The business case for investing in effective leadership development and its positive impact on organizational performance is compelling. But sometimes organizations appear to lurch from a glut to a dearth of investment, often associated with organizational performance.

Is the right time to invest in leadership development when performance is at the crest of the wave, or the when the waves are crashing on the shores of business change? Most organizations turn off the tap once financial results start to take a downturn. This decision is understandable, as the organization tightens its belt to focus on core processes, and optional investment activities take a back seat.

However, it does raise a major question: Should leadership development be considered a strategic option or a strategic imperative? Should we develop leaders in the good times, when budget is available, or should does this investment become even more of a strategic lever when times are not so good?

In early 2003, a UK-based telecommunications company completed major refinancing in a bid to re-assert itself in a highly competitive marketplace. Although financial priorities were under significant scrutiny, the CEO’s commitment to a major performance & organizational development program demonstrated the leadership team’s belief that it would provide a return on investment.

The critical organizational objectives were:

• Objective assessment of potential, role-fit and gaps
• Validation of organizational capability review outputs
• Talent retention
• Effective succession planning

The investment in the program informed significant organizational design, critical leadership appointments, a strategic focus for organizational capability and a clear consensus that leadership development was integral to the future success of the company.

The benefits to the senior leadership population were:

• Development/career support to high-potential individuals at all levels of the organization
• Enhanced capability to deliver against current/future business challenges
• Strategic alignment of development with the challenges facing the organization

When an organization’s financial performance hits a plateau or a downturn, a critical strategic review is imperative. This review usually covers all major strategic drivers, including markets, pricing, clients, products, technology, etc. It rarely includes leadership, although it may if the review could have resourcing consequences.

Such a review may carry with it a resourcing freeze or reduction. The leaders who remain, and who need to focus on delivering an upturn in the organization’s future, often face the challenges of re-prioritizing, re-planning and reorganizing in order to deliver specific outcomes. Very rarely do these times carry with them an investment in leadership assessment and development.

Leadership development during times of organizational stress might seem expendable, but there are powerful arguments that indicate that it’s quite the reverse.

Here are three reasons to invest in leadership when an organization is facing financial challenges and performance downturns:

1. Assessing the leadership population: If leadership assessment hasn’t been a regular discipline in the organization, it’s critical to determine if the best leaders are in the best roles to bring about organizational success.
2. Ensuring that leaders are equipped to deal with change and current challenges: Organizational turnarounds happen when the behaviors and skills required for the turnaround are intentionally developed.
3. Inspiring the organization through a cascade of positive leadership and investment in people:  Times of organizational transition are when leaders and employees need motivation and character to bring out the best in everyone.

It goes without saying that organizations making large profits should have effective leadership development, if for no other reason than to maintain future levels of success. Cash is plenty, leadership is motivated and time is available. Senior leaders attend expensive, high-profile programs; others are sponsored for academic programs to develop their capability; and the latest technology is exploited to access leadership development resources.

And yet even in instances where it appears that there is a feast of leadership development, there can often be a famine of focused and effective interventions. The most effective leadership development programs are integrated into the organization’s DNA, have measurable and targeted outcomes, and are based on the key tenets of adult learning theory.

Leadership development should not fluctuate between feast and famine but should be an integral part of an organization’s success, change or turnaround.

Neil Grant is a strategic leadership development consultant and the owner of Focal Leadership LLC.