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Hot Topic: Coaching Can Lead to Higher Market Performance

Wednesday, October 15, 2014
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A recent study by i4cp found that organizations in the top quartile of market performance are more likely to view coaching as an organizational competence. Amy Armitage, director of member research programs at i4cp, explains what the report found.

“In this survey, we found high-performance organizations are using coaching as a management discipline in a different way to elevate productivity and performance. When this discipline is embraced, valued, and demonstrated enterprise-wide, a culture of coaching prevails.

 “High-performance organizations are using coaching to transfer knowledge for specific business purposes. For example, you have a newer younger generation of Millennials and an older generation of Baby Boomers working together in many companies. Effective coaching cultures are able to transfer knowledge both from the older generation to the newer and vice versa. This knowledge transfer drives higher levels of productivity and performance across different employee segments. We are seeing many kinds of mentoring and cross-peer coaching that benefit different segments of the population, particularly intergenerational,” says Armitage

Measuring data is critical 

Armitage also sees that measurement is critical. It might be included as part of a performance management project, such as examining how effective senior executives are at developing their own people. Essentially, it makes coaching and developing others a core competence of leadership. 

Armitage paraphrases Marshall Goldsmith when she says, “The old-style manager tells people what to do. Whereas, the new-style manager asks questions and develops others’ capabilities through driving, reflective, powerful questioning.” 

Having the competency to be able to deliver effective feedback, and also receive effective feedback, is one of a leader’s best tools. Upfront skills, including being able to identify goals and the critical behaviors that are necessary to achieve those goals, are behavior-changing skills. 

“It is vital to understand the influence you have on changing other peoples’ behaviors, and the impact your own behavior has on others,” says Armitage. “I like to call it the behavioral lens. It goes both ways. It’s that ability to understand your behavior as it influences others, but also, the way you teach people about the impact of their own behaviors on others. A good leader needs to hold up both the positive as well as the reality lens to his employees.” 

Armitage adds, “Being able to have that positive, value-focused approach is critical to performance coaching competency. Good coaches have the ability to put themselves into the shoes of others; they’re empathetic. Much has been said about emotional intelligence, but it is also about being able to intuit and sense where others are. Good coaches always start with where the other person is.”  

The report notes that high-performance organizations use coaching to transfer knowledge five times more often than lower performers. Armitage explains that i4cp defines its high-performance organizations, the top quartile, by four characteristics: market share, revenue growth, profitability, and customer satisfaction. i4cp pulls out the top quartile of those organizations to see what they are doing differently. Then i4cp looks at the actual correlations to market performance—MPI (market performance index). 

According to Armitage, “What’s interesting about this report is while there is a strong correlation with market performance for coaching, very few companies are satisfied with the way they are doing coaching. We see that coaching effectiveness is judged as relatively low in organizations, even those in the top quartile.”  

Coaching as a core competency of leadership 

Effective coaching techniques that can help a company establish a coaching culture begin at the top. Armitage thinks it is critical to have an executive sponsor in place. This executive becomes the coaching champion, and typically, she has been through coaching. In effect, the executive is modeling coaching at the most senior levels of the organization. 

“You might see a senior person who is providing stories or anecdotes about how the coaching or mentoring has affected his career. That story becomes an example of the way things are done in that business,” Armitage notes.  

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Coaching is a difficult skill to develop, and people sometimes think they’re doing it well when they may not be. Therefore, it is important for a company to measure accountability and effectiveness. There needs to be transparency about how good, or not, executives are at coaching. An executive needs to look at the effects or results achieved by coaching.

An i4cp member cited in the report, Campbell Soup, uses the GROW model. The first thing to do in the GROW model is to look at goals you want to achieve, and set specific, measurable objectives, so you have something against which to measure. Coaching discussions also center on the reality of the situation, the opportunities (or options) to consider, and the way forward. 

Fifty percent of low-performing companies do not have a champion, versus only 36 percent of high-performance organizations. “The executive level leaders need to model coaching; to be adept at it; to walk the talk. This kind of behavior often comes with an executive having had a successful coaching experience in the past,” says Armitage. 

“If an executive only sees coaching as remedial, a kind of fix-it, he typically will not have the kind of mind-set that says coaching is a core competency of leadership. If, on the other hand, the executive has experienced a positive, successful coaching and mentoring relationship, that will help him understand the value of coaching as a means to develop others and to create and develop performance outcomes,” she adds. 

The best way to enhance coaching as an organizational competence is to secure data through measures and accountability. The senior executive needs to show what results have been achieved by a mentoring or coaching program; to show what results have been achieved by a program that’s focused on very clear outcome metrics of both behavior change as well as performance outcomes. 

A coaching culture is an enterprise-wide strategic initiative. Many organizations do effective coaching in pockets where they have effective leaders who are good at coaching. However, Armitage thinks organizations need to embrace coaching as an overall organizational competency. 

In order to succeed as a leader, you must be good at developing others. It requires self-reflection, measurement, and assessment. According to i4cp’s data, coaching is well worth the time and effort it takes, because it’s correlated with market performance.  

“Because coaching is not an easy thing to do, I’d think about developing an internal team of people to drive the coaching program,” says Armitage. “It’s hard to plop a coaching culture on top of an organization that doesn’t have the willingness and political will to be good at it. Coaching starts internally with attempts at sponsorship and with business cases that a company needs to develop with top leaders.” 

More collaboration is required

”As we can easily observe, in our global economy, organizations are changing and are being more responsive to markets. They are becoming flatter, less hierarchical, so there is more need for effective team behaviors and much more collaboration that is required. I think these new structures—flatter organizations that are closer to the customers—require different leadership skills. Coaching isn’t new. There have been great mentors since Moses, but today organizations need to be more flexible and adaptive to markets in particular. There is a greater need for teamwork, collaboration, and coaching behaviors where conversation and transparency are critical,” Armitage continues.

Globalization is high in the mind of most senior executives for what’s driving these changes. Leaders have to move into new and different markets in order to grow. According to Armitage, “The whole idea of disruptive innovation is critical. You can have a market today, and it can be gone tomorrow because of disruptive innovation. Now companies are able to create 70 percent of benefits for 30 percent of costs. Globalization, technology, and rapid change all relate to how organizations have to compete in a marketplace, where labor costs have changed dramatically around the world. These factors are putting increasing pressure on productivity, and how much it costs to make products.” 

Telling stories 

Storytelling is an important way to obtain buy-in for a coaching program.  “Storytelling is a common, human condition; we all relate to stories. It’s a powerful tool that executives are using at the top of the house, as well as throughout middle management. Sometimes you can get really good stories about what coaching looks like and how it changed a leader personally,” says Armitage.  

Additionally, storytelling is a way to take data and turn those numbers into dialogue and discussion. It gets people to understand what the data means. “We have such an overage of data these days that people are struggling for meaning and understanding of how the data connects to their personal journey. This can have a powerful impact on individuals. Sometimes, within all of this technology and big data, it comes back to the story that has meaning to you, that makes you want to do something differently, to grow or learn, and to develop your own competencies,” explains Armitage. “Someone told me the difference between a great story and a good story is that you see yourself in the great story, where in the good story you see the protagonist,” she adds.

Overall, a culture of coaching doesn’t arise from a few good success stories or simply launching a new initiative. It happens when coaching becomes an expected and valued competency. It is created from the individual and collective efforts of those who coach effectively and those who are effectively coached as part of a core management discipline.  

 

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About the Author
Ruth Palombo Weiss is a business writer. 
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