Almost everybody I know who is leaving an organisation and starting independently says, when asked what they are going to do: ‘I am going into coaching.’ Certainly the market for external coaching has grown, but the supply side has increased exponentially. Why, I wonder is this so popular? I am reminded of an OD manager who, reflecting on her career, said: ‘You know, all the great initiatives I have been involved in for changing organisations have a very limited shelf-life; one new senior appointment can overturn them. But what I do for individuals is usually much appreciated and is lasting. So when I leave, this is what I want to do!’

Although it is not a mainline activity for me, my first ever independent assignment was to listen to and advise a finance director on his next five years (he insisted on paying from his own pocket much to my consternation). I heard a year later that this two hours had ‘changed his life’. I was quite amazed – and humbled, as you can imagine.

In the USA, the International Coaching Federation has soared from 1,500 members in 1999 to more 7,000 in 2004.¹ Harvard Business School expected the worldwide market to be over US$2 billion worldwide by the end of 2005. In the US, coaching is mainly by phone, and complete confidentiality is not necessarily guaranteed if the company is paying. In the UK, with its smaller geography, coaching is more likely to be face to face and generally complete discretion is assured, although most managers would see it as reasonable to ask ‘How’s it going?’ and leave it to the coachee to choose how much to reveal.

We can understand easily enough why coaching people is such a rewarding occupation. But it is rare for individuals to be paying from their own pocket. Why should companies (and not-for-profit organisations) be prepared to pay so much for this employee benefit? Until relatively recently, external coaching opportunities were confined to senior managers, perhaps so-called ‘high potentials’, and also for those who had performance problems – particularly behavioural – that needed a level of expertise beyond that available internally. At the lonely heart of the organisational ‘political pyramid’, a neutral experienced guide through the uncertainties of business life proves invaluable to many – and in the early days of coaching probably a majority of such coaches were experienced senior managers.

Now, it is much more widely extended. Several reasons lie behind this. One is undoubtedly the common formula for leadership development – namely a 360-degree feedback summary followed by a development plan and coach to guide the person into and along the development route. Then in many firms it has almost become a part of the ‘deal’ with managers – that coaches are available if desired. Even in 2001, with an economic slowdown, a Hay survey reported that 88 per cent of 170 global HR directors reported plans to extend coaching.²

Yet most of these major companies would still emphasise the importance of managers developing their staff, of a coaching style of management, with a supportive competency framework. One might well ask if the ease with which people go for the external coaching route is not a symptom of failure of the normal internal processes? Or is it just another bandwagon for HR people to join? If managers were skilled at providing feedback, jointly preparing and monitoring development plans, coaching and counselling from their own experience, dealing with poor performance – why would their employees need external help?

The same Hay survey referred to above reported that 70 per cent of organisations did not have effective internal coaching. External coaching is probably between five and ten times as expensive per hour as the cost of internal managerial time, so ‘to break even’ the external should be that much more effective in achieving performance changes. With remote and/or spasmodic interaction, that seems a tall order. For most people an external coach is an attractive proposition – the opportunity to be completely open with someone with no hidden agendas. But we need a careful balance between encouraging a coaching style of management and simultaneously undermining it by offering a more appealing option.

Can we evaluate the return from all this coaching? Dr Sabine Dembkowski (director of The Coaching Centre) and Fiona Eldridge (director of The Coaching and Communication Centre) wrote an article entitled ‘Measuring snowflakes: calculating the return on investment from coaching’³ – a wonderful title that reflects the uniqueness of each interaction. Their approach is very much to look at bottom line results that come from ‘performance improvement’, and they use a very standard ‘Jack Philips’ approach to return on investment calculation.⁴

The difficulties of ‘contamination’ seem immense here – to be able to prove cause and effect. The question it raises is: ‘Are we doing this only for better bottom line performance?’ If yes, the use of internal coaches, close to the reality of the job and the day-to-day issues, must surely be the preferred route. The choice of an external coach should be because we need skills beyond the capability that can be reasonably expected of most managers. This may include behavioural change, dealing with stress, career counselling, relationship difficulties, and so on. These we will evaluate by the perceptions of those who will benefit, not least the coachee. What is needed, it seems, is an integrated approach to coaching in organisations, which blends internal and external use in the context of the wider people development strategy.

References
1. ‘Corporate therapy’, The Economist, 15 November 2003.
2. ‘New business landscape promotes coaching boom’, Hay Group report, 2001.
3. Sabine Dembkowski and Fiona Eldridge, ‘Measuring snowflakes: calculating the RoI from coaching’, Training Zone, 27 July 2003.
4. Jack J Phillips, Return on Investment in Training and Performance Improvement Programs, Gulf Publishing Company, 1997.

Andrew Mayo is a consultant, speaker, writer and facilitator in international HR management, with specialisms in people and organisation development. He can be contacted on +44 (0) 1727 843424, at andrew.mayo@mayolearning.com or visit www.mayolearning.com

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