What the Experts Say The Coaching Industry: A Work in Progress

by Ram Charan

There’s no question that future leaders will need constant coaching. As the business environment becomes more complex, they will increasingly turn to coaches for help in understanding how to act. The kind of coaches I am talking about will do more than influence behaviors; they will be an essential part of the leader’s learning process, providing knowledge, opinions, and judgment in critical areas. These coaches will be retired CEOs or other experts from universities, think tanks, and government.

Clearly, this is not a description of what most coaches do today, as the survey results demonstrate. What we think of as coaching is generally a service to middle managers provided by entrepreneurs with a background in consulting, psychology, or human resources. This kind of coaching became popular over the past five years because companies faced a shortage of talent and were concerned about turnover among key employees. Firms wanted to signal their commitment to developing their high-potential executives, so they hired coaches. At the same time, businesspeople needed to develop not just quantitative capabilities but also people-oriented skills, and many coaches are helpful for that. As coaching has become more common, any stigma attached to receiving it at the individual level has disappeared. Now, it is often considered a badge of honor.

The coaching industry will remain fragmented until a few partnerships build a brand, collect stellar people, weed out those who are not so good, and create a reputation for outstanding work. Some coaching groups are evolving in this direction, but most are still boutique firms specializing in, for example, administering and interpreting 360-degree evaluations. To get beyond this level, the industry badly needs a leader who can define the profession and create a serious firm in the way that Marvin Bower did when he invented the modern professional management consultancy in the form of McKinsey & Company.

A big problem that tomorrow’s professional coaching firm must resolve is the difficulty of measuring performance, as the coaches themselves point out in the survey. I’m aware of no research that has followed coached executives over long periods; most of the evidence around effectiveness remains anecdotal. My sense is that the positive stories outnumber the negative ones—but as the industry matures, coaching firms will need to be able to demonstrate how they bring about change, as well as offer a clear methodology for measuring results.

Despite the recession, I agree with most survey respondents that the demand for coaching will not contract in the long term. The big developing economies—Brazil, China, India, and Russia—are going to have a tremendous appetite for it because management there is very youthful. University graduates are coming into jobs at 23 years old and finding that their bosses are all of 25, with the experience to match.

Source: A version of this article appeared in the January 2009 issue of Harvard Business Review