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Coaching Takes Center Stage

February 22, 2011

Defense contractor Northrop Grumman Corp. uses internal coaches for succession planning across multiple lines of business; group coaching for technology workers helps Genentech Inc. boost employee engagement and retention; and focused, individual coaching enabled a vice president at Philips Healthcare to provoke a daunting culture change that touched more than 6,000 employees.

Industry observers say professional coaching has gathered steam, and is being used to tackle a range of strategic business issues. Its application is changing, though. Rather than trying to “fix” underachievers, organizations are pairing high performers with coaches to accelerate their development—and get the best return on investment.

Ellen Kumata, managing director of Boston-based Cambria Consulting Inc., says organizations increasingly are targeting employees with potential to create great value over the long term as leaders. “Coaching has kind of grown up in the last five or six years. It’s an expensive solution, so companies are putting the money into people who have the longest runway to success.”

Coaching can serve a variety of purposes for companies. In an era when employees are seeking greater employment security, it can serve as a retention tool by demonstrating an organization’s commitment to career development. Coaching also helps make up for decades of “shortsighted” human resources practices when organizations failed to capture the knowledge of veteran employees, says Carl Nielson, a management consultant in Dallas. “Now they see a lot of people rising into leadership roles before they are ready. That’s where coaching comes in.”

Organizations using professional coaching for business reasons recouped an average of seven times their initial investment, according to a 2009 report by the Lexington, Kentucky-based International Coach Federation, or ICF. That report was produced for ICF by professional services firm PricewaterhouseCoopers and Canadian consulting firm Association Resource Centre Inc.

Los Angeles-based Northrop Grumman Corp. is sold on the value of coaching. The global conglomerate, with 2010 revenue topping $35 billion, has a program to train and certify employees in coaching skills. Since its inception in 2004, the initiative has produced nearly 40 internal coaches from its managerial ranks, company officials say.

By developing its own coaches, Northrop Grumman has a clearer picture of leadership gaps across the company and is better able to plan for succession, says Barb Goretsky, the corporate director of learning and leadership development.“We’re creating a culture in which coaching is used to develop our leaders. We don’t use coaching for remedial activities” for poor performers.

Northrop Grumman’s voluntary yearlong coaching program is “on par with that of large coaching providers,” says Anita Stadler, manager of the Internal Coach Development Program, which certifies the candidates as coaches. Applicants need a solid grasp of their industry, and “we look for people who already display innate people skills.”

Upon certification, internal coaches commit to a two-year coaching stint, working with two to four high-potential co-workers, Stadler says.

At roughly the same time Northrop Grumman began to groom potential leaders, San Francisco-based Genentech faced more immediate concerns. The biotech pioneer launched its Personal Excellence Program, or PEP, about five years ago, after an internal survey showed its information technology department ranked last in employee satisfaction.

PEP provides a cost-efficient blend of group and individual coaching for the firm’s 700-person IT organization, says Pam Weiss, an independent coach who works with Genentech’s program. “I really didn’t know if the one-on-one impact of coaching would translate to a group setting. But the benefits have been exponential.”

According to a Genentech-commissioned study in 2009 by the Advantage Performance Group, a Larkspur, California-based consulting firm, PEP helped to boost employee satisfaction between 10 percent and 20 percent. It also led to a 50 percent improvement in employee communication and collaboration. In addition, PEP’s business impact was more than double that of other leadership programs, generating roughly $2 for every dollar invested, according to the study.

IT employees approved for Genentech’s voluntary program receive coaching in several different formats. First, a larger “community of learning” takes part in a series of workshops.

The larger group subsequently is broken into smaller facilitated groups. Lastly, each individual participant receives three one-on-one coaching sessions. “It provides the best of both worlds: People learn collectively as a community, but also have the opportunity to get individual reinforcement and support,” Weiss says.

In fact, coaching may help boost employee engagement. Companies are eager to hasten leaders “who drive performance by the work environments they create. Building relationships is at the heart of coaching,” says Janet Harvey, president-elect of the ICF and an independent coach.

Coaching helped Lisa Barnett spearhead culture change at Philips Healthcare. Barnett, a vice president of sales for the western zone with the Seattle-based company, was surprised when top brass tapped her to lead an effort to bolster core company values. “I said: ‘I’m just a sales chick. Why do you want me to take this on?’ ” The company, which has more than 6,000 employees, sells medical imaging systems to hospitals and health care providers.

The project’s intention was to “make our core values to show up more consistently and overtly in employee behaviors,” a market differentiator, Barnett says. Those behaviors, she says, include stronger employee accountability and a rekindled passion for patient care.

The initiative was intended to influence not only sales reps, but also support teams, business development professionals and others who deal directly with customers, Barnett says.

Barnett hooked up with Harvey for one-on-one meetings, practical exercises and other activities. Coaching provided a new slant on her role as a leader, leading to above-average performance by her direct reports as well as improved employee engagement and better business results for her sales team, which includes reps from Minnesota to Hawaii.

For example, the West zone exceeded sales expectations, while each individual region in the zone achieved its sales goals—a rare occurrence, says Barnett, and one she attributes to coaching.

Although the culture-change effort is a work in progress, Barnett says “the change in our people who deal with customers has been deep and profound.”
 

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