External Coaching Produces Better Results versus Internal Coaching

“strong consideration needs to be given to using external coaching programs to enhance internal results.”

“The study also indicates that using internal coaches to coach managers or executives is not correlated with coaching success. It appears that using external coaches for those groups is more effective and perhaps confirms that the higher cost of using an external coach may be well worth it.”

New Global Study Tackles What Really Works When It Comes to Coaching Employees

Article Source: American Management Association

American Management Association and the Institute for Corporate Productivity Provide In-depth Look at Successful Coaching Practices

June 17, 2008

At one point, having a coach carried a stigma because it was more frequently directed at problem employees. Today, it’s more likely to be a sign that the employee is on the fast track and that the organization is serious about raising performance levels and developing talent. That’s according to an extensive global study commissioned by American Management Association (AMA) and conducted by the Institute for Corporate Productivity.

Coaching: A Global Study of Successful Practices is based on a survey that included responses from 1,030 managers and executives across a wide range of functional areas. The survey was conducted using AMA’s global network, including Canadian Management Centre in Toronto, Management Centre Europe in Brussels, and AMA’s partners and affiliates in Mexico City, Tokyo, Shanghai, Beijing, and Istanbul and in many other cities around the world.

When asked about the groups that their organizations coach, 60% of respondents said the coaching involved high potential employees to a high or very high extent, and 42% said the same about executives. By contrast, 37% said they coach problem employees to such a high extent.

The study defined coaching as “a short- to medium-term relationship between a manager or senior leader and a consultant (internal or external) with the purpose of improving work performance” (Douglas & McCauley, 1999). And this study showed that coaching is indeed linked to improved performance, both at the individual and organizational levels.

Executive coaching has become one of the tools to achieve effective leadership in today’s vastly changing corporate culture. As we increasingly learn how to measure executive coaching, we will find that we manage its role in leadership development better,” said Edward T. Reilly, president and CEO of American Management Association. “In going forward, what we have learned from this study will pave the way to a clearer understanding of the possibilities of executive coaching and practice. Change will need to come quickly given the vacancies in top management that are likely to occur due to retirement of the baby boomer generation,” Reilly said.

Respondents from organizations that use coaching more now than in the past are more likely to report two kinds of advantages. First, they are more likely to state that their organizations have higher levels of success in the area of coaching. Second, they are more likely to say that their organizations are performing well in the market, as determined by self-reports in the combined areas of revenue growth, market share, profitability, and customer satisfaction.

“There’s been skepticism about executive coaching in recent years. In some cases, it’s been warranted. Coaching for coaching’s sake is probably worthless. But this study suggests that—when it’s done right—coaching can raise both individual and organizational performance,” said Jay Jamrog, senior vice president of research of the Institute for Corporate Productivity.

The study found that raising individual levels of performance is the number one reason for using coaching and that using coaching for this purpose is highly correlated with the success of coaching programs.

But there are many ways of designing and implementing coaching programs and not all are equally effective, the study found. For one, sending potential coaches to external development programs was more strongly correlated with overall coaching success than more internally focused methods. Yet, those external programs were less commonly used, suggesting that strong consideration needs to be given to using external coaching programs to enhance internal results.

The study also found that clarity of purpose counts. The more a company has a clear reason for using a coach, the more likely that its coaching process will be viewed as successful. Add measurement into the mix and you have a winning formula. The research indicates that the more frequently respondents reported using a measurement method to gauge coaching effectiveness, the more likely they were to report success in their coaching programs. The measurement methods that were most strongly linked to success are individual increases in productivity, impact on engagement, satisfaction with the program, and bottom-line results on the business.

Survey participants were asked to what extent their organizations used certain criteria to match coaches with coachees. By far, the most frequent basis for matching was the area of the coach’s expertise. Almost three-quarters of respondents (74%) said matching decisions were—either frequently or a great deal—based on finding a coach with the right expertise to address specific issues.

Matching the right expertise with the right client is associated with higher success rates.

The study also shows that it pays to interview coaches. Surprisingly, when asked about the criteria they used to select coaches, only 54% say they interview potential coaches frequently or a great deal. Yet, this basic step is more correlated with reported success of coaching than any other selection strategy. Both time and money are wasted when organizations fail to invest time up front matching clients with coaches.

Another coaching best practice is to know when to use an internal versus external coach. The research indicates that external coaches are hired most often to work with executives. External coaches are significantly less likely to work with managers or supervisors. On the other hand, internal coaches are almost equally likely to work with managers as they are supervisors. Internal coaches are significantly less likely to work with executives. Additionally, while internal coaches were assumed to coach employees at all levels of the organization (43%), very few respondents (5%) said that external coaches coach employees at all levels to any great extent.

The study also indicates that using internal coaches to coach managers or executives is not correlated with coaching success. It appears that using external coaches for those groups is more effective and perhaps confirms that the higher cost of using an external coach may be well worth it.

The study found that providing coaching to expatriates is associated with success and improved market performance. Yet, few companies report that they offer coaching to this segment of their employees, suggesting that there’s an opportunity for competitive advantage here.

The study also found that there’s room for improvement in various areas related to coaching. For example, only about a third of respondents (32%) considered peer coaching (in which each participant acts as both coach and coachee to a partner within the organization to improve growth and development) to be very effective or extremely effective. That finding indicates that most organizations have yet to determine how to reap maximum benefit from their peer-coaching programs.

In general, the researchers believe that coaching remains an untapped opportunity for many organizations. Only about half of responding North American companies said they have coaching programs in place, and the same was true for just 55% of respondents in the international sample. This suggests that there’s considerable room for coaching to expand and mature, becoming a critical variable in developing and retaining scarce talent in the future. Companies that learn to leverage coaching and build their programs on what works will have a significant competitive advantage in the global marketplace.

The complete report, Coaching: A Global Study of Successful Practices, is available at www.amanet.org/research

About AMA

American Management Association is a world leader in talent development, advancing the skills of individuals to drive business success. AMA’s approach to improving performance combines experiential learning—learning through doing—with opportunities for ongoing professional growth at every step of one’s career journey. AMA supports the goals of individuals and organizations through a complete range of products and services, including seminars, Webcasts and podcasts, conferences, corporate and government solutions, business books and research. Organizations worldwide, including the majority of the Fortune 500, turn to AMA as their trusted partner in professional development and draw upon its experience to enhance skills, abilities and knowledge with noticeable results from day one.

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