Why Executive Coaching Is a Critical Part of the CEO Journey
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When thinking of venture and growth equity investment firms, many people just picture dollar signs. However, what they don’t realize is finding and financing companies is only the beginning of what investors actually do in their day-to-day. Investors and portfolio services teams support the CEOs they work with in a variety of ways. We help connect them with great people, offer a network of strategic resources and provide input on key areas including marketing, human resources, operations, business development, legal and finance.
In doing so, one of the biggest challenges (and joys) within the world of venture capital and growth equity is guiding CEOs through their journey. Not all CEOs come to the table with the full set of skills they need to build their companies to last for the next decade. However, by instilling the importance of executive coaching early on, both board members and portfolio services teams ensure the CEO-investor relationship extends far beyond just the funding.
Why every CEO can benefit from coaching
The blink of an eye. Research shows that’s how fast it takes to make a good or bad first impression. For entrepreneurs pitching ideas to VCs, in addition to a business plan and product or service concept, there is the all-important impression and connection that the individual makes. Once a company is launched, the personality and mannerisms of a founder and CEO can set the tone for the entire workplace culture. Indeed, some of the largest companies have been known to take on certain personality characteristics and attitudes -- both good and bad -- that can be traced up the ladder to the executive suite.
Can the benefits of coaching be quantified?
According to the American Management Association, organizations that use coaching reported stronger market performance. A global survey of coaching clients by PriceWaterhouseCoopers and the Association Resource Center concluded that the mean ROI for companies investing in coaching was seven times that of the initial investment. A quarter of the companies in the survey reported an ROI of 10 to 49 times investment.
In addition, a report by the International Coach Federation found that the relative effectiveness of executive coaching can be assessed by certain external and internal measures. External measures include coaching goals established at the start of the coaching relationship such as increased income or company revenue, obtaining a promotion and/or improving performance feedback. Internal measures may include self-scoring assessments; behavioral changes resulting from better self-awareness and awareness of others; and changes in the individual’s emotional state that lead to positive changes on the job.
How to focus your coaching
My colleague Laurie Tennant, vice president of people, portfolio services, is a big believer in executive coaching. “Many leaders become so focused on growing their businesses that they become disconnected from the people around them and what it takes to lead those people through change,” she says. “A good executive coach can help a CEO see the impact of this type of behavior, and make a huge difference in a company’s success.”
She believes it is important to be clear about your objectives and expectations at the outset of a coaching relationship and offers these tips:
- Find a coach who you respect as a mentor; someone from whom you can learn; who has a good grasp of best practices related to your job or industry; who can provide an objective, unbiased perspective on the decisions you make and your interactions with others.
- Take the time to debrief specific actions, conversations, presentations and beyond with your coach. “A debrief is easy to shortcut in a startup because they’re moving so fast. Having a coach forces you to reflect, regroup and learn from your successes, as well as your mistakes.”
The best executive coaching relationships resemble the relationship between a conductor and their train. The conductor (coach) can help keep the train (the executive) on the tracks during all the challenges and distractions of a startup. This requires openness from the executive -- a willingness to look honestly at behavioral traits and blind spots that are obstacles to growth and to make sincere and consistent efforts to change.
Establishing executive coaching, training and feedback loops within your company
Those who understand the challenges associated with building and scaling a successful company can attest to the benefits of executive coaching. By encouraging the CEOs with whom we work to sign up for a coach, we serve as matchmakers, pairing participants via our coaching network. We also connect our CEOs to other CEOs in order to foster mutually beneficial mentoring and relationships.
In addition to coaching, we are big proponents of executive training. I’m a case in point, currently enrolled in a superb leadership training course from Pathwise Management which is helping cultivate a deeper understanding of myself, my peers and colleagues. The training, which comes in the form of monthly executive cohort meetings and one-on-one coaching, provides an overview of the core principles of neuroscience, analytical psychology and leadership philosophy -- all of which help me be a better manager and problem-solver.
What is the best way to evaluate your effectiveness as a manager, C-level executive, board member or employee? Set up a feedback loop within your company to uncover any communications problems before they affect morale and the bottom line. It’s an already-popular approach used in surveys for end customers, so why not expand it throughout your company to your workforce, partners and investors?
When the leaders and executives of our portfolio companies walk through our doors to seek funding, we survey them because we want to know how CEOs -- and their companies -- perceive us and the support we provide. Are they happy with the individuals with whom they interact? Can we do better? This same feedback loop enables us to provide constructive feedback to our teams internally, illuminating our blind spots.
We also monitor the temperature of our internal teams on a quarterly basis via Glint, an organizational development platform (Full disclosure: Norwest is an investor in Glint). This quarterly measurement process helps us uncover important insights and gives us power to overcome the typical barriers to action. It helps guide our leaders and managers through the process of strengthening engagement and driving business results.In a highly competitive and fast-moving global marketplace, we believe in the value of ongoing relationships. Human beings are complex creatures, and relationships take work. We are all learning and growing continuously. Open, honest feedback from coaches and insights from trainings and surveys help us to do better when it comes to understanding the CEO journey.