“Companies are under-investing in human capital, largely due to lack of knowing and measuring the risk. The more uncertainty of inputs and outputs for human capital, the more reluctance to commit resources or withdraw investments in volatile times. We need to stop accounting for human resource expenditures as overhead; instead we need to look at human assets in terms of capital expenditures where returns on current period expenditures are relative to the useful life of the asset.”
— Michael Eckols
Coaching has become the development tool of choice for increased performance succession, results and retention. At Peoplesmith Global, we view coaching strategically as an accelerated delivery channel for change and a critical component of talent management and human capital succession; coaching is transformative learning. By combining the content of EQ with the process of coaching, we accelerate the learning of key leadership skills. The vast majority of major corporations today are providing coaches for their leaders and finding significant returns of their investment.
Development has become the new compensation. Global markets, technology and workforce demographics create discontinuities for winning in the competitive market. Stepping into alien cultures, forging new delivery channels and bridging the human element in virtual teams are the critical success factors in a flat world. Every dollar invested in coaching and development provides a quantitative and qualitative return in attracting, deploying and retaining talent.
While training is important for development of skill, coaching leads to behavior change. When coupled with training, coaching has been shown to add nearly four times the impact of training, increasing behavior change from 22% to 80% (Olivero, Bane, & Kopelman, 1997). A study by Manchester, Inc. showed an average return on investment of 5.7 times the initial investment in a typical executive coaching assignment, or a return of more than $100,000. Further, when the indirect benefits are included, the return jumped to 788%.The study also showed increases in:
Executives who have been coached report:
At the highest levels of the organization, softer skills contribute up to 90% of a leader's success and translate more directly into productive relationships and business results. Good technicians, promoted into managerial positions rise to the level of their intellect, and get stuck at a plateau when their arsenal of skill doesn’t allow them to master themselves and work through others. Some of the hard, bottom line results achieved with the addition of EQ are:
More than pay or perks, employees evidence a higher level of productivity, creativity and longevity as a result of effective relationships with their immediate manager/supervisors. In effect, employees want from their employers the same things that children want from their parents: Clearly defined limits on their authority and directives, evidence that managers genuinely care about them and validation and affirmation of their capabilities and contributions (Gallup).
Factual data and intellectual knowing are not enough; we need emotional mastery to create context, discern, process and make qualitative decisions. Leaders with Emotional Intelligence inspire performance beyond the global commodities of obedience and diligence to an impassioned momentum to innovate, and create intangible assets. Leaders increase the return on human capital assets. To energize and service an asset that is characterized by emotions, memories and its own volition, leaders must master their own emotional intelligence and inspire initiative, creativity and passion.
“Employees join companies and leave managers.” Strong leadership breeds employee engagement and affiliation such that a 5% increase in customer loyalty drives profit by 25%” -The Service-Profit Chain
Talent drives the bottom line. Effective leadership inspires both the rational and emotional component of human capital. Engagement drives profit by increasing productivity while affiliation reduces cost by increasing retention. Both create value that travels through the talent chain from loyal employees to satisfied clients.
Leaders hold the power of leverage in the organization. They are the opportunity capital that drives performance by influencing values through the organization.
The Leadership Multiplier™ illustrates this dynamic in organizations that are linked in networked relationships. A leader tacitly influences more than 70% of behavior in organizations.
A leader impacts an average of 12 people in his or her vertical network who impact another 12 people vertically, or 12N. Lateral social networks average as many as 20 or more people who influence 20 others who influence 20 more, or 20L. The exponential impact of leadership behavior in organizations lead us to conclude:
The Impact of One Leader is:
12N (N = # of people in vertical organizational levels)
x 20L (L = # of people in lateral social networks)
x 70% (learning influenced by leadership)
= Potential Impact of One Leader