In these bleak times, companies are depending on their star performers as never before. Organizations need their top talent to be in peak form-firing on all cylinders-so they can succeed in a market that is the toughest in living memory. How are employers handling this challenge? In a word, badly.

To start with, leaders are seriously distracted. Caught between clamoring clients and vaporizing value, a CEO understandably might find it hard to focus on talent. People issues tend to translate into layoff strategies: How many should you let go? How should the cuts be distributed? Should you act surgically and strike deep or should you dribble out the reductions over time?

When it comes to talent management, CEOs are also hamstrung by outmoded thinking. In times like these-marked by massive losses and rising unemployment-it's tempting to imagine that there's no need to worry about motivating talent. People are so grateful to have a job, the conventional thinking goes, that they can be relied on to contribute 110%. Right? Wrong.

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