Executive coaches hired to shape leaders
By Jay MacDonald • Bankrate.com

As the battle heats up to attract and retain the best and brightest talent available, American business is turning for help to an industry it once regarded as highly suspect: executive coaching.

Just a few years ago, when profits and top performers were plentiful, corporate giants pooh-poohed the idea of coaching as just pop psychobabble aimed at eroding their bottom line. The common refrain was, where's the ROI, return on investment? Even those more progressive companies that welcomed TQM, total quality management, and excellence seminars, based on Steven Covey's "Seven Habits of Highly Effective People," placed it in the expenditures column.

Today, however, one-on-one executive coaching, not just training, is all the corporate rage. What has made companies suddenly embrace their softer side? You guessed it: ROI.

According to a 2001 MetrixGlobal study of one Fortune 500 company, executive coaching returned more than $5 for every $1 spent, 529 percent, in significant financial and intangible benefits to the company. When the financial benefits of employee retention were rolled into the mix, the ROI was nearly eight to one, 788 percent.

In the 2002 study, "The Economics of Executive Coaching," Harvard Business School Journal estimated that there were at least 10,000 coaches working in business, up from 2,000 in 1996. That figure was expected to grow to 50,000 by 2007. The International Coach Federation lists 8,461 members and more than 132 chapters in 34 countries. Companies reportedly pay fees ranging from $1,500 to $15,000 per day.

"It's certainly a hot item right now," admits Michael Markovits, vice president of global executive and organizational capability, who oversees IBM's in-house executive coaching. "We've done research to show that leadership behavior has a direct impact on climate, and climate has a direct impact on business results. We invest in leadership development because we believe we're going to be a better-performing company as a result."

"Business leaders are recognizing that good social skills are good business," says Peggy Post, great-granddaughter-in-law of etiquette pioneer Emily Post and co-author of "The Etiquette Advantage in Business."

"It's not a sissy subject at all. It's a very timely business topic to help increase productivity, employee retention and client/customer retention. It just makes things run much more smoothly," she says.

Executive finishing school? In these downsized, belt-tightening times? That's right. At the new global dinner table, American business is starting to sit up straight and mind its manners.

Pumping up the EQ
Businesses rely on executive coaches in two main training areas: internally, to groom their junior executives to one day take the helm, and externally, to prepare their leaders to flawlessly represent the company when meeting, dining and socializing with customers and clients.