Over the last two decades, data has shown a trend of increasing uncertainty—but the latest data from the IMF on the world uncertainty index shows that global uncertainty has reached its highest recorded levels. The U.S. Federal economic policy index echoes this trend. This is not just an academic observation: In recent earnings calls, 87% of CEOs referenced the word “uncertainty” in their earnings reports and many organizations have suspended their earnings outlook, citing the volatile effects of tariffs and shifting policy landscapes. In an era where unpredictability is becoming the norm, the critical question becomes: How should organizations—and the people who run them—adapt to lead effectively through uncertainty?
We are observing two important implications of this unprecedented level of uncertainty:
- The level of fear and anxiety in organizations is at an unprecedented level, with the United Nations Development Programme’s most recent Human Development Report noting that the number of people expressing stress, sadness, anxiety, anger, or worry is at a ten-year high.
- The path forward for business leaders is murkier than ever before and is resulting in paralysis in decision making or a pull back to a more “command and control” leadership style.
It falls to leaders to mitigate the anxiety in their workforce and to find ways to chart the most effective path forward with incomplete information. From studying organizations and leaders that have faced fast changing and unpredictable environments, a few lessons stand out:
1. Seek to add clarity, not certainty.
Clarity removes ambiguity and helps employees understand the context, what is known, and what is not known. Having clarity allows people to make their own decisions about what actions might help make progress towards organizational goals. Certainty, on the other hand, is about removing doubt and creating confidence in decisions. Having certainty allows people to be confident in the path forward. Providing false certainty often results in confident but wrong decisions and communicating with certainty makes it hard to reevaluate decisions.
In an environment that is highly unpredictable, leaders can still add clarity about goals, decision-making criteria, and assumptions. This reduces anxiety and enables employees to focus on actions they can take and helps them to be willing to pivot if those actions prove to be the wrong ones. An example of how this distinction shows up is to say: “We don’t yet have the information to know whether the tariffs will be temporary or permanent. In either case, we are moving forward with these sets of decisions, but these other decisions will not be made until we know more.”
2. Take stock of the threats and opportunities in the environment. Talk about them transparently.
Part of the challenge of an uncertain environment is it is hard to decipher the real threats and opportunities from the perceived ones. Research has shown that individuals who have faced many threats are more likely to perceive new information as threatening than those who have not. Whether facing regulation and policy changes, new technologies, or any of the other changes that can disrupt the status-quo, an open discussion about what may or may not change will help to ensure the focus is on real threats, not on perceived ones.
Leaders are often hesitant to talk about uncertain changes because of the fear of creating unnecessary anxiety. Mental Health America’s research indicates that less than 50% of employers encourage transparent communication. The result is employees who feel unsupported and psychologically unsafe. In a highly connected world with almost infinite sources of information, protecting employees from uncertain news often backfires, with rumor mills overtaking reality.
The adoption of AI is a perfect example of an uncertain threat and opportunity. Many organizations are starting to experiment with AI use cases, and the threat of job losses or job redefinition is being discussed continuously in the media. While job losses may well be the reality with certain applications of AI, it is certainly not universal. Leaders should have the conversation about the impact of AI in their context, even if it is still uncertain and speculative, and ensure employees and customers are seeing some real opportunities—not only threats.
Leaders who do this well are focused on the use cases that add value quickly and clearly. For example, many utilities companies have started using generative AI in customer service centers to help answer questions quickly and to predict maintenance needs. Companies in other sectors, like IBM Consulting, have also done a good job of articulating for their employees where and how AI can be useful and what the current limits are to its use.
3. Think in scenarios and options.
A hallmark of uncertainty is that we often cannot know what the right choice will be. Finding the right answer requires learning by doing. Learning by doing requires two-way doors—you need to be able to undo a course of action (or at least move away from it) if the information learnt suggests it was the wrong choice. This requires utilizing tools like scenario planning to identify the decisions that will be true no matter what, and the ones that are likely to be contingent on new information. It also requires keeping options open wherever possible, even if it adds some complexity and cost.
This is why marketing departments utilize A/B testing when it is not certain what consumers will prefer. It is a way to gather that information while keeping both options open. One of the best questions to discourage individuals from closing options too quickly is to ask, “What if the opposite were true?”
4. Reframe threats as opportunities.
Uncertainty isn’t necessarily bad—times of change and disruption are filled with opportunities to do things differently and better. Leaders can acknowledge the threats but then focus on finding the opportunities.
If new regulatory requirements are disrupting the way the business has operated, it will do so for the whole industry and create an opportunity to shift the landscape and come out on top. The electrification of the auto industry allowed Hyundai to shake up the marketplace and carve out a different position for itself. In its early days, Hyundai struggled with quality and reliability and was largely known as a problematic, but affordable, manufacturer. Over the years, Hyundai made steady improvements in quality as evidenced in its J.D. Power’s Initial Quality Study scores. The shift towards EVs allowed Hyundai to dramatically shift its lineup and take advantage of the improved quality and reliability to position itself much further up-market with the Genesis brand and its suite of EVs.
Even with something as emotionally charged as return-to-work mandates, leaders can empathize and acknowledge the challenges it presents for some employees, while also discussing the opportunities it presents for greater collaboration and team cohesion. A word of caution, though: It is easy for leaders to sound disconnected from reality if the reframing comes across as disingenuous or overly optimistic. The goal is not to convince employees that there are no threats, but to put them in context and amplify the opportunities. An example of this reframe is in how leaders deal with “failures.” Don’t minimize the cost or impact of the failure, but focus equally on the opportunity to learn from it to make future efforts more successful.
With uncertainty at an all-time high, avoiding paralysis and disengagement from employees is essential to success. While leaders cannot control external events, they can help by mitigating workplace anxiety and providing clarity on objectives. Over the last few years, we have seen companies across industries utilize these strategies to improve employee participation in volatile situations: a health tech company that improved employee engagement scores by 24% and revenue by 26% in three years; a pharmaceutical company seeing 50% participation rates in change efforts, leading to millions of dollars of savings and fewer quality defects; and, an industrial giant reducing anxiety in its newly acquired companies, leading to a faster, less disruptive integration.
