The
ROI of Executive Coaching
In
today's challenging business climate, every unnecessary perk is routinely
trimmed from corporate budgets. However, thousands of business owners,
managers, and professionals still retain their executive coaches because
they correctly view them not as personal perks but as corporate benefits.
Coaching's popularity has long been fueled by anecdotal evidence of
effectiveness. Recent larger, and longer-term, studies have concluded
executive coaching not only facilitates the skills development that aids
the individual participants, but also makes a significant impact on the
overall organization.
Study participants reported numerous benefits derived from executive
coaching, including better working relationships with direct reports,
peers, and supervisors, higher job satisfaction, and less conflict within
their scope of responsibility.
Organizations noted increased productivity, quality, and organizational
strength. And, most important, they reported a significant return on the
dollars invested in the process.
Focus of Executive Coaching
Executive coaching is typically requested when an executive needs to:
- Change behaviors or skills to "fix it," (whatever "it" may be).
- Develop more effective ways of dealing with people or organizational responsibilities.
- Clear away "blind spots," (unnoticed or subtext personal issues or behaviors that dramatically impact effectiveness).
- Nurture the skills and perspective required for a new position or career change.
When Executives Need Fixing
Coaching
is often the intervention of choice when a talented executive has either a
behavioral or personal issue that negatively impacts their effectiveness.
In the privacy of the coaching relationship, issues can be addressed, and
resolutions explored and practiced, with the ongoing feedback and guidance
of an experienced coach.
Because the coaching transcends the line of command, many troubled execs
feel freer to identify and resolve the real issues they're struggling
with. As an outsider, the coach isn't as constrained when delivering
feedback, challenging a client to grow, or frankly outlining the
consequences of not changing.
On the other hand, when the issues are personal, many executives seek
coaching outside the organization, choosing to work with a professional
uniquely qualified to resolve personal issues against the background of an
organizational setting. Some of these coaches may be or have been
therapists or other mental health professionals allowing them to use a
client's personal history or dynamics to inform the process. However, the
work stays centered on coaching with regard to the specific models,
strategies, and approaches the executive can adopt to increase personal
and organizational effectiveness.
Two major
studies have shown that it is more effective and less expensive for the
organization to provide coaching to those executives who have either
become derailed or need to increase their vision.
Unfortunately not every struggling executive sees a need or believes in
the efficacy of individual coaching. Even with these reluctant clients, a
skilled coach can facilitate major growth. As the executive becomes more
comfortable, he or she will usually embrace the coaching opportunity and
attribute their heightened effectiveness to the coaching relationship.
Properly done, coaching is seen by both client and coach as a
collaborative relationship that is non-threatening to the executive's
confidence or self-esteem. Self-efficacy seems to increase, not decrease,
as the formerly reluctant executive becomes more engaged.
The organization benefits because the cost of bringing a flawed, but
otherwise valuable, employee up to speed is significantly lower rather
than replacing him or her.
Developmental Coaching
Another focus for executive coaching preparing for a new position or
supporting career growth can call for the development of both new
competencies and a broader perspective.
In a long-term study of coaching outcomes, a division of BP found participants consistently improved performance, increased potential-for-advancement ratings, and achieved 50 percent higher salary increases than colleagues who had not participated in the program.
Another study of coaching outcomes with over 100 executives, primarily from Fortune 1000 companies, reported similar results. Executives who participated in coaching realized improvements in their working relationships, better teamwork with a conflict reduction in their own groups, greater job satisfaction, more personal job commitment, and better client relationships.
Their
companies benefited from increased productivity, quality, organizational
strength, customer service, cost reductions, and retention of executives
who received coaching.
All of this led to higher bottom line profitability, while providing an
ROI in real dollars that was many times greater than the cost of the
coaching initiative.
Typically, executive coaching starts with addressing tactical issues,
analyzing the presenting complaint, and then often progresses to more
strategic issues. When the researchers looked at the impact of the
tactical versus strategic impact, their findings were startling.
A little more than half [58 percent] of the executives reported
significant impact on the business when the coaching focused on tactical
issues, while 100 percent of the participants who also addressed strategic
issues reported significant impact on the business.
Of the monetary benefits to the organization, 70 percent were delivered by
those executives who worked on the strategic issues.
If that's the great news, here's the downside. Less than half [43 percent]
of the executives progressed past the tactical to consider and work on
strategic issues.
Granted, there may be some issues about generalizing the findings of these
studies to the coaching initiatives you are providing or engaging.
However, there are clear and obvious indications that individual executive
coaching can easily move past individual initiative to a strategic
business initiative.
When we set coaching expectations and outcomes that are in line with the
expectations and strategic needs of the organization including moving
through tactical to strategic issues the potency and benefits of the
coaching initiative can be realized throughout the organization.
Resources
Birkeland,
S., Davis, B., Goff, M., Campbell, J., & Duke, C. (1997). AMOCO
individual coaching study. Unpublished research report, Personnel
Decisions International.
Minneapolis, MN.
A Practical Guide to Evaluating Coaching:
Translating State-of the-Art Techniques to the Real World
David B. Peterson and Kurt Kraiger in The Human Resources Program
Evaluation Handbook. Sage Publications, 2004
__________
Since 1986, Patricia Wiklund, Ph.D. has helped some of America's largest, and smallest, organizations resolve expensive and troublesome people problems and conflicts by leveraging the strategic power of soft skills®. A former mental health professional, she is as comfortable on the front line, as on the shop floor, or in the corporate executive suite, and also works effectively in government and educational settings. Call her today at 415 641-5997, or email her at pat@patwiklund.com to discuss how she can help you put your people and organizations back on track.
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