We investigated leadership competencies for developing senior and emerging leaders and the perceived effectiveness of leadership development programs in Health Research Organizations (HROs). A pilot study was conducted to interview HRO executives in Southern California. Respondents represented different organizational contexts to ensure a diverse overview of strategic issues, competencies, and development needs. We analyzed qualitative and quantitative data using an innovative framework for analyzing HRO leadership development. The National Center for Healthcare Leadership 'Health Leadership Competency Model' was used as the foundation of our competency research. Top strategic issues included economic downturn and external funding, the influence of governmental policies and regulations, operating in global markets, and forming strategic alliances. High priority NCHL leadership competencies required to successfully lead an HRO include talent development, collaboration, strategic orientation, and team leadership. Senior executives need financial skills and scientific achievement; emerging leaders need technical/scientific competence, information seeking, and a strong work ethic. About half of the respondents reported having no leadership development program (LDP). Almost all reported their organization encourages mentoring, but less than one-third reported an active formalized mentoring program. We conclude that uncertainties and challenges related to healthcare reform and the continued budget deficits will require HRO restructuring to contain costs, remove barriers to innovation, and show value-add in accelerating discovery to improve clinical care, patient outcomes, and community health. Successful leaders will need to become more strategic, entrepreneurial, and resourceful in developing research alliances, executing research operations, and continually improving performance at all levels of the HRO.