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Geopolitics
Geopolitics in turmoil: How to manage the impact on your workforce
Geopolitical disruption requires a systems thinking approach from CHROs, argue IMD’s Katharina Lange and Simon Evenett.
In 2025, the world feels both uncertain and dangerous. Full-blown conflicts in Ukraine, the Middle East, and Africa are exacting a terrible toll. President Trump’s policies in areas such as trade tariffs, defense, and foreign affairs are a radical departure from those of the preceding Biden administration. Tensions between China and the West continue to escalate.
Chief human resources officers (CHROs) play an important role in finding a safe path through the current geopolitical minefield. They share the responsibility of managing the resulting systemic volatility and uncertainty with other members of the C-suite to prepare the workforce for potential impact.
Critically, this means much more than just keeping people safe. While it remains imperative to protect employees and review and update business continuity plans more frequently, it is also the moment to scale up the organization’s transformational capacity.
The organization needs to recognize that the uncertainties of disruption necessitate agility and flexibility.
Build for agility
First, the organization needs to recognize that the uncertainties of disruption necessitate agility and flexibility. In turmoil, the tendency is to turn inward, away from the customer, and reduce costs. However, the outward focus on markets and stakeholders must remain. CHROs need to keep the organizational capacity to respond to unexpected turns and build the new. With outcomes highly uncertain, organizations must have sufficient resources to cope with whatever is thrown at them. They may even need to add staff rather than laying them off. This will ensure business units can pivot quickly to new realities and dial production up and down at speed.
The COVID-19 pandemic provided multiple examples of the importance of such headroom. Some of the worst-affected industries – from airlines to hospitality and leisure – saw significant layoffs. Then, when they reopened, they struggled to hire replacements, slowing their recoveries.
Moreover, some businesses that laid off staff assuming they would be inactive for a long period deployed their competencies to become part of the pandemic supply chain – for example, several alcohol producers shifted to producing hand sanitizer.
Meanwhile, some industries found that certain business areas could thrive under lockdown conditions; retailers expanded their online operations and restaurants switched to home delivery and curb pick-up, for example. Organizations that had cut back their workforces weren’t able to pivot.
Today’s geopolitical upheaval will have a similarly nuanced fallout. For instance, while an industry-by-industry, country-by-country approach to tariffs will reduce demand for some goods from some areas, it may have the opposite effect in other cases. Organizations may have to ramp up production in particular locations or for certain products.
In this context, CHROs must develop workforce plans that provide flexibility. Does the organization have the staff in the right locations to cope with peaks and troughs in demand? As the organization seeks to pivot towards new opportunities, do staff have the required skills and an adaptable mindset?
“Members of the C-suite could hold divergent views on the preferred organizational approach to geopolitical challenges.”
Align for clarity and consistency of message
In addition, CHROs have a key role to play as conveners of debate so the organization’s leaders can reach settled positions and speak with one voice.
In such an uncertain external environment, organizations need clear messages from the leadership team that leave no room for interpretation. Senior leaders who speak without ambiguity about their plans to manage geopolitical risk provide crucial reassurance to employees and key stakeholders. Communication must be consistent, particularly in relation to values and operational goals. When anxiety levels are high, workers will seize upon and magnify even minor inconsistencies in messaging and interpret them negatively.
Members of the C-suite could hold divergent views on the preferred organizational approach to geopolitical challenges. Their disagreements may be profound, but they need to stay in the conference room. CHROs can help their colleagues articulate and debate these individual perspectives to arrive at a single, aligned view that will be communicated to the workforce.
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Geopolitics Series: Navigating America’s New Direction
Your business playbook for a shifting political landscape
Control for workplace tribalism
As for the rest of the workforce, CHROs have vital work to do here, too. Geopolitical tensions may exacerbate differences and surface fault lines along national, political, or religious boundaries. Nationalistic loyalties or political differences may come to the fore and divide the workforce. US staff, say, may find themselves in difficult conversations with colleagues concerned about tariffs, policies, and public pronouncements. Hostility between Ukrainian and Russian colleagues, for example, would be understandable. “Tribal belonging” may prove stronger than individual decision-making.
Many CHROs, however, will recognize the unpredictability here. Counter-intuitive though it may feel, colleagues who know each other well often continue to work together productively and happily, independently of the conflicts raging outside the work environment. Their shared experiences and collegiate bonds are often more important than political disputes or even outright conflicts. Russian and Ukrainian students in IMD classes, for example, have often put aside the differences that divide their countries.
The challenge, then, is to take a nuanced and sensitive approach. CHROs will want to put shared values and experiences at the center of communications – and to call out those who reject these. But every situation is different.
Moreover, relationships are fluid. Even close colleagues may become more nationalistic over time, with shared bonds becoming increasingly fragile. CHROs need to be ready for the emergence of these tribal divisions by creating a culture in which conflict and disagreement are used productively.
Thoughtful leaders will spot the potential for disharmony and intervene early on. This must be done sensitively but also decisively. Ignoring such differences would be unwise. Leaders should actively encourage staff to leave national allegiances and political affiliations at the door when they enter the workplace and to find motivation in the collective goals and ambitions of the organization.
Vigorous discussion between colleagues is fine during downtime but the work environment should be focused on professional productivity. Some organizations are seeking actively to facilitate this positive binary mindset by offering “conflict rooms,” which provide moderated forums in which staff can express discontentment, share their views, and thereby reach a greater understanding of one another’s position. This can help depolarize the workplace by breaking down social and ideological differences and creating one united work tribe.
As organizations forge a united front and a unified response to intensifying geopolitical rivalry and disruption, the premium on CHRO expertise will grow.
CHROs to the fore
None of these tasks are straightforward to address but CHROs are naturally skilled in negotiation, compromise, and empathy, and are well-placed to understand the challenges faced by colleagues throughout the organization and to provide the right support. As organizations forge a united front and a unified response to intensifying geopolitical rivalry and disruption, the premium on CHRO expertise will grow. Many executives seek opportunity in the current turmoil – CHROs should be among them.
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