Recession. It's what everyone is talking about and it will affect you at some point. The boom years are now drawing to a close and public sector budgets are about to see their biggest squeeze in more than a decade.

Given how long it will take to get out of the worsening economic difficulties, many NHS staff are unlikely to see higher spending return.

It is useful to look at past experiences to help manage the future, but how many managers and clinicians were in senior leadership roles during the last recession? Not many, I guess, and so the next few years are going to be a major challenge for many boards and leadership teams.

I spent a lot of time from the 1980s onwards juggling finances with a "stop-go-stop" approach to service development. The responses to controlling revenue were cruder then. Closing capacity was often an easy option, and when in 1996 my health system received no growth whatsoever decision-making was suddenly easy. I just said no. But a more sophisticated leadership approach will be needed from today's senior managers.

Advice for boards

Smart boards will already have started discussion about managing what will be a difficult future for their organisations. But what are the lessons for leading and managing during difficult times? Well, here is my suggested 10-point plan for doing just that.

  • Assess your organisation's position in terms of financial management, service delivery and strategic change. Where are you delivering bottom lines well and where are you struggling? What are your strengths and weaknesses and those of your key partners?

  • Speedup system reform and re-engineering. There is going to be less money around so getting into organisational shape is crucial. Do not wait until the recession hits. Time is of the essence.

  • Review your team's capability and capacity. It needs to be match fit for the times ahead. Using the strengths of your team and stretching their roles will help retain their talent. But this is not a time for sentiment, so if you have team weaknesses address them now.

  • Assess the strength and depth of your inter-organisational relationships. Remember, developing trust with partners will not start if the first meaningful conversation you have is about the impact of the economic downturn.

  • Scenario plan for the future, exploring the impact of decreasing amounts of growth. Develop strategic and operational options for managing that.

  • Critically review your organisation's priorities and develop plan Bs for those you cannot put off. The NHS is one of the best planning organisations in the world, but it still has some way to go in automatically developing fallback positions and instinctively incorporating risk assessment in its planning.

  • Communicate. Be honest and realistic with staff because above all else they will be looking for leadership. There may be a temptation to withhold or massage difficult messages. Don't, because it is patronising. What staff will want is the opportunity to contribute and to come up with innovative solutions to wicked problems. Help them do that.

  • Seek external help if necessary, but if it is consultancy support be very specific about the outcomes you want. Analytical support is easy to find but securing good advice on implementation planning during hard times can be more difficult.

  • Keep your nerve and maintain a balanced perspective. Do not panic. Plan ahead. Future-gazing is an activity that far too few boards and executive teams spend enough time on. Boards have a responsibility to demonstrate to staff that they are managing their future. Managing the here and now will be tough but the plaudits will only come for leading your organisation to a secure and sustainable longer term.

  • Be positive and optimistic. It is OK for leaders to say they do not always have the answers but they should only explore their doubts in private, either on their own or with trusted advisers. Emotions are infectious in organisations, especially those of leaders.

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