Executive Coaching: The Path to Increasing Organizational Performance

Written by: Milton Almeida

Introduction

The increased use of executive coaching within businesses is due to its success in providing organizations with enhanced performance. Leaders select coaching for many reasons: the need to: (a) increase leadership skills and knowledge in complex and rapidly changing business environments, (b) maximizing the development of high potential employees, and (c) the removal of obstacles that interfere with implementing key strategic initiatives and goals. Research evaluating coaching demonstrates that executive coaching provides an impressive return on investment and positive benefits to both leaders and the organizations in which they work. This executive summary will describe executive coaching, discuss the coaching process and provide information on several studies that demonstrate the effectiveness of executive coaching in increasing organizational performance.

Executive Coaching

Gallwey (2002) defines coaching as: “unlocking a person’s potential to maximize his or her own performance. It is helping them to learn rather than teaching them”. There are four essential components to executive coaching: 1) a results orientation to a leader’s problem, 2) a partnership between coach and leader, 3) an engagement with a specific leadership challenge, and 4) the understanding that leaders need to set out specific expectations for their teams in order to solve challenges (O’Neill, 2000). Coaches assist leaders in learning how to improve their performance by collaboratively (a) identifying skill development areas, (b) creating development plans (highlighting needed resources, setting goals and timelines), (c) providing leaders with assistance in overcoming obstacles, and (d) assisting the leader with the transfer of learning into results for the organization (O’Neill, 2000). Coaches also share with leaders conceptual frameworks, encourage rigor in how leaders organize thinking, visioning, planning, and expectations; and help leaders build capacity to manage anxiety in difficult situations (O’Neill, 2000). Coaching activities are grounded in: maximizing performance, using a facilitation approach to learning, a focus on immediate performance improvement, skills development, and enhanced performance in work and personal life (Law, Ireland & Hussain, 2007).

The Coaching Process

The establishment of a coaching program in an organization can be divided into three phases: 1) pre-program; 2) program implementation; and 3) post-program evaluation. In the pre-program phase, the coach and client assess the organizational needs and readiness and create a program design. The program implementation phase is the execution of the collaboratively designed program. The post-program phase is the evaluation of both the program and the effectiveness of the coach.

The coaching process itself can be divided into seven (7) phases:

• Getting Started
• Evaluating the current state
• Reviewing the feedback and facilitating awareness
• Constructing a personal learning agenda
• Implementing the plan
• Measuring outcomes
• Transitioning from coaching.

(Ting & Hart, 2004)

In the getting started phase coaches contract with leaders, establish roles and responsibilities and start the process of creating a relationship. Next, coaches gather data from various methods that can include assessments, interviews, shadowing, and other means in order to evaluate the current state. This data is then collaboratively reviewed to identify key themes, strengths, and areas for development. This step is intended to provide feedback and facilitate leader awareness about the current situation. Once the data has been analyzed, the coach helps the leader craft goals and identify action steps to achieve these goals. These goals then form a personal learning agenda. Once this plan developed the coach and leader work together to implement the plan: finding opportunities to apply insights and practice behavioural changes. Measures laid out in the development plan are then used to measure success. Finally, in bringing the coaching relationship to an end the coach and leader plan for program closure often by reassessing progress to date and sharing learning.

Benefits and Return on Investment of Coaching

With executive coaching becoming, an increasingly popular way to develop leaders and provide increased organizational performance. Business leaders have been asking if the business impact of coaching can be measured. Growing research demonstrates the impressive returns and benefits of executive coaching.

• Metropolitan Life Insurance executives Richard Keating and Aaron Becker (2002) report that the cost for putting all their sales people through a coaching program cost the company $620,000 with measureable gains of $3.2 million: a ROI of 416.13%
• In a study of a large international hotel company Phillips (2007) found a Benefits to Cost Ratio of 3.21 and an ROI of 221%
• Based on responses from company 43 executives McGovern, Lindemann, Vergara, Murphy, Barker, & Warrenfelz (2001) calculated a coaching ROI of 570%

These results may seem overly optimistic. However, they are supported by empirical research. In a review of the coaching literature concerning coaching effectiveness Meuse, Dai, & Lee (2009) complied 10 studies and divided the results of these studies into three areas: leaders reaction to coaching, coaching effectiveness on the individual level, and coaching impact at the organizational level. They report:

Reaction to Coaching:

• 80% of the participants were favorable to the coaching (Talboom, 1999).
• Clients most frequently rated the overall effectiveness of their coaching experience as “Very Satisfactory” (Hall, Otazo & Hollenback, 1999).
• Over 75% of executive reactions to the idea of working with a coach were significantly positive (Wasylyshyn, 2003).
• Respondents were very satisfied with coaching – 86% rated coaching as very effective; 95% stated they were doing things differently as a result of coaching and 95% indicated they would recommend coaching to other staff members (Parker-Wilkins, 2006).

Coaching Effectiveness on the Individual Level:

• 70.7% to 93.8% saw coaching as effective in creating sustained behavioral change (Genger, 1997).
• Participants considered 73% of goals to have been achieved ‘very effectively’ or ‘extremely effectively’. Other stakeholders were more conservative, evaluating 54% of goals as having been achieved with this level of effectiveness, and 85% as having delivered results ‘effectively’ or higher (McGovern et al., 2001).
• 55% of the participants increased leadership effectiveness as rated by others; 52% increased as rated by self (Thach, 2002).
• The top three indications of successful coaching were (a) sustained behavioral change (63%), (b) increased self-awareness and understanding (48%), and (c) more effective leadership (45%). Over half of these coached executives reported a sustainability level between 6 and 8 out of 10; over a third was at the 9-10 level (Wasylyshyn,2003).
• 75% of survey respondents rated the effectiveness of coaching as a 3 or higher on 5-point scale (5 being ‘very effective’). Only 15% of respondents rated coaching as a 1 or a 2 (‘Is Coaching Worth the Money,’ 2005).
• Executives improved significantly and mostly on behavioral dimensions related to the coaching objectives (15 of the 19 items, 79%), some on behavioral dimensions
  indirectly related to the coaching objectives (4 of the 11 items, 36%), but none on behavioral dimensions that were unrelated to the coaching objectives (Orenstein, 2006).
• Respondents stated that coaching assisted them in developing three main competencies: (a) leadership behaviors (82%), (b) building teams (41%), and (c) developing staff (36%) (Parker-Wilkins, 2006).
• Coaching enhanced the executive’s sales performance, core self-evaluation, and global self-ratings of performance (Libri & Kemp, 2006).
• 96% of organizations reported that individual performance improved since introducing coaching. Nearly as many (92%) reported improvements to leadership and
  management effectiveness. Of these organizations, 45% and 39%, respectively, reported significant or major improvements (‘Coaching Counts,’ 2007).
• At the organizational level, participants asserted they witnessed lower rates of absence among subordinates (Talboom, 1999).
• 77% of the respondents indicated that coaching had significant or very significant impact on at least one of nine business measures. Productivity (60% favorable) and employee satisfaction (53%) were cited as the most significantly impacted by the coaching (Anderson, 2001).
• 35% improved on leadership. 28% improved as management team. 33% improved on business deliverables. And 67% improved on personal balance (‘When Coaching Measures Up,’ 2005).

The research findings point to many positive outcomes for both the leader and the organization. For the leader outcomes include: sustained behavioural changes, increased goal attainment, increased leadership effectiveness, increased self-awareness and understanding, and increased competencies as they relate to building teams and developing staff. Positive organizational outcomes include: lower rates of absenteeism, improvements in productivity, and increased employee satisfaction. Further, quantitative data reports impressive returns on coaching ranging from 222% to over 500%.

Conclusion

Executive coaching is an effective tool for leadership development and increasing organizational performance. Research demonstrates that the executive coaching process provides leaders with high levels of satisfaction, improves organizational performance, and offers impressive rate of returns on investment. Further, executive coaching is a cost effective approach to sustained behaviour change and organizational goal attainment.