Few industries have been spared from these tough economic times. Executives around the world are facing difficult decisions everyday involving lay-offs, pay cuts and managing a workforce that is constantly under threat. A McKinsey Quarterly opinion piece "Good boss, bad times" caught my interest with some useful tips for today’s leaders.

McKinsey interviewed Robert Sutton, noted author and management professor from the Stanford Graduate School of Engineering. Sutton discusses how tough times intensify the work environment and as a leader you are under even more spotlight. He speaks of a "toxic tandem" evident in current times where leaders tend to be more oblivious to the needs and actions of their subordinates. Further, subordinates have a heightened focus on trying to figure out what is going on.

So tough times present a unique leadership challenge for most executives and Sutton suggests four tips that will improve leadership effectiveness - prediction, understanding, control and compassion.

• Prediction - if some sort of stress is evident, it does less damage to people when they know they are safe versus when they are threatened. Communicate your prediction within a timeframe i.e. "there will be no lay-offs or pay cuts for 90 days; nothing is going to happen, so you’re safe until then". Provide some psychological safety.

• Understanding - it is well documented that, independent of how stressful things are, human beings need to know why things happen. Provide an explanation to staff why actions, events etc are occurring. Part of getting rid of the fear is having an increased level of understanding.

• Control - it is beneficial to give people some control over the way things happen. Announce changes in advance, tell them why things are happening and provide people with options i.e. in the case of factory closures, different exit options.

• Compassion - show compassion not just in what you do but also how you do it.

Sutton’s piece emphasises the need to continually upskill leadership teams to be more effective leaders. The reality is businesses today have to make tough decisions to survive. Organisations which effectively manage the change through skilled leadership will certainly come out on top.