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Uncertainty is not unusual in business. In fact, it can be seen as one of the defining characteristics of life as a business leader. Indeed, the combination of domestic issues, from inflation to supply chain disruptions, and global tensions suggest that the level of uncertainty is likely to remain high for years to come.
According to KPMG’s CEO Outlook 2022, which speaks to CEOs about their current and future strategies, 86% of these global business leaders anticipate a recession in the coming year, and 71% expect the recession to bring about change 10% on profit. With uncertainty more certain than ever, how can leaders begin to control future business challenges?
Related: How startups and investors can thrive in today’s economic environment
How is economic uncertainty affecting the way leaders plan for 2023?
The first thing that hits leaders right now is the fact that they exist and work within a “polycrisis,” facing numerous challenges to profitability and security all at once. Operating in crisis mode inevitably affects a leader’s ability to plan ahead and adapt to changes in a business environment.
Many companies have already had to make significant changes to their organizational, operational, and financial structures in order to survive. These companies face additional challenges now that high prices, tighter monetary policy and weak demand persist; 90% of economists predict that subdued demand will be a significant burden on business.
A side effect of this period of crisis has been increased anxiety around work, performance and money among employees. Leaders are not immune to this stress, but the pressure is high to remain calm in order to retain the best employees. And yet, any attempt at stasis is likely to be thwarted when organizational restructuring requires layoffs and reductions.
The implication for business leaders is that they need to be more flexible in adapting their strategies. In fact, even large companies need to think more like smaller startups, focused on agility to survive and thrive. Along with lingering anxieties and currency restrictions, leaders face new obstacles left over from the Great Resignation and Reorganization. The move to hybrid remote work environments means that leaders’ usual methods of making decisions are no longer available to them. They need to find much more resilience and adaptability to lead through uncertainty.
All of these factors will have a special impact for startups and smaller businesses. Newer companies may not have even established a status quo of reliable processes before the pandemic hit; now, they need to raise their baby in a recession.
As leaders try to grow their businesses and retain their teams, what should they focus on in early 2023? Here are three considerations to keep in mind:
1. Reaffirm the purpose of the organization
When leading a startup, a sense of purpose is vital. Leaders can begin by outlining how their ideas will resonate with the universe and why they matter in an attempt to instill this in the organization and create a purpose-driven business.
Leaders must ask themselves and their teams, “What do we offer the world that no one else can? What is our reason for being?” Providing clarity of purpose will strengthen the bonds between teammates and refocus people’s vision on the horizon instead of the chaos that surrounds them.
According to a recent Deloitte survey, 43% of business leaders surveyed said their company views organizational purpose solely as a marketing and branding game. That’s not the smartest approach, as customers aren’t satisfied when companies speak empty words about purpose. They wait to see action.
Related: 6 Key Tips for Leading Transparently in Economic Uncertainty
2. Build trust by celebrating integrity
Integrity should be the last quality to fall by the wayside when times get tough, but it is often one of the first. Integrity can be incredibly motivating; it can inspire a team and keep members focused on what’s important.
If leaders make promises they are unlikely to keep, the short-term gains will be dwarfed by the long-term damage to trust. Both integrity and transparency should enhance trust in leadership, which is important if the organization is heading into the unknown.
According to Deloitte’s The Future of Trust report (2021), “trustworthy companies outnumber untrustworthy companies by 2.5 times, and 88% of customers who highly trust a brand will buy from that brand again.” Employee trust in their leaders improves job performance, job satisfaction, and commitment to the organization and its mission.
3. Don’t forget the positives
When challenges abound and the world seems chaotic and uncertain, leaders can often get caught up in a negative thought pattern. This, coupled with the calamity language of news programs and social media, can be devastating to employee anxiety levels.
In a 2022 study conducted by the American Psychological Association, 73% of people in the United States who participated in the study reported feeling overwhelmed by the number of crises occurring in the world. Nearly nine in 10 participants also reported that they felt the seizures had been occurring in a constant stream.
Leaders will do well to remember that optimism is still valid and possible. Emphasize that times will get better, eventually. Offer some reassurance that there is light at the end of the tunnel.
Economic uncertainty, which continues to develop and evolve, has the potential to derail even the largest and best-organized companies. For smaller companies and startups, uncertainty can be destructive and formative at the same time. It is their nemesis and the water in which they swim. Leaders must be able to incorporate uncertainty into their projection of the future in order to grow despite the obstacles it presents.
Related: How to Prepare Your Business for the Economic Downturn