Case for Coaching
The Business Case for
By Patsi Krakoff, Psy. D., CBC
The higher up the
organizational ladder an executive goes, the less he/she can depend on
technical skills and the more one must have effective interpersonal skills and
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 bottom line performances for the
Executive Derailment from Emotional Competence
Research by the Center for Creative Leadership has found that
the primary causes of derailment in executives involve deficits in emotional
The three primary ones are:
Difficulty in handling
Not being able to work well in a team
A study of 130 executives found that how well people handled
their 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.
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
Coaching is NOT another feel-good exercise based in soft
skills that has no correlation to the bottom line.
Attitudes Yield Profit
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 5 units increase
of employee attitude led to 1.3 unit increase in customers' positive
impression, resulting in 0.5 percent increase in revenue growth.
Increases Executive Productivity
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 percent.
Training and coaching increased productivity by 88
percent, a significantly greater gain compared to training alone. (Public
Personnel Management; Washington; Winter 1997; Gerald Olivero; K Denise Bane;
Richard E Kopelman)
Coaching Use Increases
Between 25 and 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 Jacksonville, Florida, career management
consulting 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.
Uses of Coaching
firms and other sales-based organizations such as insurance companies use
coaches to bolster performance of people in high-pressure, stressful jobs. In
some cases, the coaching is geared toward correcting management behavior
problems such as poor communication skills, failure to develop subordinates, or
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 coaching intervention:
1. Top performing staff, who were
considering 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.
3. Customer revenues and
customer satisfaction were improved due to fully staffed and fully functioning
4. Revenues were increased, due to managers improving their
performance and exceeding their goals.
The Confusion over Coaching
Coaching means many different things to different people. The
occupation is emerging as an organized profession 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
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
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
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 is also present when an organization designates internal personnel to
Focus on Development of Person Being
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
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 coach.
Not Everyone's a Masterful
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 one 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
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.
coaching focuses on personal development rather than on accomplishing tasks,
this leadership style generally predicts an outstandingly positive emotional
response and better results.
The Critical Need for Impact
What is not always clear in organizations is how initiatives of
any sort dealing with intangible effects can impact the bottom line.
One study conducted by MetrixGlobal for an executive coaching program
was impressive. Seventy executives from a multi-national telecommunications
company that included participants in the United States, Canada, Mexico, and
Brazil were coached. MetrixGlobal performed an extensive survey of 43 coaching
participants that yielded the following results:
|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
remains critical to reiterate the need for coaching to demonstrate the impact
on the bottom line. It is necessary 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.
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).
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
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:
drive to achieve results
2. the ability to take initiative
3. skills in
collaboration and teamwork
4. the ability to lead teams
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 competence, and they set goals for improving them.
The result was an additional $1.5 million profit, double of that of a
comparison group who had no training.
What this means is a clear case
for training in the competencies that involve emotional intelligence. 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.
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
|Anderson, M. (November 2001).
Briefing: Case Study on the Return on Investment of Executive Coaching.
|Argyris. C. & Schon, D. (Sept.1977).
Learning in Organizations," Harvard Business Review.
|Bennis, W. (July 16, 2001).
Quoted in Orange County
Register article, "Executives get coaching in coping."
|Blanchard, K. & Shula,D. (1996).
Everyone's a Coach. Zondervan Publishing House.
|Clarke, Walter V., (1997).
(unknown resource for now, we are still trying to locate
|Drucker, P. (2001).
The Essential Drucker, HarperBusiness.
|Goleman, D., Boyatzis, R., & McKee, A. (2002).
Primal Leadership: Realizing the power of emotional intelligence.
Harvard Business School Press.
|Hargrove, R. (1995).
|Jay, M. (1999).
Coach2 the Bottom Line: An Executive
Guide to Coaching Performance, Change and Transformation in Organizations.
|Kilburg, R. (1996).
"Executive coaching." Consulting
Psychology: Practice and Research, 47.
|Laske, O. (2000).
"An integrative model of developmental
coaching". Consulting Psychology: Practice and Research, 51(3), 139-159.
|McCauley, C. D., & Hughes-James M. W. (1994).
evaluation of the outcomes of a leadership development program. The Center for
|McGovern, J., Lindemann, M., Vergara, V., Murphy, S., Barker, L.,
Maximizing the Impact of Executive Coaching.
|Olivero, G., K. Bane, & Kopelrnan, R. (1997).
Executive coaching as a transfer of training tool: Effects on productivity
in a public agency. Public Personnel Management, 26, 461-469.
|Rucci, A., Kirn, S., and Quinn, R. (Jan-Feb 1998).
Employee-Customer-Profit Chain at Sears". Harvard Business Review.
|Spencer, L. (2001).
"The Economic Value of Emotional
Intelligence Competencies and IEC-Based HR Programs," in The Emotionally
Intelligent Workplace, eds. Cherniss, C. & Goleman, D. San Francisco:
|Triad Performance Technologies, Inc.
|Young, D. P. & Dixon, N. M. (1996).
Take Effective Action: A Program Evaluation. The Center for Creative
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