As spending cuts bite deeper, businesses and politicians must offer signs of hope to those most affected, writes Cary Cooper

Last month Colin Montgomerie led a successful European team to victory in the Ryder Cup over an American team that individually was ranked much higher in world golf. The players acknowledged, and so did the pundits, that Monty's style of leadership was a key factor in the team's success.

He applied attention to detail to a "praise and reward" management style that ranged from putting Post-it notes on the lockers of his players saying what a good job they had done to being on the course at critical times to do the touchy-feely back-slapping and hugging to support individuals both when they were up—and when they were down. Above all, he was calm during periods of high tension—and there were plenty of those.

It made me think about what leadership characteristics lead to success, particularly in today's stressful climate. I suspect there is a difference in managing during optimistic and high-growth periods than in the desperate times we face, as we try to recover from one of the worst recessions in living memory.

In a recent book on The Leadership Challenge, two US academics (Jim Kouzes and Barry Posner) suggested that business leaders must: inspire a shared vision; involve people and empower them; encourage by the heart (reward, praise and touchy-feely management); be a good role model for what you want others to do; and challenge the status quo. This means that we need not only visionaries but also action-orientated leaders. As the old Japanese proverb emphasises: "Vision without action is a daydream... action without vision is a nightmare."

Employees must feel that their contribution is valued. Management and leadership in general are about getting the most out of people. Micromanaging, blaming or treating others as disposable assets is not an effective management style. Skilful leaders do exist in the UK, but we need more of them to energise our economy.

When I meet top executives or entrepreneurs, many of the successful ones have the required emotional intelligence, or the "encouraging by the heart" characteristic. Cary Cherniss of Rutgers University recently wrote a chapter in a leadership book praising the behaviour of Kenneth Chenault, chief executive of Amex after 9/11 (11 Amex employees died in the attack and many others were left homeless).

Cherniss described how Chenault had the company contact all 6,000 New York employees to see how they were feeling, personally visited the families of all those who died, found accommodation for those who were homeless and organised meetings with all employees to see if there was anything else they needed.

With spending cutbacks and difficult times ahead for job security—and for the future of pensions—we will all need authentic emotional leadership, not only from our business leaders but also from our politicians as well. We must expect our political leaders to be emotionally literate, and to understand that although we recognise that government cuts are necessary, we also need some hope and optimism. Empathy and metaphorical hugs will be much in demand.

As former prime minister William Gladstone once wrote: "The world will be a better place when the power of love replaces the love of power."