The Power of Leadership

Strategic Coaching Has Bottom-Line Benefits

By Dr. Alyssa M. Freas and Dr. Don Mankin

The rapid growth of executive coaching reflects its bottom-line benefits – increased profits and reduced costs, achieved within a defined timeframe. To be effective, executive coaching must be both strategic and individualized: A balance has to be struck between the needs of the organization and the needs of the individuals. To engage and motivate individuals, executive coaching must be tailored to their needs and aspirations. To deliver business results, the coaching must also be tailored to the strategy, vision, and values of the organization.

Executive coaching that is strategic, that focuses on business needs as well as individual needs, is the key to achieving business results. This is in marked contrast with other approaches that concentrate on solving a specific perceived problem with an individual such as an attempt to change their personality or make them more affable and approachable. Keep the spotlight on effecting business results; other benefits are important but subordinate to the primary strategic goals of the organization.

Perhaps the most important and direct benefit of good executive coaching is the development of high-impact future leaders. According to Noel Tichy, author of The Leadership Engine, “the scarcest resource in the world today is leadership talent capable of continuously transforming organizations to win in tomorrow’s world.”

Some of the specific leadership skills that can be developed by effective executive coaching include: giving and receiving feedback; varying leadership style to meet the needs of direct reports; and demonstrating that it is acceptable to ask for help. Many executives feel uncomfortable when delivering candid feedback. The executive coaching process teaches them how to overcome this obstacle. Consequently, more people in the organization receive the quality feedback they need and want. In this way, executive coaching helps all employees become more effective contributors.

More effective leadership throughout the organization will in turn drive many other important business results. For example, improved customer loyalty is one of the business benefits of improved leadership skills and, therefore, of the executive coaching that develops these skills. Coaching can help executives become more effective; effective executives create more satisfied employees; satisfied employees create more satisfied customers; and satisfied, loyal customers create higher profits. This relationship has been demonstrated in several research studies, including one of 800 Sears and Roebuck stores conducted by Ricci, Kirin, and Quinn and reported in the January 1998 issue of the Harvard Business Review.  Our own experience in developing business leaders reinforces this conclusion; our Strategic Executive Coaching (SEC) program produces more effective leaders, who create the employee satisfaction, competence, and customer loyalty necessary to drive profit.

Retention of high-impact employees is another outcome of good executive coaching and the leadership skills it develops. Retaining key, competent people is an important competitive strategy in the new, global economy. Many organizations today find themselves fighting a war for talent to keep their key, highly talented people from leaving to pursue new opportunities in other companies.

This has many costs to the company in addition to the obvious loss of the employee’s work contribution and organizational knowledge. For example, a new hire can accomplish only 60% as much in the first three months as an experienced worker. Additionally, a new hire who is learning the business will tend to serve customers less well.

There are also the costs associated with recruiting and training new employees. One Fortune 500 organization has recently calculated these costs at well in excess of $500 million per annum. By improving leadership skills throughout the organization, executive coaching makes the organization a more attractive place to work for irreplaceable, high potential people.

Framework for the Process
Where executive coaching becomes strategic is in the preparation that precedes the actual coaching process. Before the process begins, the coaches meet with the client’s executive leadership to define the strategic context. This involves addressing a number of critical questions:

  • What are the key business challenges facing your organization today? In the next two to five years?
  • What business goals are you trying to achieve?
  • What core values best define a common framework for how business results are achieved in your organization?
  • Given these challenges, goals, and values, what leadership skills, knowledge, and abilities have been critical for success in your organization in the past?
  • How relevant do you think they are for success in the New Economy?
  • Are any of these attributes different than those that may be critical to success in other organizations?
  • How does your organization determine whether you have the leadership bench strength to compete effectively in the future?
  • What is your organization’s strategy for developing leaders of the future?
  • Does your organization have proven methods to attract, develop, and retain required talent?

Once the strategic context has been mapped out, the actual executive coaching process can begin. From the point of view of the executives being coached, this is the personal component of the coaching process, where their own particular strengths and development needs are benchmarked against the leadership attributes needed to achieve the strategic goals of the business.

The process can be broken down into five steps. The exact determination of dividing lines between the individual steps is less important than the approach that is taken to the issues that arise during the process as a whole.

Careful Contracting
It takes skill to create a trusting environment in which open dialogue can occur and underlying issues can be brought to light. A great deal of honest communication and feedback will set the parameters of the coaching process.

A contracting meeting for the purpose of defining expectations should take place before the individual coaching begins. Those attending should typically include a senior-level human resource representative, the executive coach, and the executive receiving the coaching. The objectives of the “contracting dialogue” should include:

  • Identification of success factors for a specific executive’s (or team’s) current and potential role;
  • Agreement on confidentiality boundaries;
  • Identification of specific expected business results (i.e., what business results differentiate an adequate performer from a top performer in this particular role?);
  • Confirmation that the “chemistry” is right to build trust and rapport;
  • Definition of clear roles and responsibilities;
  • Agreement regarding who is “the client”;
  • Clarification of milestones and timelines;
  • Establishment of confidentiality boundaries;
  • Agreement on outcomes and expected results; and
  • Agreement on financial terms.

Addressing these and other questions will help to define the organizational and individual expectations and support the business objectives.

Comprehensive Assessment
The second step in the executive coaching process is the assessment of each individual executive. Through interviews and formal assessment tools, gaps between current and expected performance are identified to measure how the coaching client stacks up against the business context, expected leadership attributes, and expected business results.

The assessment should be done by face-to-face interviews with key stakeholders, such as direct reports, peers, bosses, and customers, and by shadowing the executive during his/her daily work. The main advantage of the face-to-face approach is that it enables the coach to probe, and thus provide feedback that is both quantitative and qualitative.

The ultimate value of the assessment process is that the results clearly illustrate areas of strength as well as those requiring attention. This paints a clear picture for the executive in terms of strengths and development opportunities, and thus focuses and informs the process.

The face-to-face interview method has been described as “a 360-degree survey that comes to life – a much deeper and meaningful picture than a written 360-degree report.”

Feedback and Action Planning
The first order of business in an effective feedback session is to revisit the agreed-upon objectives and to review the ground rules. Properly preparing executives for feedback is key to ensuring their willingness to listen, accept, open up, and move into action planning. Sessions should occur outside the normal office environment to ensure a more relaxed experience, free of interruptions or ready escape routes.  The coach must facilitate the feedback flow process, help the executive understand the data, and moderate any negative reactions to it.

During the feedback dialogue session, the coach will continue to refer to the business requirements, leader attributes, and expected business results, and compare them to current performance. The aim is to work within a framework that directs feedback toward the key objectives of the business.

The feedback session typically follows these stages:

  • Reaffirm ground rules and establish rapport;
  • Review coaching objectives and business context;
  • Describe how to interpret results;
  • Give the executive opportunity to review results;
  • Discuss surprises or frustrations;
  • Highlight strengths;
  • Identify development needs;
  • Agree on areas of improvement; and
  • Begin development planning process.

The action plan must focus on behaviors that contribute to specific business outcomes. A typical action plan includes:

  • Strengths, and why they are important in the executive’s current role;
  • Development areas;
  • Action steps required, or interventions needed in areas requiring improvement or further development;
  • The type of coaching style that will best suit the development process;
  • Suggestions for active learning or experiential development suggestions;
  • Ways in which direct reports, boss, peers, and others can help;
  • A process for following up with key stakeholders; and
  • Key milestones.

Once the action plan is complete, key stakeholders will be invited to endorse it. These stakeholders typically comprise the same group of people involved in the initial assessment interviews. By sharing the action plan with those who were initially interviewed, the executive can be assured that the planned improvements are consistent with expectations.

The other benefit of closed-loop validation is that it involves those most likely to be influenced by the change in the executive’s behavior. As a result, this process fosters their commitment to help the executive develop.

Active Learning
Once the key stakeholders agree with the action plan, the coach guides and reinforces the development strategies, which can include techniques such as action learning, role play, case study, simulation, video feedback, shadowing, and journaling. Special developmental courses and action learning are often recommended to support the coaching process.

This step is usually supported by a series of monthly meetings involving the coach, executive, and key stakeholders. These dialogues help to ensure that the milestones are being met and the ground rules are being followed, and that the coaching process continues to be focused on the organization’s business needs.

Reviewing and Sustaining Success
Approximately six months after the feedback session, an abridged version of the initial assessment is conducted to determine the impact of the process on the individual and the organization. The results of the assessment give credit for progress and address areas in which changes are still required, or bring attention to necessary midcourse corrections. The results of the abridged assessment are shared with key stakeholders to further the development of the executive and ensure alignment.

Our research shows that follow-up is a critical factor in the success of the entire coaching process. Additionally, to ensure overall quality, assessment of the coach is essential.

Alabama Power’s Success Story
The coaching approach described here has been applied successfully in a number of organizations. For example, Alabama Power (APCO), the primary electric company for the state of Alabama, has made executive coaching an essential part of their strategic change and leadership retention programs. As with all such utility companies, it is facing major changes primarily because of deregulation of the power market.

In 1997, APCO implemented our SEC program at the most senior level to shift the culture of the entire organization so that it could adapt more effectively to the deregulated marketplace. The president of the company, his senior management team, and their direct reports (about 40 people) went through the development program.

An essential part of the program within APCO was to institutionalize the coaching process by “training the trainers,” so that the effects would cascade through the organization. Essentially, each participant was coached into becoming a coach. A key focus of the coaching program was to ensure that the executive team members were role models for other executives and for all employees of the company.

The results so far demonstrate improvements in team leadership, collaboration, coaching effectiveness, and leadership skills. After going through the process, nearly 90% of all APCO officers were rated by their peers and direct reports as more effective leaders and coaches. According to APCO’s chief information officer, “The SEC process has been a primary contributing factor to APCO having one of its best years ever.”

The Ultimate Value of Coaching
The prime objective of an executive coaching program is always to improve the business results of the company. This is achieved by increasing profits or cutting costs. The business of executive coaching is neither simply intuitive nor merely the application of a mechanized process. It must, at all times, be rooted in the business strategies of the individual client organization, justifying itself by delivering real and tangible business results.

Executive coaches themselves must understand how their clients operate and what internal and external pressures they face. The process of coaching must not end when the executive coaching firm walks out the door. A strategic coaching approach offers a supporting work-context which ensures that the new leadership behaviors are self-sustaining and continue to deliver business results well into the future.

This is not a trivial challenge. As the New Economy – dynamic, global, and technology-driven – continues to evolve, new leadership skills and behaviors will be needed. New challenges will emerge – e.g., the need for dramatic and rapid change, new technologies, virtual work, and a workforce that is increasingly multicultural, mobile, and independent.

Given this turbulent world and the challenges and opportunities it presents, the “strategic” in strategic executive coaching will become even more important than it is today.

Dr. Alyssa Freas is CEO of Executive Coaching Network (EXCN); Dr. Don Mankin is a senior executive coach for EXCN. Mankin has been an active business consultant and coach for more than 30 years, helping managers and executives lead technology-driven, team-based organizational change. Freas and Mankin are currently working on a book on leadership in the new economy.

This article was originally printed in the Fall 2000 issue of Executive Talent, a journal published jointly by the Association of Executive Search Consultants and Kennedy Information.

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