In these challenging times, the human resource function in companies often resorts to a multipronged approach to save costs—freeze hiring, cut bonuses and downsize. Initiatives such as talent management are very often viewed as overheads instead of necessities. But it is actually in times such as these that outstanding senior executives can have the greatest impact. When there is insufficient industry growth to keep everyone well-fed and gaining market share becomes critical for survival, strong leaders are sometimes the only competitive advantage driving an organization’s success. Attracting, retaining and developing these game-changing leaders should, therefore, remain a top priority.

Illustration: Jayachandran / Mint

1. It’s easy to find talent in a tight job market: In a contracting job market, companies sometimes assume—incorrectly—that it will be easier to find good people. But since most world-class talent in the highest executive ranks usually remains employed, recruiting the best leadership team is always a challenge.

Companies will also have to work as hard as ever to recruit and attract top candidates. In a world where titans such as American International Group Inc. (AIG) can falter, companies such as Lehman Brothers Holdings Inc. can fail, candidates may view even promising opportunities at highly regarded companies with caution. In India, Satyam Computer Services Ltd was faced with a challenging governance situation, which has now been effectively turned around. In such an environment, staying at a company where they’ve built up years of goodwill may seem like a safer bet for employees. Reputation is also a strong influencer in the recruitment market and a company’s employment brand can be a big differentiator. This brand identity is influenced, in part, by the quality of the company’s leaders. But how a company is perceived in the market is also strongly related to how it recruits, so it’s important for companies to recognize and highlight what makes them desirable to potential employees.

Even companies that struggle to distinguish themselves and aren’t yet market leaders can cultivate a more appealing employment brand simply by taking a more personal approach to recruiting. For example, senior management should get more involved in the recruitment process, even reaching out personally to senior-level candidates when required.

2. Retention doesn’t matter because employees have nowhere else to go: No matter how bad the overall economic landscape becomes, businesses in dire straits will still have difficulty retaining talented leaders, and top performers will always have opportunities. In such an environment, other companies are always looking to bring on board good talent and at relatively lower costs. This is why companies need to pay attention to their A-listers, focusing on their growth and development.

If companies don’t treat their senior leaders well during challenging times, those leaders will leave. If it doesn’t happen during the downturn, it will occur after the economy recovers and alternative job opportunities appear.

In these situations, it’s important for companies to continue to offer employees opportunities to develop, whether through “stretch" roles, work on strategic projects or expansion of key responsibility areas. Consistent one-on-one communication from the CEO and other senior leaders also remains a key retention vehicle. It can help remind employees that they are valued and that everyone is in the situation together.

3. Our current leadership team will get us through: When the economy is strong and a company is in growth mode, it is easy to overlook marginal performance and a casual approach to spending. When profit margins are high and cutting costs isn’t a focus, companies can sometimes manage to succeed even without outstanding senior leadership.

But in some cases, even a team that excels at growing the company in prosperous times will not possess the competencies the organization needs to navigate a downturn. At these times, it’s important to consider each member of the current executive team anew, ensuring that those in place are the right individuals to lead the company through difficult times.

Should a company need to make cuts, it should also ensure that the best people remain. Rather than implementing across-the-board cuts which aren’t strategic and don’t succeed in making the operation more efficient, companies should be sure that layoffs are tied both to performance management and to the strategic needs of the organization.

4. We can’t worry about the future—we’re in survival mode: Even amid short-term hardship, companies should remain focused on long-term plans—and make sure they have the right people to execute them successfully. This may be difficult, but such planning remains a corporate governance responsibility and something that boards and shareholders should care about, no matter what the state of the economy is.

Focus on the future is critical. In addition to looking at the roles that exist in the organization today, companies also need to try and predict what roles will exist in the next generation of the workforce. This needs to be followed by determining who within the organization can meet these new responsibilities, identifying the gaps that will need to be filled and engaging in strategic workforce planning to determine the company’s talent needs for the future.

The goal of talent management doesn’t change when the economy struggles. It’s still about building an organization that’s engineered for long-term growth and success. Tight budgets don’t make effective talent management impossible: They just emphasize the need for a keener focus on the topic, from the chief executive on down, to ensure that companies make the most strategic use of their greatest asset—their talent.

This is an excerpt from an article by Tom Scanlan, a New-York based consultant, who is a member of executive search consulting firm Spencer Stuart’s human resources practice, with inputs from Anjali Bansal, partner, Spencer Stuart, who leads the India practice of the firm and is based in the firm’s Mumbai office