Studies suggest executive coaching may be the best way for organizations to effectively develop the leaders needed for increasingly turbulent times.
Organizations are caught in a dilemma. The recent global economic meltdown has required many companies to cut back drastically and tighten belts wherever possible — including cutting their commitment and resources dedicated to leadership development.
At the same time, a majority of CEOs across industries and geographies view maximizing the productivity of their current leaders and developing the next generation of leaders as mission critical. Aon Consulting’s “2008 Benefits and Talent Survey” found that 56 percents of employers in the U.S. are experiencing a leadership shortage that is impeding their organization’s performance. In addition, succession planning is taking on a new urgency in many organizations as baby-boomer managers head toward retirement.
How can companies reconcile their need to retain and develop leaders while still managing costs and ensuring a return on investment? One-on-one executive coaching may be the best answer to that question.
Business school programs meet certain development needs but tend to be generic and at times academic. Targeted in-house leadership initiatives help to align leaders with corporate culture and strategy and have the added advantage of building internal networks. But once again, large leadership programs tend to be a shotgun-type approach to development with potentially uneven benefits that are difficult to measure.
Executive coaching provides:
• Development that is specific to the individual leader and his or her unique needs.
• Clearly-defined, measurable objectives and outcomes that are collectively agreed to by the boss, the leader being coached and the coach.
• Observable behavioral change and business impact in four to six months.
Coaching can benefit the next generation of leaders, leaders brought into the organization from the outside and current leaders who need to up their game to meet new strategic and global challenges. But before engaging an executive coach, it’s important to examine the background and experience of a coach and the characteristics of qualified vendors of coaching services.
Developing the Next Generation of Leaders
Leadership development used to be done primarily by moving young, talented professionals progressively up the middle management ranks. Incremental promotions allowed them to be tested in lower-risk assignments and to develop skills over an extended period of time. Their direct managers were often available to provide hands-on coaching and mentoring along the way.
In today’s organizations, mid-management jobs have been eliminated and more traditional career paths have become a thing of the past. Greater demands mean that bosses are no longer able to give junior executives the time and attention they would like. Global and virtual organizations provide less visibility and less one-on-one access.
An external executive coach can help fill the development gap. A 2007 survey by the Alta Mesa Group, titled “The Establishment of Executive Coaching,” found that the most frequent reason for hiring executive coaches is to boost the performance of high-potential leaders, and 93 percent of survey respondents who had worked with a coach considered the experience a success. Coaches help the aspiring leader understand what is required to be successful in organizational terms, develop their own leadership template and create a goal-oriented development plan that will increase the probability that they will move to the next level of the organization.
As an objective third party, the coach can provide necessary feedback, appropriate encouragement and a confidential sounding board for grappling with management and leadership challenges and opportunities. Collaborating with the next-generation leader’s boss, the coaching engagement ensures milestones are measured in business terms and the end goals are clearly met.
Successfully On-Boarding External Hires
As much as organizations may want to develop and promote from within, they sometimes need to look externally for the executive competencies and experience needed. But bringing in talent from the outside presents its own set of problems and challenges.
Some studies suggest 40 percent of new leaders fail within the first 18 months. Aon Consulting and coaching and career management firm DBM, in separate studies, report a 50 percent chance an executive will quit or be fired within the first three years. The Alexcel/Institute of Executive Development 2008 “Executive Transitions Market Study” provides even more insight:
• Ninety-two percent of respondents said it takes new executives more than 90 days (to reach productivity) and 62 percent said more than six months. Even after making it through the first 90 or 180 days, a significant percentage of external executive hires are gone within two years.
• Thirty percent of external hires fail to meet expectations in two years, representing millions of dollars in losses at the executive level. Among all respondents, 68 percent indicated fail rates are related to a lack of interpersonal and leadership skills, 45 percent of respondents indicated it was a lack of personal skills, and 41 percent attributed underperformance to goal conflicts between the executive and the organization.
The four key factors that lead to derailment of external hires are:
• Not understanding the culture and/or lack of political savvy to navigate the culture.
• Lack of clarity about expectations and what the real success metrics are.
• Inability to build effective relationships with peers and subordinates.
• Reliance on what worked in the past rather than what is needed now.
Considering all the data available and the well-known landmines that new executives face, what causes these failure rates to continue? On the organization’s part, it is the mistaken belief that a senior person should be able to figure it out on his or her own. From the executive’s side, it is assuming that he or she is smart and needs to make a mark as soon as possible.
A more thoughtful and structured approach to on-boarding new executives — creating a process by which a new executive hire is integrated and oriented in their new job and organization — is clearly needed. A senior internal mentor working hand in hand with an external executive coach should be a key component of the on-boarding process.
One-on-one coaching helps the new leader avoid derailers by providing an experienced but unbiased thought partner in grappling with the challenges of a new organization, identifying the relevant success metrics with the new team and quickly building credibility with colleagues that are critical to achieving strategic business objectives. By partnering with an internal mentor, the external coach can monitor first impressions and ensure the executive leverages strengths and thoroughly understands where his or her focus and priorities need to be.
Upping the Game of Current Executives
The number of executive competencies required for success has grown exponentially. Talented leaders —smart, sophisticated businesspeople who are technically literate, globally astute and operationally agile —are the most important organizational resource for the next 20 years. The ongoing development of current leaders has to be a priority.
“Trends in Executive Coaching,” a 2008 joint study by DBM and the Human Capital Institute, found that the business community has embraced executive coaching as a “versatile leadership development tool that can be used to proactively enhance the effectiveness of already high performing and capable executives.” The study found that organizations using coaching got a solid return on their investment. Direct financial impact of coaching included:
• Executive output (33 percent), such as sales revenue and productivity.
• Quality improvements (23 percent), such as increased reliability or decreased defects.
• Cost savings (23 percent).
• Reduced turnover (21 percent).
Qualitative measures of coaching effectiveness included:
• Achievement of agreed-upon development objectives (84 percent).
• Anecdotal evidence of success (83 percent).
• Other people’s perceptions of the coachee (79 percent).
• Coachee’s ability to be promoted or to take on new responsibility (74 percent).
Coaching helps experienced leaders redefine their success metrics, reassess their leadership style, realign their priorities, prepare for an uncertain future and lead their new multigenerational and often global teams to success. As Fortune magazine noted, “Coaching bridges the growing chasm between what managers are being asked to do and what they have been trained to do.”
Selecting Vendors and Coaches
“Coaching: A Global Study of Successful Practices,” a 2008 study by the American Management Association and the Institute for Corporate Productivity, found that organizations are engaging coaches more frequently and in different ways.
As the coaching profession matures, there will be more standard contracts, vetting of credentials and ways to measure return on investment, as well as return on expectations. The profession is moving away from a cottage industry model of individual practitioners in the direction of credentialed professionals who are part of a larger association, consulting group or coaching agency.
Organizations that are using coaching to maximize leadership bench strength and get the best return on development dollars are increasingly looking for coaching vendors who can provide:
• A cadre of prequalified coaches.
• Consistent coaching services across organizational boundaries.
• Validated and appropriate coaching tools and techniques.
• An understanding of global leadership issues.
• Partnership with the organization in defining, tracking and measuring success.
Executive coaches should be highly credentialed business executives and senior practitioners in the areas of leadership development and organizational performance. Coaches must be able to demonstrate a balance of diverse and relevant business experience, an understanding of organizational dynamics and proven executive coaching capabilities. The AMA and Institute for Corporate Productivity found that the three most common criteria for selecting coaches are business experience of the coach, recommendations from a trusted source and interviews with prospective coaches to ensure best fit.
Futurists say there have been more changes in the past 50 years than in the previous 50,000, and in the next 50 years we can expect even more radical changes. The recent global financial crisis is just one example of what may be ahead. In this environment, leadership that can adjust to meet new challenges will be critical, and successful organizations will not be able to leave leadership development to chance.
Executive coaching provides a development strategy that meets today’s needs while preparing the leadership team for the future. The results can be clearly defined and measured. ROI can be directly observed in changed leadership behavior, increased leadership competency and greater organizational impact. Consulting firms providing executive coaching can be your strategic partner in preparing the leadership team for turbulent times.Filed under: Leadership Development, Measurement