Despite layoffs and recession-starved budgets, many employers are investing in leadership-development programs, hoping not to be caught short of strong managers when the economy recovers.

Identifying and grooming leaders is important in good times, says Bret Furio, senior vice president of consumer lifestyle for Philips Electronics North America. “In times of crisis when the economy is struggling,”

he adds, “it’s imperative.”

Like many companies Philips Electronics NV is trimming its training budget this year. A December survey of 117 large US companies by Watson Wyatt Worldwide Inc. found 23% of respondents had recently cut training programs, and another 18% planned to do so this year.

But Philips will offer its annual Inspire program for 30 high-potential employees, stressing subjects such as business strategy and personal leadership. Participants are assigned to teams to work on a business project.

Mr. Furio reasons that investing in leadership development will help Philips through the recession and recovery. . . .

Philips is typical of many companies, according to Bersin & Associates, a research firm that studies corporate training. Bersin estimates that companies cut overall training budgets by 11% last year and projects another decline this year, based on a recent survey of human-resources executives. President Josh Bersin says the deepest cuts are in training for “soft skills’

such as communicating with co-workers and conducting meetings. He says leadership development is taking a growing share of training budgets.

Yaarit Silverstone, global managing director for the organizational-effectiveness practice at consulting firm Accenture Ltd., says the emphasis on leadership development is a departure from the past. Ms. Silverstone says companies historically cut leadership-development programs during downturns, but the moves backfired, prompting midlevel managers and top performers to leave when the company recovered. Now, she says, executives believe that without capable managers, “their ability to come through (the recession) in a healthy fashion is diminished.”

Consider Estee Lauder Cos. The New York cosmetics maker Thursday reported lower sales and profit for the period ended Dec. 31, and said it would eliminate 2,000 jobs over the next two years, but Lauder is continuing its leadership-development programs, albeit more cheaply. Lauder typically sends 120 executives to a two-or-three-week summer program at Vassar College. This year, it plans to send 60, for one week.

In all its leadership programs, Lauder will emphasize innovation and managing change in volatile business conditions.

FOR DISCUSSION

How can companies justify spending money on leadership development when they are laying off other employees?