Leading through volatility and uncertainty

By Jim Lemoine, Assistant Professor of Organization and Human Resources

Woman leads a business meeting.

When the coronavirus pandemic first emerged, numerous articles popped up in business media referring to it as a VUCA situation—an organizational climate that is volatile, uncertain, complex or ambiguous. People often say VUCA environments defy logical planning, with some even suggesting that the best any business leader can do is to make things up as they go along. 

That was familiar (but bad) advice as COVID-19 spread, and remains so today. The organizations that emerge strongest from VUCA situations aren’t the ones that give up and wait for the storm to pass—they are the ones that plan proactively, pay attention to environmental cues, and lay the foundation to successfully reboot and recover.

Lemoine

It’s natural to feel like it’s useless or impossible to plan for VUCA situations, but that’s not a helpful impulse. My colleague Nate Bennett, of Georgia State University, and I have proposed that most business climates—including the one created by the coronavirus—are not volatile, uncertain, complex and ambiguous at the same time. It might be one or two of those attributes, but it’s generally not all four. And being able to identify which describe your climate is critical to understanding what the most effective response may be.

The pandemic, for instance, started out very ambiguous, but then settled into a cycle of volatility and high uncertainty. The prescription for this particular blend of VUCA attributes is to invest in information-gathering capability and use that information to build agility and contingency options for the future. 

Research shows that with more robust information, not only does our decision-making capability and effectiveness improve, but our intuition also leads us to better choices. All in all, the better informed we are, the better decisions we make—even when we don’t take time to think through those decisions. With better information, organizations can build agile strategies for the future: planning different levels of potential staffing and supply needs, anticipating market changes that require proactive responses, and understanding what essential employees are going through. 

That last piece is crucial because, as challenging and dangerous as VUCA demands may be, it’s the effect on employees that may have the most long-term impact for organizations. Research shows we are more likely to respond strongly to recent events than distant ones, and negative experiences generally outweigh positive ones. No matter how well you treated your employees before, their experience during tumultuous times may disproportionately affect their plans for the future. 

As markets and workplaces become less chaotic post-VUCA, an onset of opportunities may give your employees new expectations and options. Whether they respond with loyalty to you will likely depend on how they feel they’ve been treated during those difficult times. 

For instance, many organizations laid off employees during the pandemic. There’s no getting around the financial realities that make these decisions necessary, but for organizations and employees who suffer through them, are the lines of communication open? Are managers being as transparent and engaged as they realistically can be with their current and former teams? During a crisis, it’s easy to view simple contact as a lower priority, but the absence of information and evidenced concern can persuade employees that the company is not worth their commitment.