Executive Coaching

Welcome to the Momentum Business Coaching Newsletter for
October 2005

Leadership Coaching for Business Results

"As long as there are human beings doing the work, businesses can profit by creating more fruitful relationships with them." - Stratford Sherman and Alyssa Freas, Harvard Business Review, Dec. 2004

Many attempts have been made over the past decade to quantify return on investment of coaching programmes for executives in organisations. Some spectacular results have been recorded.

Yet even using ROI measurement standards, it is difficult to quantify data of a qualitative nature.

In 2003 Anthony M. Grant of the University of Sydney surveyed coaching research and found only 56 studies that met standards of reliable methodology. There were only 131 peer-reviewed studies since 1937. While the outcomes of coaching programmes appear to be positive, the quality of research on coaching is poor. There are new studies being conducted currently by academics, but it may be years before there are authoritative guides and best practices for coaching.

ROI may never become a measure of the true success of coaching. The marketplace is perhaps the most vocal proponent of the use of coaching for executives for leadership development. Top corporations such as GE, IBM, Hewlett-Packard, JP Morgan Chase, and Goldman Sachs are among those that invest heavily in hiring coaches for their executives. Overall, annual spending on coaching in the U.S. is roughly estimated at $1 billion.

Other companies with smaller budgets are wisely following this trend. Successful companies don't allocate money for programmes that don't have a positive impact on their bottom line or, at least, they don't for very long. Even so, there are some concerns about how much coaching adds to the financial success of the organisation.

Improving an executive's well-being can certainly contribute to improving his or her interpersonal skills (and hence the productivity of the team). Unfortunately, some coaching may get an executive to feel better without having a noticeable impact on his or her behaviours. Obviously, this would be a case of incomplete or ineffective coaching.

How to Get the Most out of Executive Coaching

Let's look at three studies of return on investing for coaching.

1. Gerald Olivero, Denise K. Bane, and Richard E. Kopelman, "Executive Coaching as a Transfer of Training Tool: Effects on Productivity in a Public Agency" appeared in Public Personnel Management, vol. 26, no. 4 (1997), pp. 461-469.

Summary: Describes the advantages of one-on-one executive coaching in positively influencing transfer of training. Examines the effects of executive coaching in a local government agency. Thirty-one managers took a management development programme followed by eight weeks of one-on-one executive coaching. The study finds that training increased managerial productivity by 22.4 percent, while coaching increased productivity by 88 percent.

2. Andres D. Ellinger, "Antecedents and Consequences of Coaching Behavior," Performance Improvement Quarterly, vol. 12, no. 4 (1999), pp. 45-70.

Summary: Discusses the use of coaching to facilitate the development of learning organizations. Presents the results of a study to determine the outcomes of coaching interventions. Finds that managers' commitment to coaching can impact employee, manager, and organisational performance.

3. Carol Patton, "Rating the Returns," Human Resource Executive, vol. 15, no. 5 (April 2001), pp. 40-43.

Summary: Outlines a nine-step ROI process that determines the value of executive coaching. Claims that this process must be applied consistently throughout the organszation. Includes a list of measurement tools and important ROI measurements.

(Source: Morgan, H., Harkins, P., & Goldsmith, M. (Eds.). (2005). The Art and Practice of Leadership Coaching. John Wiley & Sons, Inc.)

Here are examples of other studies on coaching:

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 organszation. The third party research study cites a 10:1 return on investment in less than one year.

The study found that the following business outcomes were directly attributable to the coaching intervention:

Top performing staff, who were considering leaving the organisation, were retained, resulting in reduced turnover, increased revenue, and improved customer satisfaction.
A positive work environment was created, focusing on strategic account development and higher sales volume.

Customer revenues and customer satisfaction were improved due to fully staffed and fully functioning territories.

Revenues were increased due to managers improving their performance and exceeding their goals.

Another study conducted by MetrixGlobal for an executive coaching programme was impressive. Over 70 executives were coached 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 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 executive coaching. (Merrill Anderson: merrilland@metrixglobal.net)

Three Key Elements in the Coaching Relationship

A survey of the current literature and of experienced executive coaches reveals the importance of a three-level qualification process to ensure effective coaching.

Coaching is a three-way partnership between:

1. The organisation hiring the coach.
2. The executive to be coached.
3. The coach.

All involved must agree on specific goals and parameters. The organisation needs to have clear goals and a purpose for the coaching programme. There must be top-level support and visible links to business imperatives.

The executive has to be willing to accept the process of coaching, including opening up to feedback and making behavioural changes.

The coach must be committed to being candid while fostering a supportive environment. The coach must have a sense of the executive's world from a personal, business, and social perspective and be able to hold out a mirror to the executive to foster behavioural changes. At the same time, the coach must be able to maintain trust and navigate sensitive political issues with the organisation.

As in any triangular relationship, the key is defining and clarifying goals, roles, and accountability. For coaching to produce results, the goals should be measurable. Many times this involves using 360-degree assessments before and after coaching.

Executive coaching may not be for everyone, and organisations and clients should consider their purposes and goals before engaging coaches. While the results may not be directly measurable in dollars, there is no company that can't benefit from more candor, better communications, and more conscious awareness of how its leaders interact with people in order to maximize talents and resources.

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