a process that is disciplined and data-driven can help leaders gain more confidence in their decision-making even as they take a nimbler approach. 

Emotional Intelligence 

In times of uncertainty, it’s easy for stress to override rational thinking and for emotions to take charge. The greater a leader’s emotional intelligence, often referred to as EQ, the more equipped they’ll be to keep their own emotions in check as they navigate a difficult environment and help their own teams manage the emotions that inevitably arise amidst change and volatility.  

The key for leaders is to identify trigger points that require them to be self-aware of the emotion that a change trigger has burdened a leader with.  Awareness enables leaders to develop the skills to respond in an emotionally intelligent way…they choose their response to emotional triggers.   

It’s precisely at times like these that teams look to their leaders for a steady hand and a cool head. Now more than ever, organizational leaders need to stay attuned to how both internal and external changes—and the decisions they necessitate—are impacting their teams emotionally. Employees across the organization need their leaders to communicate clearly and transparently, demonstrate confidence, and rally them around a shared vision and purpose. None of that is possible unless leaders can manage their own emotions and focus rationally on the task at hand. 

A Learning Mindset 

The faster our world changes, the more important it is to learn from each experience and apply those learnings to meet the evolving needs of the organization’s many stakeholders. But the pace of change makes it more likely that leaders will be constantly pulled into the busy-ness of day-to-day operations, finding it tough to allocate time to pause, reflect, learn, and apply. 

A learning mindset is an essential skill for leaders at every level of the business, especially in volatile times. By instituting a Do/Pause/Reflect process and making it part of their routine, leaders can ensure their schedules (and those of their direct reports) include time to step back from their daily responsibilities, reflect on what has worked well and what hasn’t, draw key learnings from their experiences, and apply them to move forward effectively. While it may sound counterintuitive, a fast-changing world demands that we occasionally stop, so we can take stock, apply learnings, and avoid the missteps and delays we can’t afford. 

The Role of Assessment and Coaching in Volatile Times 

Building and enhancing skills like these is essential in times of economic uncertainty and change, but it’s not as simple as recognizing the need and making a commitment to address it. In fact, recognizing the need is only half the battle when it comes to professional development.  

That’s why many organizations are employing sophisticated assessment tools that help leaders identify areas for improvement by delving into not only how they respond in various situations but why they operate the way they do. By understanding the drivers behind their behaviors, leaders will be in a much better position to make positive changes that better equip them to navigate volatile circumstances.  

Executive coaching then helps leaders build the skills it takes to thrive in a VUCA world. An experienced coach can use the insights gleaned from assessments to develop a targeted action plan that helps an individual leader build on strengths and overcome weaknesses. That’s a crucial step in ensuring organizational leaders are well-equipped to meet the challenges of these times. 

The Leadership Advisory Practice at Odgers Berndtson helps organizations discover and develop leaders, strengthen value-creating teams, and prepare for what’s next. Learn how our highly experienced assessors and coaches can help your leaders build and enhance the skills necessary to lead in volatile times.