Why is business coaching so important? An empirical assessment

Coachee hat eine Sparrks Business coaching auf einem Tablett

Organizations nowadays spend millions of dollars on learning solutions aiming at helping talents. They seek to leverage such solutions to boost individual performance and, in turn, organizational performance. From the set of learning solutions, business coaching is one of the most deployed to enhance work performance. But why is business coaching important in that regard? Why is it the right approach to improve performance, especially among managers and leaders? Does it work? 

The goal of business coaching

Business coaching is a learning solution that focuses on achieving desired and intentional change. Such a change would boost the career success of executives and managers and, in turn, the overall company performance. Two-three decades ago, a business coaching intervention focused exclusively on correcting managerial performance deficiencies. Nowadays, the solution aims to facilitate learning among coachees in an organizational context irrespective of identified performance deficiencies. As Ellinger & Boostrom phrased, such facilitation generated by business coaching enables the process of "moving executives from excellent performance to peak performance". Effectiveness ensues when individuals are encouraged to function at peak levels and rely on their strengths.

Change, as the intended result of most business coaching solutions, comes with change outcomes. Desired change outcomes include a change in personal behavior, boosting leader effectiveness through goal attainment and optimized performance, promoting stronger relationships, personal development, and work-life balance. The importance of business coaching rests in its ability to enable or facilitate the reach of such change outcomes. Change is also the domain where successful leaders thrive or specialize. That's why business coaching fits naturally to individuals in leadership positions.

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Why is Business Coaching so Important?

Without empirical analysis, the impact of business coaching remains an assumption, if not a speculation. That is why we are putting forward the following objective claims that prove the effectiveness of business coaching in concrete, measured terms.

Leveraging emotional intelligence and change leader competencies

In study of Van Oosten on 85 senior executives conceptualized leadership effectiveness as four constructs: job performance, work engagement, personal vision, and career satisfaction. The concluding results showed that business coaching positively and directly impacted work engagement, personal aspiration, and career satisfaction. A deeper view revealed that business coaching moderated the relationship between "the change leader and emotional acumen competency clusters" .

Outcomes reflecting why business coaching is important.
Outcomes reflecting why is business coaching important.

The power of business coaching to leverage change leader competencies and the emotional intelligence potentials of coachees is quite remarkable. The change leader factor alone, essential for positive change, includes broad and valuable competencies such as achievement orientation, change catalyst, self-confidence, initiative, teamwork and collaboration, inspiration, leadership, and optimism. On the other hand, according to the emotional intelligence theory, the emotional acumen cluster, manifested as emotional intelligence (EI), helps leaders be more effective in their tasks and relationships. Encouragement of such competencies, especially those falling under the change leader spectrum, is crucial for organizations with a strong focus on results and selling.

Assessing the impact of business coaching on work performance

The direct impact of business coaching on the performance needed further evaluation, despite the indirect benefits being clear from such power use of IQ and change leader competencies (as well as spillover effects). Among scholars, measuring the performance or effectiveness of a coached leader has been somewhat hard to quantify. It may prove difficult to put a number to a role that includes functions such as running part of the business, building and maintaining relationships, and interacting with key internal and external stakeholders. Despite such inherent difficulties, by implementing multi-rater (360) feedback in her research, Tach found that business coaching influences a positive change in the workplace. Her study found that business coaching increased leadership performance by 60%. 

Smither et al., using a different research method, also empirically linked business coaching with an improvement in leadership performance. By conducting a longitudinal field study for managers (as opposed to the limited cross-sectional study), managers manifested improvements in specific goal-setting, ideas for improvements, and multi-rater feedback after working with an executive coach.

Aggregating 18 studies in meta-analysis to identify results of business coaching

A final research worth relying on is Theeboom et al., notably the meta-analysis of 18 studies on the effect of business coaching on individual-level. As in study of Van Oosten this meta-analysis began by first defining a set of individual-level outcome categories. It identified five such outcomes, phrased as follows: performance and skills, well-being, coping, work attitudes, and goal-directed self-regulation. The results revealed that business coaching directly impacted all outcomes, including performance and skills (g=0.60). Effect size ranged from g=0.43 (coping) to g=0.74 (goal-directed self-regulation). Such a direct impact across the board means that business coaching is an effective intervention in organizations.

Serious, unbiased studies like the ones this blog article relies on agree on the positive importance of business coaching. Business coaching is so important because it is an effective tool for improving the functioning of individuals in organizations. In short, companies spend millions on business coaching because, in return, they earn billions.

Key Takeaways

The literature we relied on here already suggests that a well-crafted coaching intervention leads to a positive change in employees’ well-being, demonstrated by a decrease in sickness-related absenteeism and burnout. Furthermore, business coaching helps individuals better cope with stressors. Brunn & Milczarek showed, in 2007, that work-related stress affects more than 20% of workers in the EU (this figure being dynamic). In monetary terms, that 20% translates into a € 20,000,000,000 loss per year. In this reality, business coaching represents the optimal solution to turn such staggering losses into recouped earnings.

In this article, we at Sparrks evaluated several competent studies to assess the importance of business coaching. Despite implementing different research tools, such studies arrived at the same conclusion: Business coaching is valuable due to its direct impact on both task-related and emotional-related functions. Such influence triggers benefits such as increased employee performance, enhanced leadership effectiveness, well-being, better coping with stressors, work-life balance, goal attainment, and, ultimately, widespread business success. 

*g is a reliability value used in the cited study. Values from 0.50 to 0.70 generally mean moderate reliability. Higher than 0.70 means high to excellent reliability. Less than 0.50 means low reliability.

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FAQ: Why is business coaching so important?

What does a business coach teach?

A business coach teaches techniques that help coachees (businesspersons) build leadership skills, craft business strategies, and improve their mindset toward work goals.

How does coaching enhance performance?

Coaching improves performance by helping coachees establish and take action towards achieving goals, becoming self-reliant, gain more job and life-satisfaction, contributing more effectively to the team and the organization, take greater responsibility and accountability for actions and commitments, work more closely with others, and communicate more effectively.

What are core values in effective coaching relationships?

Some core values in an effective coaching relationship include mutual respect, trust, compassion, competency, engagement, quality, and confidentiality.