What is Executive Coaching?

Executive Coaching is a one-on-one training and collaborative relationship between a certified or self-proclaimed coach and an executive interested in improving him or herself primarily in career or business related skills. The process typically lasts between three months and one year, depending on the type of intervention, and consists of face-to-face developmental discussions aimed at performance improvement or developing a particular competence. The coaching is meant to be practical and goal-focused and may concentrate on avoiding professional derailers or working through organizational issues or change initiatives.

The arrangement is an alternative to classroom-style training, and is individualized, focused, and tailored to a single individual. It is also different from “consulting”, which focuses more on results of a group within an organization or the organization as a whole.

At the heart of any effective coaching intervention lies a relationship of trust and honest, helpful feedback between the coach and coachee. Coaches provide executives with feedback they would normally never get from those they work with. Coaching should help people discover and embrace the truth about themselves, the good and the bad, so that they can change and grow. Too many people stay stuck and static in their personal and professional growth, repeating the same old patterns, because they have a distorted view of who they are, and in the case of work, how they are performing. Unless people have a realistic view of who they are, including their strengths and weaknesses, they can’t move to a new place.

Once the executive has been made more aware of his or her personal style and areas of needed development, it is the coach’s job to create a psychological/emotional environment where positive things can happen. It is the coach’s job to collaborate with the coachee to set a limited number of well defined, performance related goals and then help the executive achieve them. The coaching should be targeted and practical.

Leading companies around the world increasingly provide their most valuable executives with executive coaching to fast-track improvement and extend much-needed competencies. Executive coaching can assist an organization in achieving competitive success by translating its high performance vision into clear, actionable steps to be taken by its executives.

• Executive coaching is typically used to address:
• Development of high-potential leaders who are looking for improvement and/or feedback
• On-boarding of new leaders
• Merger or restructuring
• Change in strategy
• Change in required competencies or job skills
• Change in management
• Succession planning
• Cultural alignment
• Improvement of under performing executives

Why Are More Companies Using Coaching?

Significant recent trends have supported impressive increases in the use of executive coaching by organizations. A recent Hay Group survey of 170 HR professionals revealed that more than 50% had set up a coaching program in the past 18 months and that coaching is growing at about 40% per year. A 2004 survey by The Chartered Institute of Personnel and Development found that 80% of responding companies were using coaching in their companies. The Harvard Business Review has estimated that spending by corporations on executive coaching will be around $2 billion for 2006.

A number of factors are contributing to the impressive growth of executive development, both of the individual and of the group:

Moving from Manufacturing to Services – The shift to an increasingly knowledge-based economy makes knowledge, skills and competencies of employees the most significant driver of company value.

Shift in Workforce Demographics – Organizations are becoming more concerned with preparing for a potential labor shortage as baby boomers begin to retire. The SHRM 2004-2005 Workplace Forecast shows that HR professionals rate preparing for the next wave of retirement as the third most important trend in the HR profession, and a large number plan on investing more in development to boost employee skills levels, as well as use succession planning to a greater extent.

Development for Retention – According to the SHRM 2004 U.S. Job Recovery and Retention Survey, 82% of executive level employees are looking for new jobs. According to a survey reported in The Wall Street Journal, 78% of CEOs say “retention of key workers” is the most critical factor their firm’s success. Dissatisfaction with the potential for career development is a leading reason executives search for new positions. Organizations understand that it is far more expensive to recruit new employees than it is to retain them, and that development is a very effective way to create positive work environment where employees are engaged, feel appreciated and see opportunities for career growth. In fact, HR professionals rank executive development programs as second only to competitive salaries as key to reducing turnover among executives.

Ever-changing Business Environment – The rapid pace of business and increasing time pressures mean that dealing with change is becoming an everyday challenge. Flexibility and the ability to learn and adapt have become essential skills. Focused interventions, such as coaching, have become critical to helping executives adjust to major shifts in business strategies and objectives.

Customized, Just-in-Time Development – Because the development needs of individual executives are so diverse, the traditional use of “one size fits all” training programs that occur several times a year are becoming obsolete. Coaching offers a flexible, and highly personalized approach to development, which can be delivered to individual executives or management teams to address specific shortcomings in current performance, bolster under-developed skills or capitalize on existing strengths.

Broader Management Roles – Corporate downsizings and the resulting flatter, and hopefully more productive, organizational structures mean that newly promoted individuals often have to make larger leaps in skills, responsibilities and performance in their new positions. Development can help these leaders in achieving these changes quickly.

Increased Pressure in the “C-Suite” - With issues like Sarbanes-Oxley, increasingly rigorous oversight from Boards of Directors, and the public’s concern over trust, ethics and integrity; the performance of the most-senior leaders within an organization has never been so heavily scrutinized and carefully measured. There is a growing recognition of the costs associated with poorly performing top level executives and turnover among CEOs is at an all time. According to the Harvard Business Review, two our of five CEOs fail in the first 18 months and one-third of Fortune 100 companies have replaced their CEOs since 1995. For C-level executives, it is getting lonelier at the top as they have fewer people they can confide in, develop ideas and discuss decisions. An executive coach or advisor provides organizations and Boards with an opportunity to undertake pre-emptive and proactive interventions to improve C-level performance while providing these executives with the services of a safe and objective confidant with whom to collaborate on issues and give support.

Individual Responsibility for Development – Downsizing, restructuring and other organizational changes have radically altered the traditional “employment contract”. With the decline of “jobs for life”, employees can no longer rely on employers to provide them with all their career development needs. As executives are being asked to remain flexible and to accept responsibility for their own careers, many are turning to coaching to help identify development needs, plan development activities and support personal problem solving.

Increased Emphasis on Succession Planning – Corporations are beginning to realize that executive succession pipelines are broken. For example, according to the Harvard Business Review, CEO tenure is shrinking, with two out of every five new CEOs failing in their first 18 months. It has become absolutely critical for companies to cultivate internal candidates for top positions by establishing on-going programs that correctly identify the highest potential executives and provide them with meaningful and measurable development.

These are just some of the drivers of increasing demand for executive coaching services. However, along with the increase in demand have come concerns about the effective use of these consulting services, in particular coaching.

Who Are These Executive Coaches Anyway?

The executive coaching industry is highly fragmented with a number of “mom and pop” shops in every major city and solo practitioners performing most of the work. An article in the Harvard Business Review in June 2002 suggested that there were at least 10,000 professional coaches in the U.S. and this figure was expected to exceed 50,00 by 2007. There is no formal educational or practical requirement for calling oneself a coach and buyers of coaching services struggle with the lack of standards or qualifications to guide them. Many coaches have never worked in a corporate environment, or have gone through a brief training program following graduation from college or business school. Even the phrase “executive coaching” is used to describe services that are far a field from type of senior-level developmental consulting that this guide addresses. This broader definition of executive coaching can include life planning, career counseling, health and nutrition advice, New Age Aura readings and training in skills from public speaking to dinner etiquette.

In addition to self-employed coaches, there are an increasing number of consulting firms for whom coaching is a major part of their practice, while large HR, management, outplacement and recruitment consultancies are adding coaching services to their portfolios. Some of these firms embrace a business psychology model of coaching where their coaches are qualified occupational, counseling or clinical psychologists. Others recruit people with track records in business or consultants with somewhat related backgrounds (outplacement consultants for instance) and train them as coaches in-house. Top executive coaching companies include WJM Associates, Inc.and Executive Development Associates and in Australia; Odin Consulting.

A free form of executive coaching is provided by the Federal Government through the Small Business Administration. SBA also partners with SCORE, a non-profit organization of volunteers primarily consisting of retired executives.