As the battle heats up to attract and retain the best and brightest talent available, American business is turning for help to an industry it once regarded as highly suspect: executive coaching.
Just a few years ago, when profits and top performers were plentiful, corporate giants pooh-poohed the idea of coaching as just pop psychobabble aimed at eroding their bottom line. The common refrain was, where’s the ROI, return on investment? Even those more progressive companies that welcomed TQM, total quality management, and excellence seminars, based on Steven Covey’s “Seven Habits of Highly Effective People,” placed it in the expenditures column.
Today, however, one-on-one executive coaching, not just training, is all the corporate rage.
What has made companies suddenly embrace their softer side? You guessed it: ROI. According to a 2001 MetrixGlobal study of one Fortune 500 company, executive coaching returned more than $5 for every $1 spent, 529 percent, in significant financial and intangible benefits to the company. When the financial benefits of employee retention were rolled into the mix, the ROI was nearly eight to one, 788 percent.
In the 2002 study, “The Economics of Executive Coaching,” Harvard Business School Journal estimated that there were at least 10,000 coaches working in business, up from 2,000 in 1996. That figure was expected to grow to 50,000 by 2007. The International Coach Federation lists 8,461 members and more than 132 chapters in 34 countries. Companies reportedly pay fees ranging from $1,500 to $15,000 per day.
“It’s certainly a hot item right now,” admits Michael Markovits, vice president of global executive and organizational capability, who oversees IBM’s in-house executive coaching. “We’ve done research to show that leadership behavior has a direct impact on climate, and climate has a direct impact on business results. We invest in leadership development because we believe we’re going to be a better-performing company as a result.”
“Business leaders are recognizing that good social skills are good business,” says Peggy Post, great-granddaughter-in-law of etiquette pioneer Emily Post and co-author of “The Etiquette Advantage in Business.” “It’s not a sissy subject at all. It’s a very timely business topic to help increase productivity, employee retention and client/customer retention. It just makes things run much more smoothly,” she says. Executive finishing school? In these downsized, belt-tightening times? That’s right. At the new global dinner table, American business is starting to sit up straight and mind its manners.
Pumping up the EQ
Businesses rely on executive coaches in two main training areas: internally, to groom their junior executives to one day take the helm, and externally, to prepare their leaders to flawlessly represent the company when meeting, dining and socializing with customers and clients.
Such clients as Cisco Systems and Google find coaching a cost-effective way to counter the brain drain of a more mobile and global economy. Catherine Hind, an executive coach in Vancouver, Bristish Columbia, says that under the old business model, employees who excelled at their jobs were often made leaders without ever acquiring the necessary skills to motivate, lead and develop those beneath them. It was a sad sort of “Peter Principle” scenario that left the new leader feeling frustrated and ineffective and the company wondering where all the promise went.
That’s where executive coaches come in. Armed with various assessment tools, they analyze an individual’s strengths and weaknesses and factor in where the employee wants to go and where the company would like to see them go. They then work one-on-one with the individual to help them acquire the competencies they will need to get there and to be effective when they do.
Hind likens it to “Seven Habits” on steroids. “Covey and all that stuff is great, but there’s theory and then there’s embodiment of it. Coaching, because of its ongoing nature, supports the use of a tool like Covey,” she says. “Studies have shown that you’ll absorb maybe 15 percent of a seminar at best, but if you combine that with coaching, it moves up to 89 or 90 percent retention because you’re going to absorb what is specifically relevant to you.”
Some companies, including IBM, actually studied leaders throughout their organization to identify leadership competencies for their execs to acquire. By using self-assessments, management assessments and 360-assessments, they are able to track the progress of employees through this ongoing finishing school. Markovits says the use of coaches to grow leaders internally beats hands-down the previous system of favoritism, fraternalism and that time-honored tradition, sucking up.
“Not everyone is a good role model. By having leadership competencies, it sets out that this is what we want you to aspire to.”It also has opened corporate eyes to how to improve performance. In business today, the focus has shifted from IQ, or intelligence, to EQ, or emotional intelligence. The difference? “IQ is something you are basically born with, and EQ is something you can develop your whole life,” says Hind. “Coaching directly interacts with your emotional intelligence. That is an area you can improve upon with leaders. You can’t make them smarter, but you can help them grow more emotionally intelligent.”
Joel Garfinkle, an executive coach in Oakland, Calif., works with an executive for an average of 12-18 months to polish them up for promotion.”Mostly, it’s a manager saying, ‘I want my employee to be more successful,'” he says. “Either we are fixing a behavior or we’re working to get someone who is already successful to the next level.”
Such clients as Cisco Systems and Google find coaching a cost-effective way to counter the brain drain of a more mobile and global economy. “When a star employee leaves, there are incredible skills and abilities and knowledge capital that are going with them, and that is pretty much irreplaceable,” he says. “The cost of replacing even an average employee can equal about 150 percent of the base salary of that employee.”
Despite appearances, employee satisfaction is not always about the money. Companies find that hiring an executive coach for a rising star might be the coolest new perk they can offer.”Surveys on why people leave a company often find that money is fifth or sixth. Often, No. 1 is recognition,” says Garfinkle. “Hiring an executive coach can be recognition from a manager of the support you need.”
DeNita Turner, president of Laurel, Md.-based Image Builders Inc., has provided the polish to many of the professional athletes in the National Basketball Association. She says coaching is a one-on-one sport that goes far beyond a pep talk in the locker room. “If you’re managing people, I have to care about your dog, your man, your wife, your husband, your house, your flood, the pipes broke, your car doesn’t work, I hate this person, I don’t like where I sit, it’s too dark, it’s too warm, it’s too cold,” she says. “People will say of someone, ‘They’re great in this area, they have wonderful skills BUT …’ When people ask me what I do, I say ‘I take care of everything that comes after the BUT.'”
For Post, executive coaching can run the gamut from cubicle etiquette and body odor diplomacy to how to request or offer help without offending. Not surprisingly, companies call upon the Emily Post Institute frequently for a refresher course in good old-fashioned table manners.
“People judge others by their actions and appearance and words, and certainly table manners seem to rise to the top when people think about etiquette,” she says. “A lot of people just haven’t been taught these skills. It’s just a reality of our informal times; with so many single-parent and dual-income families, there has been a decline in families having a meal together over the past two decades. They want to give their employees these skills without embarrassing them.”
What’s in it for you to take advantage of executive coaching, should it be offered? Plenty. Take one of Garfinkle’s clients, who was working for $120,000 a year, roughly 30 percent to 40 percent below market value, at a dead-end job. With less than two years of coaching, he managed to land a job that paid $165,000 that was three levels above his former dead-end position.”He said to me, ‘If I had talked to this company three months ago, I wouldn’t have gotten past the second interview.’
Author – Jay MacDonald