Sure enough, changes are inevitably required in leadership to manage the talent of the future. According to Steve Newhall, Vice President for Europe at talent management consultancy DDI.

For most businesses, the landscape has changed beyond recognition. The days of easy prosperity seem so long ago as to be almost a myth! Today’s business environment is so fast-moving and volatile that leaders can scarcely keep up with new pressures and demands placed upon them and unsurprisingly they are struggling to cope. Fortunately there are some constants that leaders and executives can cling to that will help them steer a steady ship not just through the downturn, but beyond into whatever business environment that will emerge.

Recent headlines have demonstrated how badly leadership has failed. High profile senior executives and company heads have been accused of betraying their employees and acting carelessly with the businesses they lead. But perhaps we shouldn’t be so shocked. Even in the good times confidence in leadership skills across the world was decaying. DDI’s Global Leadership Forecast 2008/09, released right before the onset of the downturn, showed that just 35 per cent of HR professionals had high confidence in their leaders’ ability to drive organisational success. Moreover, most businesses had done little to build a strong pipeline of future leaders.

“That many leaders have failed to take decisive and fast action to regaining control of their organisations through leading courageously, with equanimity and discipline is unfortunately not so surprising.”

That many leaders have failed to take decisive and fast action to regaining control of their organisations through leading courageously, with equanimity and discipline is unfortunately not so surprising. Knowing the skill sets and likely innate behaviors of the senior management and leadership population is one step HR teams can take to immediately make a real difference to the business. When times are easier, any leadership deficiencies are easily masked, but in crisis situations problematic shortcomings are thrown into sharp relief. Everyone has negative personality traits, or “derailers”, that can be effectively managed around – once leaders understand what they are and are taught coping mechanisms. Now is not the time to let bad habits prevent cool and calm management. Staff need motivation and focus, not panic and indecision.

Having identified the behavioral pitfalls, the remaining leadership gaps to plug are skills. Unfortunately like every department, HR teams across the land are facing serious budget cuts, just when leaders need support the most. Many commentators have called for training and development budgets to be protected, to help organisations survive after the recession. While this is a nice wish, the reality is that this is unlikely to happen.

The key is to focus the remaining budget on those people who will make most difference to the business; the most effective leaders and high flyers in the company. These senior leaders and high potential groups should be the last to be affected by development budget cuts – it’s critical they are given the skills that the business needs to survive. Organisations need to be finding, and developing, those who can innovate and create new ways of working. And new innovations can only survive through effective motivation and empowerment. However achieving this type of dynamic environment is often problematic; typically some 34 per cent of executives struggle to empower staff. The problem is likely to increase during difficult times, with a rise in tendency to micromanage together with its damaging effect on morale and productivity. This is in fact one example of the kind of conflicting priorities that are presenting themselves during this difficult time; senior staff are increasingly being asked to perform paradoxes, for example winning new business while cutting costs, monitoring situations and making business adjustments yet keeping a far enough distance from staff so as not to overbear.

High potential development groups will need to be revaluated in the context of the new reality. Maintaining the pipeline of future leaders is critical – but how many future leaders are needed if the organisation is downsizing? Talent pools need to reflect the needs of the business not vice versa. Smaller organisations with the same size talent pool will likely mean more people than opportunities, leading to frustration. Set against this is that fact that the downturn offers this group the best learning opportunity they may ever have.

The current climate isn’t without opportunities. By reacting fast to understand the leadership population and how it will react, as well as giving the business useful data in a way it can understand, HR may finally win its place on the strategic table.

This is not just important for 2009, or even 2010. There is no doubt that the constantly changing, ambiguity filled, uncertain environment faced by managers and leaders today is here to stay. Even when the upturn begins, successful businesses will be working with new leadership models, new ways of organising themselves, yet still struggling with the old thorny issues of rapid globalization, new technologies, increasing competition and changing demographics of the workforce. Investing in leaders now will help steady the journey in the future.