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Executive Coaching: A Business Risk?


The coaching industry is doing incredibly well and where the fat cats gather in the executive coaching arena, it is generating $2 billion every year. An amount not to be sniffed at. Annie Hayes reports on who is buying and why.

Ridler and Co, a specialist executive coaching provider recently published its Trends in Buying Executive Coaching Services report. According to the company it’s all good news – the global executive coaching industry has seen one of the fastest growth rates of any sector in the last decade and it doesn’t look as though the glittering statistics will falter.

Commenting, Nigel McEwen of Ridler & co said: “The executive coaching market continues to thrive. Many executives now regard coaching as being essential to their performance and employers are becoming more sophisticated in their use of executive coaches. My feeling, based on our research, is that there will be significant changes over the next few years in the coaching market with employers becoming more demanding in their expectations of greater professionalism and more responsiveness from executive coaches.”

So what is meant by executive coaching? Unlike life coaching which focuses purely on helping an individual to achieve their life goals, executive coaching looks at the needs of the person in their work context. Typically executive coaching occurs at the Chief Executive, board level and one tier below that. High flyers that are being nurtured for senior roles may also be invited to take part. More often then not this type of coaching is sponsored by the employer and forms part of the organisations overall engagement and retention strategy.

For many businesses, however, making the decision to school senior management is the easy part. The executive coaching market is increasingly fragmented and self-regulation in the industry is confusing the marketplace. So what should businesses look for when employing an executive coach?

Business acumen:
According to the report authors, employers prefer executive coaches who have had a prior business career – often at a relatively senior level, the ability to apply psychological principles with expertise, engage in regular supervision and who have a good track record.

Francois Moscovici, Director of White Water Strategies says that what all this boils down to is credibility. In an industry where few formal qualifications exist and there are few if any barriers to entry sifting the cowboys from the real mcoy is not easy.

“There is a pool of well-regarded small firms that many of the larger companies are selecting but there is still no dominant name, no McKinsey equivalent. I would agree that having business experience is incredibly important for executive coaches. They need to be able to tap into the lingo and demeanour of executives. Pure psychologists can’t just jump in and be successful but I wouldn’t agree that they need to have worked at a senior level themselves.”

Olivia Stefanino, Author and Business Coach agrees and says that experience is invaluable and brings an added dimension into the coaching session. “Not only can you understand the coachee’s position better – and ‘speak the same language’ – but there are loads of relevant stories and experiences to draw upon. I’d find it hard to coach someone effectively if I didn’t have appropriate experience in the arena.

And assessing that credibility says Moscovici is something that clients like to do themselves. “Increasingly we’re seeing larger organisations conducting a beauty parade to select their coaches. They go for the brand but they also want to see the whites of someone’s eyes and they need to be confident that some chemistry can be achieved.”

The report authors also say that as well as looking for relevant business experience, they are also looking for coaches to adopt more professional attitudes. Stefanino says this is just down to common sense.

“Why would any employer want to employ a coach with unprofessional attitudes?! For me experience counts for a lot – and I’d advise any employer to ask coaches for references/testimonials together with evidence that the coaching actually works! For example, I worked hard when I was setting out as a coach/leadership trainer to prove that my coaching programmes actually work! I ran a pilot project with a high street bank (virtually free!) just to be able to measure the results. After nine months, the people who had come through my programme had seen their sales figures soar by 330%. (Those in the control group, who went through the bank training, saw their figures rise by 110%.) To me, and clients, that’s real evidence that the programme is both professional and effective.”

Moscovici says that demonstrating the return on the investment is crucial yet is still not an area that clients feel comfortable with. It’s easy, says Moscovici to demonstrate the effectiveness of a coaching programme where the results are tangible and quantitative such as improving sales effectiveness or management where figures before and after can be run and 360 degree reviews can reveal how managers are perceived. Moscovici warns, however, that executive coaching can only be successful where there is buy in from the top.

“We often find that individually, executives are receptive but they are often coy to advertise that they are being coached to their colleagues. It should be a badge of honour and it is important that the Chief Executive supports the initiative. Where executive coaching is poorly managed and secretive it starts to lose value.”

Beating off the competitors
For many businesses executive coaching is a key weapon being used by employers in the ‘war for talent’; the research puts retention as the joint most popular reason for using it. Moscovici agrees and says that at the bottom line, executives and high flyers are simply more likely to stay if they are being developed but warns that it can be a business risk too.

“If someone is wobbly for example it might precipitate their departure. There are a significant proportion of coachees who are stuck and sometimes coaching becomes a remedial activity. It often crystallizes underlying issues. This is a business risk. You never know what is going to happen when you start coaching.”

Stefanino admits that this can happen. “With my last corporate client, a lot of the management employees really appreciated that their company was investing in them personally. They saw coaching (and the leadership course which we ran simultaneously) as something that would help them both in their business and personal lives. However, with another corporate client some of the employees ‘saw the light’ and decided that they no longer wanted to work with the organisation. I always warn employers before I embark on any programme that some staff may choose to leave and that they should be prepared for this eventuality. I think it’s good that a company employs only those people who really “want to be there” anyway – unhappy employees can be very dangerous with their contagious negativity!”

Executive coaching is a young profession and like management consultancy 30 or 40 years ago there are no barriers to entry. This lack of qualification and verification often confuses those that want to buy from the industry but by sticking close to a few fail safe principles such as only taking on board coaches with business experience and credibility organisations can insure themselves against disappointment. But above all if executive coaching is to have a positive return on investment it appears that buy in from the top down is the key ingredient in making sure that the money is well spent.


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