Jack Lowe Jr., chief executive officer of employee-owned TDIndustries, an electrical and mechanical contractor in Dallas, is a believer in developing leadership skills. So strong a believer, in fact, that throughout the economic downswing he's continued to train employees on such skills as problem solving and conflict management. "If a leader is someone who influences people, then that's everyone," Mr. Lowe explains.

Mr. Lowe's approach is unconventional in a down economy. "Soft" skills are harder to measure and identify than more finite know-how such as industry specifics or sales experience. So these skills are "perceived as nice to have, but [the emphasis on them] does tend to be the first thing to go when companies start cutting back or when business results aren't what you want them to be," says Allan Foss, manager of leadership training at PPG Industries in Pittsburgh.

Mr. Lowe points to a recent employee workshop as an example of why he encourages leadership training -- in good times and bad. Forty front-line construction workers spent two days training on how to solve problems as a team. The company uses real issues related to retention, safety, pre-project planning, and even developing a group medical plan in this workshop. The workers in this latest session were asked how managers and workers can increase their respect for one another. Such sessions "don't develop polished ready-to-go solutions, but they do come up with good ideas," Mr. Lowe explains. Employees "feel so valued and so pumped up from this opportunity [that] in terms of productivity I know I'll get back those two days in about two weeks."

There are a variety of reasons to focus on developing your soft skills. A study on workplace conflict by the Management Development Institute at Eckerd College in St. Petersburg, Fla., shows that people who are good at reaching out to co-workers on tough issues and offering solutions when differences arise are more likely to be seen as effective leaders. On the other hand, managers who avoid difficult confrontations or handle them too brusquely are perceived by those above and below them as lacking in leadership skills.

And top executives are beginning to appreciate the link between certain people skills and the bottom line. Best Buy Co. Inc., the Minneapolis-based electronics and appliances retail chain, surveys store employees twice a year to ask, among other things, how effective managers are at engaging them. "We get huge feedback," says Wendy Wade, vice president of human resources. "And we've seen a high correlation between the survey results and a store's performance. We can really zoom in on the managers who are underperforming" when it comes to keeping the staff involved.

Even if you don't work for a Best Buy or PPG, where proactive, participatory leadership is a part of the day-to-day company culture, employing this more enlightened management style can still be a career booster. Here's some advice from professionals who have enhanced their careers by focusing on soft skills:

The Gallup Organization has found that productivity soars when big-company managers create a small-company environment. One approach is to provide information and feedback that makes workers feel personally connected to company targets and results.

Cheryl Jensen, a senior manager at IBM in Dallas, knows first-hand that an "inclusive" management style can make an even bigger difference in tough times. Several years ago, she was put in charge of a sales group "losing a half-million dollars a month. I looked at the financial information, which only the previous manager had seen, and decided to show it to everyone -- workers, clients, partners. We rallied around the idea that [the performance] was unacceptable."

After the group identified goals for each individual, Ms. Jensen began posting financial data monthly so people could see how progress related to their separate jobs. "I actually saw people saying, 'if I do this part of my job differently, I see how it will impact results.' " One group even decided to car-pool in certain instances to control expenses. The result: "We got to breakeven in six months," she says. Soon after, hers was the No. 2 group (of six) in the U.S. Ms. Jensen now coaches other IBM sales managers how to create a similar inclusive environment for their own teams.

When unemployment is high and raises are scarce, workers are less likely to complain about petty personality conflicts or raise touchy salary issues. Instead, a manager's pressing issues are likely to involve telling the boss about missed targets or laying off valued employees. Still, there are ways to help preserve group morale and your own reputation, so you and your team will be ready to move full-steam ahead when business picks up.

"Fewer people will get fired for missing goals and being honest about it than for missing goals and not telling anyone," but neither scenario is going to score points with those higher up, says Mr. Foss. The ideal manager "gets out in front of the situation and says 'we might not get the results we wanted, and here's what I think we need to do about it.' "

Ann Hambly, president of Prudential Asset Resources, Dallas, a commercial-mortgage-servicing unit of Prudential Financial Inc., believes the key to delivering bad news is taking steps along the way to ensure that nothing is a shock to the people who work for her. In the late 1990s, Ms. Hambly started up a new business group for what is now Nomura Holdings, recruiting colleagues she knew at other companies. But she wound up shutting down the business less than two years after it began. "I had to lay off 80 people in one day -- half of the staff," she recalls. "But I always tried to be upfront and tell them everything I knew. They were able to draw their own educated conclusions, and there weren't nasty surprises."

At Prudential Asset, she follows the same open-book strategy. "My entire group meets quarterly to talk about where we made money, where we fell short, where expenses rose and why." She sees this knowledge sharing as a source of security in uncertain times. "The group would know if things were getting bad, so in the meantime, they can rest assured things are OK, and they won't fall off a cliff they didn't see."

"You have to take risks to be noticed and get promoted," says Ms. Hambly, even if there's little new business on the table. Take a position on the tough issues your company is grappling with, she advises. "Be confident and say, 'Here's what I think we need to do.' Then help to get it done."

Giving your staff room to take on work independently and even make small mistakes can seem risky when business is in a downswing and everyone is on the verge of crisis mode. But Ms. Wade urges managers in these situations to avoid thinking that everything is too important to be left to someone else.

"You have to delegate things other people clearly can do," she says. Otherwise, when business does pick up, they'll be less able or reluctant to tackle new developments, or they'll move on to where they feel more valued just when you need them most. In addition, "People on the front lines see problems and have ideas for, say, how to improve customer service," she explains. "You have to give them the room to speak up and be willing to throw support behind their good ideas."