In the face of widening skill gaps, worker shortages, economic turbulence, the rapid spread of new technologies, and social and geopolitical strains, the pace of organizational change and stress is growing exponentially. Organizational resizing and “flattening” activities that result in layoffs of workers and middle managers at scale are forcing companies to change their workers’ and leaders’ roles, longstanding collaboration patterns, and working relationships. Increasingly, employees are required to learn and adapt to new tools and methods for performing their tasks amid greater adoption of automation, AI, and related technologies. Under the strain of these pressures, developing individual-level adaptability alone will not suffice; building organizational resilience has become an imperative that the HR function is uniquely positioned to lead.

While AI is reviled by workers as their potential replacement and residents living in the vicinity of existing or planned data centers, it is equally praised for its potential impact as a primary driver of the next industrial revolution, a massive multiplier of economic growth, and a balancing factor of both economic inflation and labor shortages through productivity improvements. However much stress its potential places on organizations, it is only one of several factors creating marketplace volatility with which they must contend. Organizational resilience must be developed to contend with that and much more.

For example, JPMorgan reports that financial markets are “under stress” due to the combined effects of global fragmentation, inflation, and artificial intelligence, to the point that “rolling shocks” may be the new reality. Part of that is due to the energy markets, where price increases and looming shortages may create the largest oil supply shock since World War II. Those issues will dramatically impact not only consumer gas prices but also the fortunes and operations of industries such as airlines, trucking/shipping, plastics, construction, semiconductors, clothing, pharmaceuticals, manufacturing, farming, chemicals, and paints. 

At the same time, U.S. equity market growth has been heavily reliant on the technology (Information Technology and Communications) sector, which has grown 600% over the past decade, compared to 200% growth in the S&P 500. That sector now represents nearly 50% of the S&P 500's total value, meaning overall market health is masked by the Tech sector, making other industry challenges and the volatility they face less obvious. The need to build organizational resilience exists in almost every corner of the commercial, governmental, and nonprofit sectors worldwide.

Understanding organizational resilience

Organizational resilience is the ability, at the group level, to anticipate crises and respond effectively to disruptions, whether foreseen or unexpected, modest or severe. Such an ability can be likened to “being cool under fire” or to being adaptable and responsive to the challenge at hand at the enterprise, business unit, functional, or team level. The Center for Creative Leadership (CCL) defines organizational resilience as “the dynamic capacity of the people within an organization” to:

• Be mindfully aware of the environment
• Respond productively to continuous change, adversity, and disruption
• Positively adapt and learn from experience in order to drive higher levels of performance over the long term

It represents a shared mindset, set of abilities and approaches, and a focus on responding constructively to novel circumstances, unplanned events, and occurrences in ways that enable a group of employees to find their way to achieve the organization’s mission and objectives despite unexpected setbacks and barriers. This is crucial, as human tendencies are to react in nonconstructive ways to disruptions in how, when, where, and with whom they perform their work, and to resist change. That further complicates a timely and appropriate organizational response to the challenges faced and can be accompanied by further experiences of anxiety and stress that show themselves as personal and interpersonal edginess, difficulties in adapting, and under-optimized work contributions. 

Research has identified characteristics of resilient and adaptable people that differentiate them from others less capable of managing the stressors and difficulties that accompany volatility and uncertainty. These include:

A growth mindset

This is the belief that personal abilities and intelligence can be developed through dedication, learning, and hard work. It is the core driver of a continuous learner, a characteristic of someone who is curious and motivated to grow and expand their understanding of new possibilities and solutions.

Elevated emotional intelligence (EI)

This is the scientifically validated ability to recognize, understand, and manage one's own emotions and those of others with whom one interacts. It is foundational to remaining calm, reasoned, and supportive of others in times of stress, chaos, and uncertainty.

Building and maintaining networks

Resilient people seek out and maintain strong and supportive relationships within and across their assigned team, function, and business, including external connections who can provide industry, professional, and personal guidance, ideas, or mentoring. Well-networked individuals can tap into diverse perspectives, work methods, and solutions that often exceed the knowledge and reach of specialized skill teams or operations. Those can become crucial to innovative problem-solving.

Creativity and flexibility

Highly resilient workers are distinguished from their peers by their creative thinking, open, flexible mindsets, and integrative thinking, which enable them to assess situations and more readily identify new approaches and potential solutions. These individuals are less likely to adhere to long-standing “truths” about the problems and solution sets that “work here” and are often drawn to innovative ideas and more advanced or emerging practices.

Practicing effective coping mechanisms 

People who are capable of managing their stress, “clear their heads”, and “calm their minds” in response to changes in their environments or work requirements often rely on mechanisms that temporarily and effectively separate them from those stressors. Their self-awareness of experiencing physical and/or emotional stress is followed by subsequent use of methods such as mindfulness, meditation, and physical activity to create a break, control the reaction(s), and prepare themselves for clear thinking and response or action planning.

Data-driven assessments and decision-making

Resilient people seek an objective, fact-based understanding of situations or circumstances, their root causes, and the solution sets that will best address those causes and overcome the barriers to successful completion of the task or objective. They use this approach to overcome the inevitable, emotion-driven reactions that are all too human (and common) under conditions of stress and anxiety resulting from dramatic environmental changes.

Communicative and adaptable leadership 

Leaders and managers exert tremendous influence over how employees feel, perceive, and respond to threats to the organization’s, team’s, and their individual ability to succeed. When circumstances surrounding their operations and work processes become difficult, dire, or restricted by internal or external forces, how their leaders respond can make or break a team’s focus and belief in their ability to overcome those. As a result, when organizational resilience is considered, the role of leaders who communicate openly and transparently, are emotionally calm and available to their team members, and can see pathways to success has an enormous impact on their team’s reaction and mindset.
 

Why organizational resilience is important

The business and talent outcomes achieved by resilient organizations, compared with those of less resilient organizations, are impressive and help establish a business case for building organizational resilience. For example, McKinsey has found that resilient and adaptable employees are almost 4 times (3.8X) more likely to be highly innovative. When adding in the presence of both psychological safety and high organizational and leadership support, organizations generate experience six times (6X) higher levels of engagement and 6.2X more innovation.

Other research focused on employee mental health and well-being has demonstrated that high levels of organizational resilience are associated with greater employee engagement, job satisfaction, work happiness, and organizational commitment. The reason is that improving employee resilience contributes to significant increases in their self-esteem, sense of control over life events, sense of purpose in life, and improved employee interpersonal relationships. The combined effects of elevated levels of organizational resilience and adaptability increase worker productivity in those organizations. Anecdotal reports and observations indicate that resilient organizations are quicker to respond to disruptive events and forces, and more effective at managing business and operational risks. The reported increases in organizational innovation appear to stem from a greater freedom to try novel problem-solving methods and solutions. 

However, McKinsey reports that globally, only 23% of surveyed employees say they and their organizations are resilient and adaptable, with notable weaknesses in handling unexpected events and in having confidence in their/the organization’s ability to respond effectively to unpredictability. That lack of confidence is a sure sign that the organization’s culture and operational capacity to manage change needs to be addressed. Developing organizational resilience is thus an essential capability for success as volatility and uncertainty continue to escalate.

How to build sustainable organizational resilience at scale

Creating organizational resilience, as with any enterprise-level change or improvement effort, requires a comprehensive approach, patience to generate and observe real results, and sustained commitment over the years. It cannot be accomplished as a single initiative or project, as individual leaders and employees with different skill sets, experiences, and perspectives will come and go, and human instincts and biases can introduce fear and anxiety as circumstances change. There are three primary factors to address when building organizational resilience and adaptability to inevitable shifts in market and internal conditions.

1. Organizational culture

Addressing the enterprise culture is crucial, as it creates an ecosystem and work environment that supports and enables the behaviors necessary for adaptive, responsive planning, action, and decision-making by employees at all levels. This starts with a review of the corporate mission statement, core values, and operating model to update them to align with the capabilities identified as critical to successful flexibility and adaptability at the organizational, functional, business unit, team, and individual levels. The need to clarify and continually reinforce the critical importance and business value of trust and cooperation, diversity of thought and perspectives, inclusivity among workers, well-being, and psychological safety that have been demonstrated as critical foundations of employee and group resilience. 

The identification and enterprise-wide adoption of formal inquiry and solution frameworks and models that provide the basis for shared, objective discovery and problem-solving create requirements for openness and innovation in addressing new issues and unusual circumstances. The adoption of these establishes a cultural standard and expectation that data and fact-based approaches will be used to evaluate situations and changing circumstances over and above any individual or group's “feelings” or “sense” based on their personal experiences.

Given the extent of their influence on employee perceptions and readiness to accept and adopt changes, develop and promote adaptive leaders and managers who are prepared to respond appropriately to gradual or sudden changes in operating environments. Update leadership competency models used to hire, promote, evaluate, and develop supervisors, managers, and leaders at all levels to include the prioritized capabilities needed to lead amid turbulence. Examples include:

• Emotional Intelligence
• Strategic thinking
• Decisiveness and action orientation
• Ability to manage ambiguity
• Ability to learn and adapt 
• Team and individual listening, coaching, and problem-solving

Leader’s behaviors, actions, and decisions should be measured, tracked, and evaluated on a continuing basis to guide them as they guide many others through challenging times and circumstances. The use of surveys (e.g., pulse, employee engagement), employee listening (e.g., targeted 360-degree, upward feedback, skip-level focus groups), talent KPIs (turnover, absenteeism, transfers in/out), and team output (e.g., production quantity, quality, timeliness, productivity) can serve as effective monitoring mechanisms for evaluating leadership and managerial effectiveness. 

A uniquely powerful approach to building a collective, aligned understanding of situations or circumstances and how they impact objectives and plans among leadership teams, called “sense making”, can be used to unify leadership teams when facing crises and chaotic events. It teaches and enables teams to review and generate alignment across differing opinions and perspectives, and to come up with better solutions and responses. This approach comes from the Center for Creative Leadership and has been shown to be effective in generating a common understanding or interpretation of the trend or event, its root causes, and potential solutions targeted directly at those causes.

2. Operational improvements

The second element in a comprehensive solution involves improving the adaptability of business operations by embedding sustainably flexible management practices and processes. These call for building standing operational capabilities to anticipate events and environmental changes, enabling new approaches to workflows, and engaging employees to participate and be continuously prepared and experienced in managing changes. 

Resilient managers and teams can be empowered to adapt continuously by normalizing “freedom within a framework”, a concept that provides guardrails defining output standards (quantity, quality, timeliness), but gives them authority to adjust how their work is performed, the tools and methods they use, and their responsibilities are shared and overseen. Related to this is institutionalizing the redesign of roles to support improvements in job autonomy and meaningfulness, greater worker engagement, and improved productivity. Job design approaches provide the structure that supports and enables such upgrades.

Leverage process improvement as a continuous approach to operational optimization by adopting and embedding Lean, Agile, Kaizen, and Six Sigma methodologies that engage individual contributor employees in identifying inefficiencies and ineffective processes in their assigned workflows. Their involvement in making or using changes better prepares them (cognitively and emotionally) to react and respond to other changes they experience. Certified process and practice improvement experts can be deployed part-time or full-time as facilitators for the employee project teams, equipped with training and certifications as Scrum Masters, or Black Belts, such as those from the Institute of Industrial and Systems Engineers (IISE). 

Encourage, promote, and create an ecosystem of adaptability, innovation, and change readiness by establishing structured approaches to learning from successes and shortfalls, implementing formal after-action reviews, and periodic team check-ins in which teams self-evaluate their performance against goals, standards, and expectations. These reviews should encourage open and transparent introspection and build a shared understanding of their operational strengths, weaknesses, opportunities, and threats. Discussions can also be included that enhance crisis preparation for likely or potential issues with “what if” scenario response sessions.

Finally, build resilience and readiness for change by formalizing developmental and operational talent mobility, in which talent is reallocated or assigned to respond to shifting priorities or to address short-term issues and opportunities. Regular changes to employees' work assignments (full-time or part-time deployments) help them adjust to changes in what they do, when they do it, and with whom they work, preparing them for more permanent shifts when circumstances require. It also exposes them to a broader network of colleagues across functions, lines of business, and experience levels, which leads to learning new techniques, methods, and approaches to problem-solving and solution development.

3. Workforce resilience and change readiness

Adapt talent management processes, practices, and standards to meet the volatilities now facing businesses and their employees. Start by hiring resilient individuals who possess some or all of the traits needed to perform effectively and adapt to changing conditions. For example, embed formal talent assessments for those traits and behavioral preferences into tools and methods used in screening and selecting employees, such as:

• Emotional intelligence (EI) and regulation
• Critical thinking
• Curiosity and learning agility
• Cognitive flexibility and open-mindedness 
• Evidence-based review and root cause analysis

Offer targeted training and development that emphasizes resilience-related skills-building through eLearning, workshops, and team-based sessions that involve perspective-shifting and behavior-building related to managing and responding to personal stress reactions, maintaining focus under pressure, interpersonal collaboration, communication under pressure, solving problems as conditions shift, making informed decisions, resolving conflicts constructively, and understanding different work and response styles. 

Create structured, ongoing team- and peer-based support mechanisms, including team-building, group coaching, and mentoring by more experienced colleagues. The latter can be made more scalable and especially effective by inviting late-career, pre-retirement, and retired alumni to share stories and lessons learned from successfully navigating previously chaotic times and circumstances. 

Establish flexibility in individual and team performance priorities through agile, adaptable goal setting that enables adjustments to annual or quarterly performance (and associated incentive) objectives as plans and strategies adapt to changing business conditions. Create formal processes and practices that empower leaders and managers to make such adjustments in a coordinated and business-aligned way. This type of flexibility communicates to employees the realities of the moment or timeframe, and the organization’s commitment to fairness and consistency.

Proactively support employee wellness and self-care by monitoring psychological safety, burnout, interpersonal conflict, health and physical maladies, and financial well-being. Provide resources, tools, and outlets for employees to request or access support through wellness and employee assistance program platforms, psychological services and advice, physical fitness programs and facilities, financial and debt management resources, and stress management guidance and tools, among many others.

Managerial coaching, mentoring, and guidance should be emphasized as critical elements of their roles, as they attend to each employee’s needs for feedback and improvement, development, advancement, as well as for meaning and connection to the larger organizational purpose and goals. Building resilience at the individual level depends on those, as employees look to their direct managers to help them understand their environment, minimize ambiguity, clarify work goals, and validate their assigned roles and responsibilities as conditions change. Equally important to coaching is making people feel like an integral part of a team, where belonging and inclusion give them a sense that their work and that of others are both valued and essential to the team's success. 

As many talent management processes and HR support mechanisms are well-defined and structured, they should be reevaluated to determine the extent to which they can or should be flexed and adapted to changing business and operational conditions. The HR operating model is a critical consideration, and new, more adaptive models, such as the Human Readiness Operating System, can be used to identify and create more responsive solutions that flex with shifting circumstances and market, financial, labor force, and other environmental pressures.

Relevant Practices & Tools

Advanced Coaching and Mentoring Practices that Build Structured and Reliable Programs to Enhance Performance. >

Coaching and mentoring at this level gains structure and formalization as it is increasingly integrated into operations to guide employees at all levels in the performance management process... more »

Cascading and Updating Strategic Goals that are Aligned with Organizational Objectives. >

Creating a formal flow of goals from top executives down to the lowest level employees ensures an alignment of work efforts and objectives from the top to the bottom of the organization... more »

Creating an Operating Model to Align the Organization with the Business Strategy. >

Operating models identify how all aspects of an organization work in harmony to help the organization implement the business strategy and accomplish its goals... more »

Applying Organization Development Principles to Uncover Opportunities for Improving Organizational Performance and Health. >

Organizations are constantly in flux, with multiple change efforts underway. HR is being called upon to facilitate more and more of these endeavors, using Organizational Development tools, methodologies, and framework... more »

The External Environmental Scan Tool: Capture and Categorize Factors Outside of the Company’s Scope Impacting its Objectives. >

This template provides a structure for identifying key external topics that should be considered in a formal analysis of the business’s upcoming challenges... more »