By John K. Allen, Ed.D.
Adapted from an address to the Massachusetts School of Professional Psychology and The Executive Coaching Forum
What does an executive coach need to know about business? Quite a bit if one wants to be successful and effective coaching at the executive level. In 1979, when I started as a psychologist coaching executives there were perhaps 50 psychologists in Massachusetts with a similar skill set to mine. Today, there are 80 aspiring executive coaches in this room alone.
When I go on a sales call today I say, “I am different from most coaches. There are probably a hundred thousand executive coaches in the US. There are probably several thousand who are psychologists. There are maybe a hundred who have been the Chairman or CEO of a company of any size. There are perhaps a few who have been senior officers of publicly traded companies and fewer still who have served on the Board of a NYSE company.”
I position myself as a good businessman who happens to be a psychologist and executive coach. But that’s my sales speech. What do you really need to know about business to be a good coach?
First, you need to know your way around an organization – the major functions of the organization: marketing, sales, research and development, engineering or product development, operations, quality, IT, finance, and human resources.
What people in these departments do can vary depending on the industry. For example, a marketing manager in an insurance agency doesn’t conduct customer research or public relations. She takes opportunities that sales people generate and markets them to insurance companies to get the best quote for the customer. You learn these subtleties from clients.
When I first started in consulting, I was fortunate in that I had a few clients who liked me enough to teach me their business. One of my early clients was a very successful distributor. This client taught me about gross profit and overhead and marketing. The company was a second-generation business, and there was much accumulated wisdom which was often quite simple, but true! An example I recall was a saying in their business, “Don’t buy the truck until you get the business.”
I ultimately did a great deal of selection work and coaching in the distribution industry. Later in my career, I became CEO of a large national wholesale distributor. The lessons I learned early in my consulting career at the family distributor really helped as I found myself saying - yes, you guessed it, “Don’t buy the truck until you get the business.”
An executive coach should know something about strategy to recognize what the organization is trying to do and to help the executive tie his or her actions to the organization’s efforts. I have always had an interest in strategy and gravitated early in my career to helping executives and their teams think through where they are going.
I received a real education in strategy and planning, however, when I joined one of my clients who had just gone public. I thought I was going to play an HR staff role until shortly after I was hired, a Board members pulled me aside and said, “John, you were recruited to make earnings go up. You are costing us a penny a share, so get going.” That sharpens the senses quite a bit.
Growth had slowed in the company so I asked the operating company heads, “What’s the plan for growth? They said, “What plan?” I thought that was a good place to start, and I became Vice President of Planning.
I knew some things about strategy and planning, and like every good consultant, I had learned how to stay half a step ahead of the client. I read every book and article on strategy and planning I could find, attended a few seminars, and was able to come up with a planning process that helped the operating companies achieve record growth.
My point is that you can never be well enough prepared in terms of business knowledge. Experience in addition to academic and intellectual preparation is helpful, but you need to be prepared to learn as you go along to be a good coach.
There are some financial tools and concepts that are helpful to understand including balance sheets, profit and loss statements, cash flow, gross profit, cost accounting, and return on investment. I learned about finance through taking classes in accounting - painful for a psychologist but helpful. But mostly I learned by doing.
I had the opportunity to be a Group Vice President for a public manufacturing company with three operating companies reporting to me - each with a different cost system. Reading three different financial statements each month and meeting with a boss who would quiz me on the detail was a great way to learn about accounting.
You may not have this opportunity or experience but other learning opportunities will present themselves if you approach them with an open attitude. People are willing to teach you if you show an interest. Believe me, very few people will ask the controller to explain goodwill or variance analysis, so if you do you’ll likely get some attention
The biggest financial issue to focus on if you want to be a superior executive coach is profit. If you want become a valued resource to an executive, understand how he or she makes money in their business. Ask the question. They’ll quickly tell you what is important and be impressed that you asked.
Profit is a funny thing and I want to say a few words about the biases coaches may carry into the coaching relationship. My father was a social worker and I come from a family of helpers. My oldest sister is a social worker, my next sister is a recreation therapist who is now running the DPW – but that’s a long story, and my youngest sister is a Special Ed teacher. With four kids and a social worker’s salary, there wasn’t much money around so Dad used to work at juvenile homes on the weekends and sometimes he would take me along. Other kids played baseball in the backyard. I went on case calls and hung out with delinquents.
Learning to identify with the goal of profit and making money was something I had to learn. Spending time with powerful and successful executives takes a little getting used to. Many of you also come from the helping professions. I’ve seen a number of psychologist coaches derail by identifying with the underdog rather than aligning themselves with the executive.
Opportunities to learn about business strategies and tactics present themselves in funny ways, and you need to be alert so that you take advantage of them. About a month after my promotion to Group Vice President there was a fire, which burned down my administration building, destroyed one manufacturing plant, and seriously damaged another. Fortunately no one was hurt, but it was a devastating blow. Nevertheless, we had shipments to make on Monday and I had a boss who said, “Remember, the fire is not an excuse.”
This was a wonderful opportunity to learn about outsourcing. It was also a way to learn about how people
Again, my point is that through a mixture of reading, seminars, experiences, and conversations you will learn enough about business to be quite helpful if you are open to the experience.
There are always business trends to be aware of. They change over time and many are fads. But you need at least a passing familiarity. Some current trends include TQM, Six Sigma, Lean Manufacturing, Sarbanes-Oxley, and Benchmarking. If you look around someone’s office you will frequently see what books and magazines they are reading. I find this helpful both in keeping up with trends and also to get ideas about what the company’s philosophy and culture are.
A general knowledge of what is going on in the business world is useful for a coach. Nearly every executive reads the Wall Street Journal or at least tries to. You should too.
Executives often have global responsibilities and need to have a multi-cultural perspective. That means you should too. Outsourcing is a big topic now and changes the nature of many executive jobs. China has been, and continues to be, the big issue for anyone involved in manufacturing.
On the legal front it’s useful to know about employment law – especially relating to terminations, personnel records, harassment, and discrimination.
Let me share a few caveats. While becoming as knowledgeable about business as you can, don’t pretend to know things you don’t. Executives are very smart and you will either discredit yourself or, worse yet, somebody may believe you know more than you do and take your advice. Remember, you are the coach and not the player.
It is helpful to have a network or mentor when you are getting started. When I first started in consulting I had a mentor. I had met a very senior and experienced corporate psychologist named Dr. Peter Gilbert. Pete gave me the best advice I ever received and have continued to follow to this day.
I had just started my own consulting firm and I was constantly running around like crazy looking for new clients. He said, “John, you’re focused on the wrong thing. You need to focus on your existing clients and give them value. If you do that your clients will multiply like fishes and loaves of bread.”
I called Pete last week to share with him that I was going to quote him, and reminding him of his advice. He’s 88 now and sharp as a tack. He laughed and he said, “John, don’t forget to tell them the rest of what I said - make sure you give them a little more than what they pay for.”
So from Pete to me to you, have good coaching skills, learn about business, give value to your client and to their company, and you will be a very successful executive coach.
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