Editor's Note: This is a new weekly column on leadership by Dr. Todd Thomas, who founded IMPACT Consulting and Development and previously led executive development at Daimler and organizational learning at Rockwell Avionics. This column appears Mondays in our "Don't Miss" section.

The 57% drop in adjusted profit for Borders ( BGP) in the first quarter of 2009 was "less worse" than expected, so the stocks jumped the next day to lead a rally on Wall Street.

Housing statistics have also encouraged the market, benefiting Home Depot ( HD), Lowe's ( LOW) and others in the home improvement business after the Fed announcement on housing starts was "less worse" than previously predicted.

Even the automakers (with the exception of General Motors ( GM)) saw improvement in their shares because sales declines were "less worse" than they were this time a few months ago.

This could really catch on. I'm writing this column right now sitting in a Caribou Coffee, where the coffee is less-worse than the coffee I make at home. Perhaps I could even start promoting myself as a "less worse" writer and speaker than many others!

In all seriousness, this talk about "less worse" is an important reflection on leadership. In the short-term, "less worse" is a reasonably encouraging statement to ignite some hope in a relatively hopeless market. And if nothing else, it contributes a positive string of dialogue into a media flow that has been nothing short of doomsday.

One of the great challenges in a short-term recovery will be to avoid a reversion back to a measure of success in purely financial terms. We've seen that much of the boom that led to this bust was all smoke and mirrors, in large part because leaders were not held accountable for the "whys" of their decisions and actions, only the financial outcomes. If we are looking for truly long-term sustainable results, leaders have to actually lead instead of worrying about how to label their results.

Leaders trying to motivate and encourage employees in times of such mixed and negative results have a long and challenging road ahead. They will have to have not only integrity, but courage, focus and a vision for what the future may look like.

Courage

Courage in leadership is not just about making the "hard" decisions. This is usually company-talk for laying off employees. Courage in leadership goes beyond the simple operational discussions. Courage means a willingness to state the truth and to deal with reality as it is seen and understood by employees and customers. Former GM CEO Rick Wagoner was known as a leader that spoke primarily what others wanted to hear. The lack of courage to face reality, to realize that times have changed and that GM is no longer the behemoth it used to be has cost the company dearly. In fact it has cost the company so much that General Motors is now leader-less. Fritz Henderson's job is to manage the remains of the company under the direction of the Obama administration. There's not much hope for a large ship without a captain at the helm.

Focus

In times when the results we see cannot be explained by normal and linear logic (just read last Thursday's 'Fast Money' Recap: The Rally: Unhealthy Signs), leaders who are going to be successful must be disciplined and focused. Fred Smith, CEO of FedEx ( FDX), showed he understands this point when he recently stated that FedEx has hit the bottom. With reasonable financial forecasts, and a focus on FedEx's core competency (logistics), Smith is likely to ensure not only a financially successful organization but one where employees and customers are satisfied that they know what they are doing. The important thing to notice about Smith's approach is that it is based on one thing -- a focus on doing what FedEx does well. While his forecasts for financial returns are less than analysts had hoped, he is not a leader that lets analysts determine his business. This is the kind of leadership we need in a "less worse" environment.

Vision

While the troops are fighting the fires, the leader has to have a future vision that can compel employees and customers to be willing to weather the storm. I'm not talking about the laminated-on-the-wall kind of vision, but the focus on future success that can create the energy and engagement necessary to be successful in the recovery -- whenever it comes. Jim Balsillie and Mike Lazardidis, co-CEOs of Research in Motion ( RIMM) are aware of this and have not allowed the speculation of the markets to interfere with their vision. Continuously one of Canada's most admired corporate cultures, the company behind the Blackberry blew away doomsday expectations when it reported record earnings for the fourth quarter 2008. Do they have cool technology? Yes. But others do as well. They also have a well defined and focused vision, and the courage to maintain the course.

It is easy to be righteous about integrity in leadership when hard times are forcing layoffs and 401ks are only a fraction of their worth from 24 months ago. It will be just as important to focus on leadership when times begin to improve. Our starvation for high returns, if not checked by discipline, will lead us back to an era where CEOs, managers and Boards of Directors sold out accountability and honesty for short-term gain. And then "less worse" will be about as much as we can expect to receive.

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