The Business Case for Coaching
The higher up the organizational ladder an executive goes, the
less he/she can depend on technical skils and the more one must
have effective interpersonal skills and emotional intelligence.
Organizations spend large sums of money to hire coaches for top
executives in an effort to improve these abilities. Are coaching
programs effective in improving bottomline performance in organizations?
Research by the Center for Creative Leadership has found that
the primary causes of derailment in executives involve deficits
in emotional competence. The three primary ones are:
1. Difficulty in handling change
2. Inability to work well in a team
3. Poor interpersonal relations
A study of 130 executives found that how well people handledtheir
own emotions determined how much people around them preferred to
deal with them (Walter V. Clarke Associates, 1997).
Effective coaching works with executives and others to develop
their proficiency in working with change. It helps them identify
when teamwork is important and to use their skills to foster it.
Coaching builds skills and capacities for effective working relationships.
Coaching paves the way for decision makers to create higher levels
of organizational effectiveness through dialogue, inquiry and positive
interactions. Coaching creates awareness, purpose, competence and
well-being among participants. Coaching is NOT another feel-good
exercise based in soft skills that has no correlation to the bottom
In an article in the Harvard Business Review (Jan-Feb 1998) entitled
The Employee-Customer-Profit Chain at Sears, by Rucci, Kirn and
Quinn, a model was developed indicating that a 5 unit increase
in a measure of employee attitude led to a 1.3 unit increase in
customers' positive impression, resulting in 0.5 percent increase
in revenue growth.
One study examined the effects of executive
coaching in a public sector municipal agency. Thirty-one
managers underwent a conventional managerial training program,
followed by 8 weeks of one-on-one executive coaching. Training– which included goal setting,
collaborative problem solving, practice, feedback, supervisory
involvement, evaluation of end-results, and a public presentation– increased
productivity by 22.4%. Training and coaching increased productivity
by 88%, a significantly greater gain compared to training alone.
(Public Personnel Management; Washington; Winter 1997; Gerald Olivero;
K Denise Bane; Richard E Kopelman)
Approximately 25 to 40 percent of Fortune 500 companies use executive
coaches, according to the Hay Group, an international human-resources
consultancy. According to a survey by Manchester, Inc., a Florida
career management firm, about six out of ten organizations currently
offer coaching or other developmental counseling to their managers
and executives. Another 20 percent of companies said they plan
to offer coaching within the next year.
Although it was once used as an intervention with troubled staff,
coaching is now part of the standard leadership development training
for executives in such companies as IBM, Motorola, J.P. Morgan
Chase, Hewlett-Packard and many others. Companies such as Merrill
Lynch, and sales-based organizations such as insurance firms use
coaches to bolster performance of people in high-pressure stressful
In some cases, the coaching is geared toward correcting management
behavior problems such as poor communication skills, failure to
develop subordinates, or indecisiveness. More often, however, it
is used to sharpen the leadership skills of high-potential individuals.
Coaching can ensure the success, or decrease the failure rate,
of newly promoted managers.
"People are in a legitimate state of doubt– about galloping
technology, globalization, heightened competition and increased
complexity," says Warren Bennis, who teaches leadership at
the University of Southern California. "They
need someone to bounce ideas off of and to listen to their existential
Michigan-based Triad Performance Technologies, Inc. studied and
evaluated the effects of a coaching intervention on a group of
regional and district sales managers within a large telecom organization.
The third party research study cites a 10:1 return on investment
in less than one year.
The following business outcomes were directly attributed to the
performing staff who had considered leaving the organization,
were retained, resulting in reduced turnover, increased revenue,
and improved customer satisfaction.
positive work environment was created, focusing on strategic
account development and achieving higher sales volume.
revenues and customer satisfaction were improved due to fully
staffed and fully functioning territories.
were increased, due to managers improving their performance
and exceeding their goals.
( www.coaching.com )
The Confusion over Coaching
Coaching means many different things to different people. As a
profession, it is emerging as an organized occupation and is
struggling to find identity. Coach training schools vary widely
in their philosophies and competencies. Many consultants and
persons trained in psychology are simply calling themselves coaches
with no formal training or consistent standards.
In many companies and industries coaching is showing up in several
ways. One is through the use of external coaches to work with key
or targeted individuals (CEOs, high potential executives, problem
managers). Secondly, some companies have hired internal executive
and management coaches. Thirdly, they have trained their own management
and executive staff in coaching skills. While all of these are
valuable initiatives, each has unique implications.
How coaching is experienced by people in organizations, however,
is not always clear. There is a great difference in the coaching
experience that depends on whether the person coaching is truly
independent or not.
Coaching Without Responsibility, Accountability and Authority
According to Mike Jay, founder of B-Coach
Systems ( www.b-coach.com ), "It is easy to mistake a coach for a person (leader, manager,
teacher, trainer, mentor, etc) coaching as they both use the same
skills; however, the critical issue is that of responsibility,
accountability and authority over outcomes." This
key differentiation separates coaches from leaders, mentors, managers,
teachers, trainers, facilitators and counselors coaching."
This difference is important because it shapes the nature of the
coaching relationship. Only with a coach is the focus solely on
the agenda of the person being coached as a part of a business
or organizational system. When a manager is coaching, or using
coaching skills, there is at the very least implicit pressure to
change in a direction desired by others. That pressure may also
be present when an organization designates internal personnel to
With an external coach the focus is on the development of the
person being coached. The most effective coaching will help clients
identify the relationship between their own development and requirements
of the business. There is a natural tension between these two streams
that a coach can help clarify. By asking questions designed to
examine assumptions and beliefs, the mental models of the person
being coached are explored. This leads to double-loop learning
(Argyris and Schon) where a person can improve not only performance,
but emotional intelligence as well.
A truly effective coaching experience is one that provides long-lasting
results. On the surface, coaching sounds like goal setting with
accountability and motivational pumping up. The athletic coach
comes to mind. Even Ken Blanchard co-authored a book with Don Schula,
Everyone's a Coach. But the truth is, not everyone's a masterful
Not Everyone's a Masterful Coach
The work of effective coaching within organizations involves unleashing
the human spirit and expanding people's capacity to stretch and
grow beyond self-limiting boundaries. Coaching should not start
with goal setting and problem solving, but rather with exploring
the underlying concepts or mental models that a person uses to
make meaning. What are the assumptions and beliefs that determine
behavior? The truly effective coach knows that you can't solve
a problem before you know what the problem really is.
This is a primary difference between coaching, as it is set forth
here as an independent set of skills, and consulting. The consultant
is usually called to provide answers. The consultant doing coaching
may or may not be skilled at distinguishing this important difference.
Before they can focus on performance issues, a masterful coach
guides the exploration process, identifying openings where there
may be blind spots. He or she helps to clarify what really matters
to the person being coached. Together, they look towards alignment
of personal and organizational goals. Only then can there be commitment
to right action within the context of the organizational culture
and business reality.
It becomes evident that this exploration of assumptions and beliefs
is difficult to do when the person coaching is a peer or a supervisor
within the organization.
Goleman, Boyatzis and McKee in their
latest book Primal Leadership ( Harvard Business School Press
2002) bring up the point that despite the commonly held belief
that every leader needs to be a good coach, they exhibit this
style least often. In high-pressure
times, leaders say they "don't have the time" for
coaching. Although coaching focuses on personal development rather
than on accomplishing tasks, this leadership style generally
predicts an outstandingly positive emotional response and better
The Need for Impact Studies
What is not always clear in organizations is how initiatives of
any sort dealing with intangible effects can impact the bottom
One study conducted by MetrixGlobal for an executive coaching
program designed by The Pyramid Resource Group (www.pyramidresource.com)
was impressive. Pyramid coached over 70 executives from a multi-national
telecommunications company that included participants in the United
States, Canada, Mexico, and Brazil . MetrixGlobal performed an
extensive survey of 43 coaching participants that yielded the following
Coaching produced a 529% return on investment and significant
intangible benefits to the business. Including the financial benefits
from employee retention, coaching boosted the overall ROI to 788%.
The study provided powerful new insights into how to maximize the
business impact from executive coaching.(Merrill Anderson: firstname.lastname@example.org
It remains critical to reiterate the need for coaching to demonstrate
the impact on the bottom line. Money is acknowledged as an indicator
of value in the marketplace. Peter Drucker often refers to profit
as the return on invested capital. We must always evaluate the
return to our human and financial capital in light of profitability.
It is critical to establish measurements before coaching programs
are implemented in order to account for the change induced by coaching.
Few organizations or consultants take the time to do this.
To be successful in today's ever-shifting
market, people count for more– they can make or break the
best business strategy, be the driver or brake in adopting new
technologies. People are not an implementation issue, nor just
an operational or strategic asset. People are the raw resource
around which business success revolves.
No strategy, however well designed, will work unless you have
the right people, with the right skills and behaviors, in the right
roles, motivated in the right way and supported by the right leaders. Adopting new technologies without having the right people to use
them, wastes billions of dollars of investment by companies throughout
–The Hay Group
Emotional Intelligence, Coaching and the Bottom Line
An analysis of more than 300 top-level executives from fifteen
global companies showed that six emotional competencies distinguished
stars from the average: Influence, Team Leadership, Organizational
Awareness, Self-Confidence, Achievement Drive, and Leadership (Spencer,
L. M., Jr., 1997). The higher one goes in organizational hierarchy,
the more one's emotional intelligence distinguishes the star performers.
Currently, organizations are looking to recent work on emotional
intelligence to augment approaches to executive and management
development. One study involved a leadership competence model developed
by Lyle Spencer for an industrial controls firm, a $2 billion global
division of Siemens with 400 branches in 56 countries.
When star performers were compared to average managers, four competencies
of emotional intelligence emerged as the unique strengths of the
stars. Not a single one of them related to technical or purely
cognitive strengths. The following four abilities distinguished
those managers who were star leaders, that is, those whose growth
in revenues and return on sales put their performance in the top
10 to 15 percent:
• The drive to achieve results
• The ability to take initiative
• Skills in collaboration and teamwork
• The ability to lead teams
Then, with a clear idea of which competencies to target, another
pool of managers was trained to cultivate these four strengths.
They became familiar with and were evaluated on each competency,
and they set goals for improving them. The result was an additional
$1.5 million profit, twice as much as a comparison group who had
This is a clear case for training in emotional intelligence competencies.
Being able to identify and define such competencies is now made
possible through 360 degree surveys such as the Emotional Competency
Inventory, or ECI, developed by the Hay Group. Coaches can facilitate
the effective delivery of feedback given to persons from their
peers, subordinates, supervisors and even from family members who
are invaluable sources of information.
One of the most effective ways of accessing greater emotional
competency is through coaching. Coaching helps develop sound leadership,
outstanding interpersonal practices and the ability to manage organizational
conflicts. Coaching is about creating the capacity for appreciative
and supportive interaction that leads to the achievement of business
Resources is a Leadership Consulting, Training and Executive Coaching
Firm Helping Companies Assess, Select, Coach and Retain Emotionally
Intelligent People; Emotional Intelligence-Based Interviewing and
Selection; Multi-Rater 360-Degree Feedback; Career Coaching; Change
Management; Corporate Culture Surveys and Executive Coaching.
Dr. Maynard Brusman
Consulting Psychologist and Executive Coach
Trusted Advisor to Senior Leadership Teams
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