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Coaching is big business. When the 2008 financial crisis began, collapsing corporate profits reduced demand for coaching services. But as economies recovered, so did the coaching market and today it is estimated to be worth over $12bn globally. And it’s still growing.

Yet alongside this growth there has been increasing concern in organizations whether coaching reliably works to improve performance. An amazing 99% of HR professionals believe that coaching can in principle help improve peoples’ performance. Yet only 19% of them believe that the coaching going on in their business is actually effective.

One of the biggest contributing factors here is that as the market has grown, so has the challenge of selecting and managing coaching suppliers. Selection is important because the effectiveness of coaching is strongly dependent on the quality of the coach. Unsurprisingly, good coaches get better results than poor ones. And effectively managing suppliers after you have selected them is equally critical as studies show that while coaching can indeed be valuable, this is only so when the process is carefully managed. When not effectively managed, coaching interventions may help specific individuals, but across organizations as a whole they tend not produce a significant positive aggregate impact on performance.

2 Fundamental Challenges

There is certainly no shortage of advice on how to manage coaching. A quick Google brings up a mass of literature on what makes a good coach, how to contract objectives, and how coaching can best be done. Yet for all this advice successfully navigating the market involves overcoming two fundamental challenges.

First, the coaching market is in a poor state - fragmented and essentially unregulated. There are no market dominators and the field is characterized by small and often one-man-band businesses. There has been a steady increase in the number of operators, too, with a recent report suggesting that there are around 100,000 coaches globally, employed in nearly 50,000 businesses. And that’s probably a conservative estimate. There is a lack of standardization in qualifications and multiple routes to ‘accreditation’, with some of the most established and successful coaches refusing to associate with accrediting bodies.

Second, the state of the coaching market is deteriorating further as it is not functioning effectively as a market. In an effective market, good coaches would thrive and poor ones fail. In the coaching market, however, it is difficult to compare different providers’ offerings and even harder to find out which ones are best. Qualifications differ and often mean little to purchasers of coaching. Accreditation is no guarantee of quality. And there is no common single unit of coaching to help compare providers’ prices; instead, they all package coaching slightly differently. To make matters worse, the majority of companies using external coaches do not check whether coaching works, and those that do rarely then share this information to help others choose a coach, even within their own business. Moreover, even where they do check whether coaching works, it is not clear to what degree any success or failure is due to the coach, the coachee, or the support of the broader business. Consequently, whilst really good coaches probably do prosper, many far less effective ones do as well.

How to select and manage coaching suppliers

To try and deal with these fundamental challenges, firms have tried a number of tactics. Wind the clock back five to ten years and a popular tactic was to invest (sometimes hundreds of thousands of pounds) in running assessment centers to select coaching suppliers. These centers were then used to establish preferred supplier lists.

This may sound a sensible approach, but it has become less popular over the years as firms have realized that it faces two big problems. It is not clear that the assessment centers work and successfully select the best coaches. And it can be tough to restrict managers to the coaches on the eventual supplier list.

So what can firms do? Well, all is not lost, and there are things that they can fairly easily do:

  • Allow people to choose their own coach and do not bother trying to assess the capability of coaches beforehand. Do not trust accreditation to assure quality. In the absence of effective market regulation, word of mouth recommendations are a good start.
  • Create a standardized contract between your firm and coaching suppliers, with standard terms and conditions. This should include details of a coaching process that they must follow and require them to lay out their costs in a standardized way (e.g., the cost per hour of coaching, including any additional administration required).
  • Require suppliers to charge coaching by the hour (charging per two hours is currently common in the market, but how many leaders have two hours to spare in any day?).
  • Require coaches and coaches to stipulate the specific behavior goals of coaching before coaching begins. There are exceptions to this. For example, some very senior people have coaching arrangements where they start off with one issue they need support with, and then progress on to other issues. But the majority of coaching will be for specific behavior goals.
  • Ban coaching packages, whereby someone buys six sessions of coaching (something that is standard practice in the market). Why should all development needs require six sessions? Some will require just one session, while others will require 10. And the vast majority of behavior change objectives should only require one to three sessions. So, once the behavioral goals of coaching have been agreed, require coaches and coaches to agree the number of number of sessions required. Usually, this should be no more three sessions before a review of progress.
  • Require managers to be involved, by stipulating that they have to agree to coaching objectives and be involved in any review sessions. You should also require coaches to keep managers updated after each coaching session with the actions it has been agreed that the coach will take.
  • Measure the effectiveness of coaching. If you do not have the resource to do this, require your coaching suppliers to do it for you. How best to measure effectiveness is a topic in its own right and for another day, but at the very least, ask coachee’s managers whether the coaching has achieved its goals.
  • Collect this effectiveness data centrally (a spreadsheet will do) and make it available to all internal staff requesting a coach. That way, they can see which coaches are the highest rated by their colleagues.

Implemented together, these recommendations will at least ensure that your organization has an effective internal coaching market and that less effective coaches can be gradually removed. And let’s be clear, these recommendations are not just nice-to-haves, but essential for any firm using coaching. Because the coaching market is more than just difficult to manage: It is fundamentally broken. So to make coaching work, you need to take hold of the market and make it work for you.