Leading Through Volatility

Recently, I was sitting in Washington, D.C., in the office of the CEO of a shipping and logistics company. Hanging over the right corner of his office was a flat screen TV tuned to a financial channel posting the most recent "unprecedented" crash in markets around the world. The CEO remarked how hard it is for anyone to make a decision with the media screaming about the remarkable, perpetual instability of all markets in nearly all parts of the globe.

The extreme marketplace volatility over the past several years is not news. But our leaders — and our workforce — have not yet learned how to adjust to it. The psychological term for it is called "affect tolerance," or the ability to manage our emotional responses to outside events. These events are becoming more distracting, increasing our levels of anxiety and affecting our ability to keep focus on short-, mid-, and long-term goals. This agitated way of looking at the world is extremely dangerous because it causes us to ignore the indisputably cyclical nature of our industries and the absolute necessity to balance our long-term strategy with our short-term needs.

Take the following remark from my conversation with the shipping CEO, one of the most revered leaders of the last few decades:

Look at all the cash that American corporations are sitting on right now — this is unprecedented. When you think about what it takes to make a decision today — and the fact that with immediate, unprecedented media access to not only what your decision is but the flood of opinions that are then given loud voice to criticizing it and you — it's no wonder that CEOs today end up paralyzed about investing in the future. They're getting such immediate, public reactions for every risk that they take that they are paralyzed from making any decisions. They're just sitting on cash that could absolutely be put to better use.

With certainty, it is long-term investments that are suffering from this hoarding.

What is the answer? The media is not going to disappear anytime soon, but our reaction to it and other stressors must. Those of us that adapt and overcome these will enjoy a considerable competitive advantage over those who cannot. By managing and displacing the impact this agitation can have on our minds, we are able to re-attune ourselves to the mid- and long-range strategic initiatives that will in large part determine our long-term prosperity.

One begins by learning to become much more comfortable with the mind's reaction to agitation. Untrained minds, almost universally, become incredibly affected by elevated adrenaline. Cognitively, its affects can be drastic on higher order function. Studies show that human beings untrained to its affects lose the ability to differentiate amongst priorities, the capacity for short-term memory, and any ability to perform complex problem solving. But we can combat this by absorbing and applying pattern recognition.

The first time adrenaline floods our systems its effects are dominant. But with practice, its effects can eventually be mastered, so much so that it can actually become an asset. Studies show that individuals used to the presence of adrenaline report increased focused and concentration, greater endurance, and heightened wakefulness. We must put ourselves and our people in situations where they can safely experience heightened levels of adrenaline but are crafted in such a way that they can still follow through on their tasks. With each new level of pressure introduced, the person will adapt to its presence, and their confidence that they can work with its presence increases.

• Assume that fluidity and crisis management will be a core part of all of our jobs. This must be a new skill set that is developed along with more traditional competencies. Seek out projects that are crisis turnarounds, and make such developmental experiences part of traditional career development.
  
• Use perspective reorientation techniques to keep people focused and moving. Emphasize that we have been through worse before. For instance, when people talk with despair about the future prospects of the country, rattle off actual unemployment rates during the Great Depression. There were times during World War II that our future habitation on this planet was put in serious doubt. Even more real during the Cuban Missile Crisis. We survived those, as we will survive these.
  
• Become more emotionally accessible to your people. Allow them to express their fears to you in a setting in which you can coach them through their emotional reactivity. Understand that people's emotional reactions are fleeting, regardless of their immediate intensity. Feelings are by definition passing. The key is to help unproductive reactions, like panic, pass as quickly as possible. Listening with interest to brief venting remarks but not overreacting to their implications is critical. Continue to remind people of their goals and the very tangible ways in which they can further their progress towards desirable outcomes.

Following these three steps can help build leaders that not only thrive in a competency that has become core to senior executive success but also have the capacity to pass that resiliency onto those individuals under their command. What other ways can you suggest helping leaders and workers focus in times of stress?

Justin Menkes is a leader in C-suite talent evaluation, a consultant at Spencer Stuart, and the author of Better Under Pressure (Harvard Business Review Press).

Thanks to Justin Menkes / Blogs HBR / Harvard Business Publishing
http://blogs.hbr.org/cs/2011/10/leading_through_volatility.html?cm_sp=blog_flyout-_-cs-_-leading_through_volatility