In recent years, the operating environment of organizations has changed significantly. Rapid economic fluctuations, geopolitical uncertainty, technological disruption, and changes in the structures of working life have made the future more difficult to predict than before. Companies are forced to make strategic decisions in situations where information is limited and changes happen quickly.
This operating environment is often described with the concept of VUCA, which refers to volatility, uncertainty, complexity, and ambiguity. VUCA thinking has become a significant way of describing the modern leadership environment in management and business literature, and in particular the work of Bennett and Lemoine (2014) is frequently cited as a key starting point for this discussion.
Several international leadership studies show that the greatest challenges facing organizations today relate precisely to managing uncertainty. McKinsey’s leadership studies, for example, highlight the ability to navigate change, make decisions in uncertain situations, and build resilience in organizations (McKinsey 2023).
This development also affects how leaders are assessed in recruitments. Traditionally, the evaluation of leaders has focused on successes in stable operating environments, such as efficiency, operational management, and process optimization. As the operating environment changes rapidly, the focus of evaluation shifts increasingly toward how a leader performs under uncertainty.
What does good leadership mean in a VUCA world?
Expectations of leadership have changed. A leader in a stable environment often focuses on predictability, efficiency, and maintaining clear processes. In an uncertain operating environment, the leader’s role expands. They must be able to create direction in situations where not all variables are known.
In a VUCA environment, leaders are expected in particular to be able to tolerate uncertainty, make decisions on the basis of incomplete information, and keep the organization functional in the midst of change. At the same time, interaction and people management are emphasized. The leader must be able to build trust and help the team navigate situations where there is no clear answer.
Key leadership competencies
Several international leadership models emphasize the same themes. Organizations expect leaders to demonstrate resilience, adaptability, the ability to lead change, and the skill to build a psychologically safe work environment (McKinsey 2023; SIGMA 2022).
Adaptability and agility
Adaptability refers to a leader’s ability to quickly change plans, priorities, and ways of working as the situation changes. Importantly, the changes should not lead to the organization becoming paralyzed, but rather the leader is able to maintain direction.
Resilience and emotional intelligence
Resilience means the ability to withstand pressure and recover quickly from setbacks. Emotional intelligence supports this ability: the leader recognizes their own reactions and knows how to regulate them, as well as taking into account the emotions of others.
Decision-making under uncertainty
In an uncertain operating environment, the leader must be able to make decisions without complete information. In practice, this means a continuous balancing act between sufficient analysis and sufficiently rapid progress. Excessive caution can slow the organization down, while overly hasty decisions can increase risks. The point is not about perfect decisions, but about timely solutions that are good enough in terms of direction.
Building trust and psychological safety
In an uncertain environment, open discussion and trust are emphasized. In a psychologically safe environment, employees dare to bring forward their views, which supports learning and decision-making (Edmondson 2019).
Why is it difficult to assess leadership in an uncertain environment?
Although the competencies described above are well recognized, assessing them in a recruitment situation is not straightforward.
Firstly, many leaders are able to describe their actions rationally and convincingly, even if their actual behavior under pressure is different. Secondly, functioning under uncertainty often only becomes apparent in situations where risk, pressure, and time constraints are real. Thirdly, people tend to overestimate their own adaptability and decision-making ability in challenging situations, which undermines the reliability of self-assessments (Dunning, Heath & Suls 2004).
In addition, research shows that individual behavior is strongly situation-dependent and cannot always be reliably predicted based solely on self-description or individual examples (Mischel 1977).
For this reason, assessment based on conversation alone is not always sufficient, and multiple perspectives and methods are needed.
Assessing leadership competencies
A central question in executive recruitment is how to assess a leader’s actions in situations where all the answers are not ready. The following assessment methods can generally be utilized in recruitments:
Behavioral-based interview
The interview examines concrete situations from the applicant’s previous career. The aim is to identify recurring patterns of behavior, not individual successes.
Scenario-based assessment
The applicant is presented with a situation in which decision-making involves uncertainty and conflicting information. The assessment examines thinking, prioritization, and communication.
Simulations and case exercises
Simulations reveal behavior under pressure. They help assess decision-making, interaction, and leadership style in realistic situations.
Psychological personal assessments in support of leadership selection
Psychological personal assessments complement other methods by providing objective information about the applicant’s ways of working, motivation, and capabilities.
Their key strength lies in the fact that they also help assess potential that is not yet directly visible in work experience. Not all leaders have had the opportunity to operate in a genuinely uncertain operating environment, but their readiness to do so can still be assessed.
Personal assessments can reveal, for example:
- Learning ability and flexibility of thinking
- Ways of reacting to pressure and change
- Motivation to develop and take responsibility
- Interaction and leadership style
When this information is combined with interviews and simulations, a considerably more reliable picture of the leader’s ability to function in future situations is formed. This reduces the risk of making decisions based solely on experience or intuitive impression.
The significance of potential in a VUCA environment
Not all the expertise needed in uncertainty can be assessed solely on the basis of previous track records. Therefore, the assessment of potential rises to a central role.
Potential in this context refers in particular to the ability to learn, adapt, and grow in changing situations. A leader who has not yet encountered certain kinds of challenges may nonetheless possess strong capabilities to handle them in the future.
Key indicators of potential include:
- Ability to absorb new information quickly
- Openness to different perspectives
- Willingness to change one’s own behavior based on feedback
- Motivation to develop and bear responsibility
Summary
An uncertain operating environment also changes how leaders are assessed in recruitment situations. Organizations must identify the competencies that help leaders function in situations where all the answers are not ready.
When planning the next executive recruitment, it is worth considering at least the following:
- Identify and name 3–5 leadership competencies that the organization needs in an uncertain operating environment.
- Make these competencies a visible part of the leadership profile and recruitment assessment criteria.
- Build a structured interview framework that addresses change, uncertainty, and decision-making with incomplete information.
- Utilize simulations, case exercises, and psychometric assessments to evaluate the leader’s way of working.
When the assessment in executive recruitment is based on clearly defined competencies and diverse methods, organizations are better able to identify those leaders who are capable of creating direction even in an uncertain operating environment.
Avainsanat
Julkaistu
Ota yhteyttä
Mikko Savusalo
mikko.savusalo[at]avila.fi
Maiju Pauni
maiju.pauni[at]avila.fi