The Executive Edge (Q4 2024) - Inside This Issue: Leadership Development in Uncertainty, US Election Economic Impact, and Emotional Intelligence

Inside This Issue: Leadership Development in Uncertainty, US Election Economic Impact, and Emotional Intelligence. Featuring Professors S. Sriram, Jagadeesh Sivadasan, and Ethan Kross.

Each edition of this newsletter features a curated selection of news articles organized by trending topics, followed by expert commentary from Michigan Ross faculty aimed to empower you with forward-thinking insights and perspectives to navigate and thrive in today’s dynamic global business landscape.

If you have questions or comments about this newsletter or want to learn more about executive education solutions to this issue’s topics and beyond, please contact us at [email protected].
 

Leadership Development in Times of Uncertainty: Preparing for 2025 and Beyond

• CNBC: What makes a good leader? Being able to listen, say young people
• Forbes: Why There Are So Many Bad Managers And What We Can Do About It
• Fortune: How good leaders help managers connect employees to company culture
• HR Brew: Gen Z will make up 10% of managers in 2025
• HR Dive: Manager development a top priority for HR in 2025, Gartner says
• SHRM: Providing Resilient Leadership in an Era of Global Uncertainty
• World Economic Forum: Leadership for our times: Build on the past to create a better future
   

Headline Highlights: The year 2025 brings new challenges and opportunities as businesses navigate a changing leadership landscape. With more Gen Z stepping into managerial roles and ongoing economic uncertainty, organizations face increasing pressure to prepare their leaders for the complexities ahead. As companies prioritize leadership development, they must equip managers with the tools to build resilient teams, navigate shifting economic policies, and foster organizational culture amidst change. Leadership training is not only about preparing for what’s known but about equipping leaders to thrive in an unpredictable future.

Expert Perspective from S. Sriram, Associate Dean for Graduate Programs, Michigan Ross:

What does resilient leadership mean to you, and why is it crucial in today’s global landscape?

Every generation likely believes it is living in an era of unprecedented change, and as a result, visionary leaders have always had to be resilient. However, the rapid shifts in today’s geopolitical landscape and technological advancements make resilient leadership more critical than ever. In this environment, visionary leaders must possess three key traits: the ability to anticipate change well in advance, the strategic foresight to identify opportunities for staying ahead, and the capability to inspire their teams to embrace those changes. To do this, resilient leaders must be excellent listeners, open to new ideas, and foster a team culture that values the same openness and adaptability.
 

How can organizations and business schools work together to ensure leadership training aligns with the real-world challenges leaders face?

As institutions dedicated to training future leaders and advancing thought leadership through faculty research, business schools naturally have a strong inclination to collaborate with outside organizations. On the curricular side, there are many opportunities for partnership, particularly through sponsored projects and guest lectures. Additionally, it is crucial for business schools to maintain ongoing engagement with the organizations that recruit their students, gaining insights into the most valuable skills in addressing the challenges they face. This feedback can drive curricular updates, ensuring students acquire the right competencies to succeed in the real world. On the research front, faculty continually seek to collaborate with organizations to inform their research agendas, thereby reinforcing their role as thought leaders in the field.
 

What lessons from past economic disruptions can today’s leaders apply to prepare for the unknown challenges of the future?

Organizations that have successfully navigated disruptions driven by macroeconomic shocks, geopolitical shifts, or technological advances tend to share several key traits. First, they never take anything for granted. To avoid complacency, they challenge the status quo—even when it seems suboptimal in the short term. For instance, some firms have hesitated to introduce new products for fear of cannibalizing existing ones, only to be overtaken by competitors leveraging similar technologies. Second, they cultivate a positive mindset, viewing each challenge as an opportunity rather than a setback. Third, they foster a culture that encourages active listening and the expression of contrarian viewpoints. This openness helps organizations anticipate potential disruptions and identify strategies to navigate them successfully.
 

US Election Global Economic Impact

• Allianz: Global economic growth down over 30% due to Trump
• AP News: Trump’s tariffs in his first term did little to alter the economy, but this time could be different
• Forbes: The Global Economic Impact Of The U.S. Election
• Goldman Sachs: The global economy is forecast to grow solidly in 2025 despite trade uncertainty
• NPR: How are world economies reacting to Trump's imminent return as U.S. president?
• Reuters: How a Trump White House could actually help China, Japan markets
• The Economic Times: Trump 2.0: Will America's strengthening dollar rattle the rest of the world?
   

Headline Highlights: President Donald Trump's re-election has sparked widespread speculation about its global economic repercussions. The president-elect's promise of imposing tariffs against Canada, Mexico, and China raised analyst concerns about potential trade wars and their impact on international markets. As economists weigh in, the broader forecast for global economic growth remains cautiously optimistic, with 2025 expected to bring solid expansion despite potential volatility.

Expert Perspective from Jagadeesh Sivadasan, Professor of Business Economics and Public Policy:

Based on your research on the US-China trade war, what strategies have proven effective for firms in mitigating the effects of increased tariffs and trade tensions?

Our work suggests two key strategies that exporters to the US have been using when they face tariffs from the US. One strategy is to pivot away from the US market to other markets, such as Europe and other parts of Asia. The other strategy is to open subsidiaries in other countries and shift production to locations (e.g., Vietnam) that are not targeted by tariff hikes. From the perspective of US firms that faced retaliatory tariffs from China, we find evidence that they may also be shifting towards other markets, especially Asian countries other than China. Recent work by a former Ross faculty suggests that US importers responded by changing suppliers to other countries, breaking existing supply linkages to China. While one strategy could be to shift the supply chain back to the US, research suggests that US firms have not adopted this approach widely enough to have a positive impact on US manufacturing employment.
 

What role does executive human capital play in helping firms manage and adapt to heightened trade tensions and tariffs?

Our work suggests a key role for executive human capital in managing adverse tariff shocks. We find that Chinese public firms hit by the sharp increase in tariffs by the Trump administration in 2018 increased hiring of executives with foreign work experience, especially those with experience in European markets. In terms of kinds of expertise, firms increased the hiring of executives with marketing backgrounds, suggesting that such executives may be critical to the firms for finding and developing customers in new markets (or to maintaining customer relationships in the US in the face of increased tariff costs). Our work also shows that executive experience matters for success in foreign markets: firms with more of such executives coped better in terms of maintaining overseas revenues. Another way that we found executive human capital mattered was in opening and growing foreign subsidiaries. These subsidiaries could help Chinese firms develop customer relationships in new markets, or could serve as export platforms that allow the firm to avoid China-specific tariffs.
 

What factors could make the economic impact different in Trump’s second term versus the first?

When drawing inferences from our and other research on the impact of the 2018 tariffs, keep in mind that this work reflects short to medium-term reactions by firms. In the initial months after the hikes, there was significant uncertainty about how persistent the tariff hikes would be. The fact that the Biden administration has maintained most of the tariffs and the election of President-elect Trump to a new term could signal to firms that higher tariffs will be more permanent than they anticipated. Further, potential tariffs on what were considered friendly countries (like Canada and Mexico) could lead to the reassessment of the “friendshoring” strategy of shifting sourcing to countries considered safe from tariff risks. In the face of this “new normal” of higher import costs, firms may be forced towards more onshore manufacturing. The challenge would be managing and competing in the face of higher costs of onshore production. This challenge relates to another concern about additional tariff hikes in the second Trump term. Research has shown that in the short term, almost all of the tariff hikes were passed on to US importers and consumers. Additional hikes in the aftermath of a longer-term period of high inflation could delay the reduction in inflation rates, which may, in turn, delay the reduction of interest rates by the Federal Reserve.

 

Emotional Intelligence and Emotion Regulation at Work

• Forbes: Why Emotional Intelligence Is Important For Leadership—And How To Build It
• Gallup: U.S. Worker Negative Emotions Stay Above Pre-Pandemic Levels
• HBR: When Your Employee Feels Angry, Sad, or Dejected
• HR Magazine: Managers want, but aren’t getting, emotional intelligence training
• SHRM: Civil and Psychologically Safe Political Conversations Lead to Lengthier Tenure
• The Economic Times: Emotions play a critical role in the workplace, says McLean & Company
• The Guardian: Exhaustion at work can lead to difficulty controlling emotions, scientists say
   

Headline Highlights: Despite increasing awareness of the importance of emotions and emotional intelligence in the workplace, managers who lack training in these areas continue to face high levels of stress and negative emotions among their teams. Addressing these issues and fostering psychological safety is crucial for improving team dynamics and retention while mitigating the broader impacts of unmanaged emotions at work.

Expert Perspective from Ethan Kross, Professor of Psychology and Professor of Management and Organizations, Michigan Ross

You describe emotions as information, rather than being “good” or “bad”. Why is this distinction important to make as workers report higher levels of “negative emotions”?

It’s an important distinction because we often equate negative emotions with states of mind that we should avoid at all costs, as though they’re intrinsically harmful. This viewpoint is embodied in the toxic positivity movement that has proliferated in recent years. Science shows that all emotions, including negative ones, have value when experienced in the right proportions—not too intensely and not for too long. They offer valuable information, motivating us to deal effectively with our circumstances. For example, anxiety alerts us to focus on important tasks, while anger indicates that our values have been challenged and an opportunity to rectify the situation exists. The key is to find the sweet spot where these emotions aren’t too intense or prolonged; this is where science provides us with a guide. It teaches us about the tools I call “shifters,” which help us skillfully manage our emotional lives.
 

How can an individual’s ability to regulate emotions affect team dynamics?

Emotions create a "ripple effect," quickly spreading among individuals and groups. This ripple effect can have either desirable or undesirable consequences, depending on both the emotion that’s spreading and the circumstances surrounding its proliferation. People who understand how to manage their own and others' emotions can effectively channel this ripple effect, much like a conductor directing a symphony to achieve their desired outcomes. From both a human and leadership perspective, this is an invaluable skill.
 

Your upcoming book, Shift: Managing Your Emotions—So They Don't Manage You, addresses the timeless question of how to manage your emotional life. What are some of the tools from your research that can help employees regulate emotions during stressful workplace interactions?

A key theme of "Shift" is that there are no one-size-fits-all solutions for managing our emotions. Instead, we've learned that many tools exist, and different tools work for different people in various situations. In the book, I organize these tools (I call them “shifters) into two broad categories. First, there are internal shifters that you carry with you:

• Sensory Shifters: Engaging in different sensory experiences, like listening to music or smelling different scents, to influence your emotions.
• Attention Shifters: Tools for directing your attention towards or away from things that are generating undesirable emotional responses.
• Perspective Shifters: Techniques for broadening your perspective to change the way you think and, consequently, the way you feel.

Then, there are external shifters, which are resources for managing emotions in the world around you.

• Space Shifters: Changing or modifying your environment to achieve a desired emotional outcome.
• People Shifters: Leveraging the influence of others to impact your emotions positively when you're struggling.
• Culture Shifters: Creating cultures that promote emotional regulation by shifting values, norms, and practices to help you manage your emotions.

In my book, I review how to activate these different internal and external shifters to find the unique combinations of tools that work best for you.
 

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