What is Executive Coaching? And Why Your Competitors Require It Produced by David Couper Consulting May 2015
The US economy, like its people, seems increasingly fragmented. In the media, we hear a lot about successful companies becoming more successful. Conversely, we read about successful companies of many years or decades becoming obsolete, floundering or failing in a downward spiral. We don t hear much in the media about the preponderance of mediocre companies continuing to be mediocre, but we all have friends and family working for them and telling us about it over dinner, happy hour or a Facebook post. Maybe you are truly a rockstar in your field, but even so? Despite the sunny headlines, with an economy that often feels on the verge of another recession, we all understandably harbor some anxiety about our jobs, companies and our job performance, as well as that of our fellow workers upon whom the fate of our company or department depends. Success, Failure and Mediocrity Gallup: 70% of American Workers are Disengaged. Logically, we know success, failure and mediocrity are simply a summary expression of a company s people. People create and deliver the technology, products and services. How then to increase the performance of people? If it was as simple as incenting them with pay raises, promotions and bonuses, every company would be successful. Instinctively, we know it is not that simple, but shouldn t it be? How great would it feel to be able to tell our friends and family about how we and the company we work for, manage, or own are prospering? How we are learning, growing, creating value, being recognized and rewarded? The very thought brings a smile, but why does this seem so elusive? How elusive? Gallup researchers interviewed nearly 150,000 workers people in all states and industries and discovered that a stunning number are miserable in their jobs. More specifically, only 30% of the nation s working population today admits to being fully engaged at work. 52% of Americans admit to being disengaged in their jobs, and another 18% admit to being actively disengaged. 1 What if a company s manufacturing equipment was functioning well only 30% of the time, manufacturing flawed products 52% of the time and had 18% down time? Every company would bring in the experts to repair or upgrade that equipment or its operating software ASAP. Cost would not be an issue. Why are people not given the same priority, the same value, as machinery? If so, why not actively coach and develop their people, not merely counsel the underperformers already on their way out the door? If attaining high employee engagement has become one of the most important ambitions of leadership, why is it that our practices appear to be doing more harm than good? What s causing 7 in every 10 workers to disengage and under-commit themselves at work? 1
Why Not Proactively Develop and Coach Our People? We find the common perception to this question has three essential parts: The short answer is because it is difficult. It is even more difficult to do so in-house and we don t have the money to spend. This perception is actually quite accurate if for the wrong reasons. HR is already understaffed and perceived as non-core, not mission-critical support. Companies are reluctant to spend more dollars for outside coaching and would rather try doing it inhouse. How do I measure the results? For any manager authorizing the budget to repair or upgrade (coach) its people, it seems impossible to objectively measure the results or the ROI (Return On Investment). The Executive Coach A commonly accepted definition of executive coaching is: Executive coaching means regular meetings between a business leader and a trained facilitator, designed to produce positive changes in business behavior in a limited time frame. 2 Common sense tells us that successful companies with high levels of worker engagement are doing something different than those with low engagement. That logically leads us to conclude they either somehow only hire the cream of the workforce (unlikely), or they devote the time, energy and resources to develop their people, starting with managers and executives as the engine of the company s growth. Let s explore those three common concerns over Executive Coaching. It is difficult. True. When it comes to building companies and out-performing the competition in a global economy, most things worthwhile are difficult or everyone would be doing it. Developing an engaged workforce, one that will drive the company to new heights, is difficult. That is why Executive Coaching is a specialized niche at the intersection of business and management consulting, training, personal and professional development. It is a field for accomplished business people, usually with at least 20 years experience in business, who understand the pressures, frustrations and fears of managers at all levels and bring a heart centered yet results-oriented approach to their clients. The average external Executive Coach is 53 years old. 2
It is extremely difficult to do so in-house, and we don t have the money to spend on outsourced coaching. True. And False. False, or false premise. Developing a company s key people to new levels of creativity, productivity and longevity is not an expense it is an investment. Also true; it is difficult to do in-house using HR staff. To begin with, few HR people are professionally trained and experienced in Executive Coaching. Fewer of those have the extra time to do so. In-house coaching? Most managers or executives will not open up and communicate honestly with someone from their company s HR department for obvious reasons: Confidentiality. They don t want to criticize or negatively discuss their boss or co-workers to an HR staffer who may disclose their conversation to the CEO, the VP-HR or their boss. Risk. They don t want to risk negative entries inserted in their employee file that they are disgruntled, planning to leave or burdened with personal problems, making them ineligible for promotion or first on the list for the next round of layoffs. Awkward. They may not want to discuss their personal life (which always affects workplace performance) with someone they will have to face day-in and day-out in the lunchroom, perhaps for years. They fear becoming the subject of workplace gossip if the HR coach breaches their confidentiality. Industry statistics clearly show internal coaching is not cost-effective, with only ten percent of executive coaches being internal. 90% of coaches describe themselves as contracted, external coaches. 2 External Executive Coaches are accountable to the client company, yet realize the only way to produce positive results (ROI) is to maintain the absolute confidentiality of the individual coaching clients. The company also benefits through external coaching by keeping that a variable-cost item, easy to scale up or down as needed. How do I measure the results? ROI? A fair and important question. Gallup s report specifically states that engagement drives greater productivity, lower turnover, and a better quality of work. For punctuation, it adds: Organizations in the top decile of engagement outperform their peers by 147% in earnings per share, and have 90% better growth trend than their competition. 1 While a macro-measure, those are undeniably impressive stats. And it comes as no surprise since Executive Coaching is a mature industry. It has answered the ROI question every day since its inception and developed a number of tools to enable its clients to clearly measure the cost/benefit of the time and money invested, both subjectively and objectively.
For example, companies that have used professional coaching for business reasons have seen a median Return On their Investment of 7 times their initial investment, according to a study commissioned by ICF, and conducted by PricewaterhouseCoopers and Association Resource Centre Inc. According to a different research study of senior level executives at Fortune 1000 companies who received developmental coaching, the average return from the programs was nearly 5.7 times the initial investment. 3 One of the first things a company should do when selecting an executive coaching firm is to discuss in detail its goals, expectations and how results will be measured and reported (see the companion White Paper, How to Select an Executive Coaching Firm). Executive Coaching: The Cost/Benefit The cost/benefit of developing engaged productive management revolves around a company s objectives. In a recent, comprehensive industry survey, the goals of external Executive Coaching are 2 : EXTERNAL/CONTRACT COACH 36% 31% 16% 12% 6% CHANGE MANAGEMENT CREATING GROWTH PRODUCTIVITY BUILD TRUST SUCCESSION PLANNING
The reasons for coaching are strikingly consistent: Reasons for Coaching 2006-2015 60 50 40 30 37 43 33 49 53 56 20 10 20 18 25 21 23 21 0 2006 2009 2012 2015 Assist a Transition Address a Problem Leadership Development
Positive Results: The Coached Speak Up Most Executive Coaching firms also use subjective measures, such as anonymous surveys of the managers being coached, and other channels enabling all workers, coached or not, to provide input that is carefully analyzed, quantified and reported to the client company. A few actual and quite typical ordinary comments from managers at different levels and companies on their coaching experience from a well-respected Coaching Firm follow: I just got my increase and review today, they were a little late this year, but anyway...i again wanted to thank you for your guidance and wisdom during our sessions. I received an excellent review from my supervisor and an above average increase in salary. I will forever be grateful for your help in reaching this milestone in my career. I wanted to send some feedback regarding my positive experiences with my coach. My coaching sessions started at a crucial time for me because some longstanding issues within my department were escalating. She provided invaluable support, advice and insight that really helped me get through a very stressful and somewhat traumatic time. She showed great empathy for my situation and provided wonderful positive reinforcement. The end result has been very positive and it has set the stage for some real progress within my department. I am very thankful that my coach was able to share her wealth of experience and knowledge to assist me in my growth as a manager and to be a happier manager overall! I really miss our sessions. The Next Step By definition, if your company, division or department is not winning, its managers are not performing optimally. It may be in the C-suite, the factory floor, cube-farm or all of the above. If your company workers attrition rate is above its industry average, there is a reason (and it is unlikely the selection of free snacks stocked in the lunchroom). You may well have hired a terrific management team at all levels, one that is simply not performing for a variety of reasons that coaching can turn around quickly. If so, replacing those people would be like replacing your car s engine because the front two tires are flat. They just needed to be properly inflated to minimize friction, improve stability and increase speed. Before considering a restructuring, a modest investment in an initial consult and assessment from a quality Executive Coaching firm is likely your next best step. This may begin with a highly cost effective consultation followed by a custom constructed (anonymized) survey of managers at all levels to determine whether Executive Coaching is the best solution. This serves the Executive Coaching firm as well, since no reputable Executive Coaching Firm will accept an engagement unless it is highly confident it can produce strong near and long term value and drive a high ROI. Where to start? How do you evaluate and select the best Executive Coaching firm for your company? DCC has published a companion White Paper titled, How to Select an Executive Coaching Firm). 1 http://www.fastcompany.com/3011032/creative-conversations/gallups-workplace-jedi-on-how-to-fix-our-employee-engagement-problem 2 2015 Exec Coaching Survey 3 Maximizing the Impact of Executive Coaching (http://www.coachfederation.org/includes/docs/049manchesterreviewmaximizingimpactofexeccoaching2. pdf), The Manchester Review, Volume 6, Number 1, Joy McGovern, et.al., 2001).