leadership coaching creates better leaders

It seems global organizations have realized what Droste coaching clients have known for decades: leadership coaching creates better leaders through effective behavior changes resulting in healthier teams and workplace cultures. Kip Kelly’s recent Chief Learning Officer article, below, discusses the latest research.

The Leadership Coaching Revolution Is Here

While professional coaching has been available for decades, organizations rarely used coaching for broad leadership development efforts. Until now.

A majority of organizations around the world are investing in leadership coaching to ensure their employees have the critical knowledge, skills and experience to remain competitive. A recent industry research study conducted by Sounding Board and Chief Learning Officer, the 2021 Leadership Coaching Report, revealed more than 70 percent of organizations offer some type of leadership coaching, and another 22 percent would like to offer leadership coaching but lack the budget and resources. Over 40 percent of these organizations report their spending on leadership coaching has increased from 2020 to 2021.

These findings track closely with other industry research. CLO’s 2020 Learning State of the Industry Report, for example, revealed more than 55 percent of organizations use executive coaching for leadership development, where it was ranked among the top three delivery methods organizations use for learning and development. Fifty-four percent reported the use of coaching and mentoring to increase in the next 12-18 months.

What’s driving the explosive growth and popularity of leadership coaching? While professional coaching has been available for decades, organizations rarely used coaching for broad leadership development efforts. Instead, coaching was more commonly reserved for a few senior leaders and high-performing individuals, or often used as a remediation tool to help struggling leaders address specific issues and problems. While there were exceptions, with some companies really embracing coaching, it was still difficult to measure the business impact, and nearly impossible to scale coaching throughout the organization.

So what has changed? The answer: everything. The world has changed. The demand for effective skills development and leadership training was at an all-time high before the COVID-19 pandemic. The health crisis, the global economic downturn and now “the Great Resignation” have all contributed to an even greater sense of urgency to solve the leadership development challenge. The pandemic also accelerated the adoption of online training and development to deliver more relevant, personalized, data-driven learning in the flow of work.

Meanwhile, technology and innovation have transformed the professional coaching industry, making it easier for organizations to manage, measure and scale leadership coaching. Coaching management platforms are designed to lift the administrative burden of managing complex coaching programs while providing greater transparency, data, and reporting.

These trends are driving a revolution in leadership coaching, as more organizations embrace coaching to drive talent development. Sounding Board and CLO’s recently published survey findings, conducted between June and July 2021, set out to understand how organizations are using leadership coaching, drawing insights from more than 450 learning and development practitioners.

Leadership coaching for talent development

According to the research, organizations are using leadership coaching to address a variety of talent development needs. Eighty percent of organizations report their principal need for leadership coaching is to improve skills for specific individuals. Increasing employee engagement and retaining key talent were also identified among the most common needs organizations are addressing with leadership coaching.

Self-awareness and communication were consistently ranked among the most important capabilities for leaders at all levels, and were also reported as the most difficult capabilities to develop across organizations, followed by managing change and strategic thinking.

In emerging leaders, interpersonal skills and execution were also identified among the most important leadership capabilities. For mid-level managers, execution and leading high-performing teams were also reported among the most important capabilities. For senior and executive leaders, strategic thinking and setting vision and direction were among the most important leadership capabilities.

Measuring the business impact of leadership development

Despite the increase in spending on leadership coaching, CLO and Sounding Board’s research suggests measuring the return on investment remains a challenge for many organizations. The majority of organizations surveyed report a lack of confidence in their ability to measure the business impact of leadership coaching. Forty-one percent of respondents said they measure infrequently and not completely, 20 percent said they rarely, if ever, measure and 12 percent never measure the business impact.

These findings are not surprising. Forty-two percent of respondents to the International Coaching Federation’s 2020 Global Coach survey identified measuring the impact of coaching as an obstacle. And, according to the 2020 CLO Learning State of the Industry report, only 24 percent of organizations report using ROI as a metric to determine the impact of leadership development programs. Another 24 percent said they plan to begin measuring in the next 12 months, while 13 percent plan to begin doing so within the next 12-24 months. It’s worth noting only 24 percent indicated they plan to share this ROI data with senior leaders. While most organizations lack confidence in their ability to measure the business impact of coaching, there are exceptions. 

According to CLO and Sounding Board’s research, twenty-eight percent of organizations report their ability to measure the business impact of leadership coaching to be high or very high. These organizations report more positive outcomes from coaching and experience fewer challenges to offering coaching.  They are also more likely to use leadership coaching to retain talent (58 percent versus 39 percent) and to gain a competitive advantage (39 percent versus 18 percent). 

More than half of these organizations use succession planning to measure the impact of leadership coaching, compared only to 23 percent of those with less confidence in their ability to measure. Customer satisfaction, productivity and ROI are also used more frequently to measure the business impact of leadership coaching in these organizations.

Challenges and Opportunities

Organizations report a range of benefits from leadership coaching, including higher employee engagement, retention, productivity and greater leadership bench strength. The research, however, also reveals several key obstacles to offering leadership coaching.

Budget is reported as the most common challenge followed by the lack of ability to measure return on investment. Organizations that have confidence in their ability to measure the business impact of leadership coaching are less likely to report challenges overall. Among these companies, budget remains the most common challenge (47 percent), followed by leadership buy-in (27 percent) and the lack of technology to manage coaching engagements (23 percent). Coaching management platforms are helping to overcome many of these challenges, making it easier to manage coaching engagement, while providing the necessary data and transparency to gain senior level buy-in that is critical to secure the investment.

Talent development and learning professionals understand the benefits of leadership coaching, but future growth and success depends on their ability to effectively scale coaching and measure the business impact. Coaching is proven to be an effective method to drive organizational performance and improve the bottom line. Measuring the business impact can unlock the full potential of leadership coaching.