Why Leaders Need Soft Skills During Tough Economic Times

During tough economic times, companies are under increasing pressure to produce better bottom-line results. This often leads to layoffs, downsizing, reorganization, and branch office closures.

In previous slowdowns, organizations have turned to the no-nonsense command-and-control type of leadership, with a focus on the "hard skills" of finance, marketing and technology to get the job done.

Soft skills that stress trust, empathy and positive interpersonal relationships may appear to be inconsistent with what is needed. Not so.

A study by the Center for Creative Leadership surveyed a wide variety of industries, asking leaders what worked best when leading organizations through tough times.

The greatest challenges that were identified were motivating staff in uncertain times; being able to clearly communicate the rationale for changes; working within a team format rather than alone and developing staff for redeployment rather than layoffs. Among the necessary characteristics of leadership, the leaders identified traits such as authenticity and honest two-way communication. The softer leadership skills of trust, empathy and compassion for employees were necessary to help the organization through difficult times.

Another study by the Center for Creative Leadership showed a direct correlation between the long-term success of an organization and the degree to which its leaders practice soft skills. There was not only a strong connection between the soft skills of leaders and the corporate culture, but the strength of this correlation increased with the level of the executive.

Similarly, Success IQ University has worked with firms experiencing transitions and found where leaders in those firms possessed and practiced soft skills, the development of a strong and positive corporate culture was stronger and faster.

These studies underscore the effect derailed leaders can have on a firm's culture and highlight the connection between leaders' self-development, while a lack of soft skills can negatively affect a leader's ability to shape a company and hinder its long term success.