Business Trends: Coaching

Key Competencies for the 21st Century

With a recently published book called How to Develop Leadership Competencies and a new program to train “master coaches,” IESE Professor Pablo Cardona says managerial coaching on competencies is the wave of the future. While his brand of coaching comes just in time for some businesses, he explains that others still have a long way to go.

In the Hollywood blockbuster Gladiator, there is a telling scene in which Commodus (played by Joaquin Phoenix) confronts his father, Caesar, demanding to know why he has been passed over as heir to the throne, in favor of the honorable Maximus. His father explains that his son lacks what it takes to be a good leader – notably, the four chief virtues of wisdom, justice, fortitude and temperance.

“But I have other virtues, father,” says Commodus. “Ambition. That can be a virtue when it drives us to excel. Resourcefulness. Courage. Devotion.”

Caesar shakes his head sadly, “Your fault as a son is my failure as a father.” Or put another way, as a manager.

Commodus responds by killing his father, showing his ambition and resourcefulness, if not his courage and devotion.

That exchange sums up much of what is wrong with management in the 21st century, according to IESE Professor Pablo Cardona, who uses the scene from Gladiator in his class on Managing People in Organizations.

“In the United States and Europe today, we have more sons than gladiators,” says Cardona. “The Western creed of ‘If it feels good, do it’ has produced a generation of immature managers who lack the fundamental habits of good leaders – what used to be called virtues.”

Yet, according to Cardona, old-fashioned virtues such as wisdom, justice, fortitude and temperance are coming back into vogue, albeit couched in more corporate-friendly terms such as decision-making, integrity, self-control and emotional intelligence. Increasingly, the business world is recognizing that good management is not just about achieving bottom-line results in the short term. It’s also about developing good habits to ensure success long into the future.

Yet how can businesses stuck in yesterday’s mentality take the necessary steps to begin to develop the talent of their people? That’s where people like Cardona come in: “I am teaching and working on developing managerial coaching or professional coaching … there is no exact name for it. It’s the coaching that managers have to do as part of effective management.”

A Fast-Growing Field

Managerial coaching may be a relatively new phenomenon, but it is widely considered one of the fastest growing disciplines in business and is a buzzword in boardrooms around world. Cardona first encountered it 10 years ago, when the area of managerial competencies started taking off.

He explains, “The world of competencies, which started to develop in the 1990s, says that you must look at not only what you achieve, but how you achieve it. Suddenly, the managerial world realized that they were responsible not only for results, but for other things also – one of the most important being the development of their people. And this makes a lot of business sense. You got the results in the past, OK, fine, but how prepared is your organization for getting results tomorrow? Is your organization better able to get results tomorrow? Competencies look at your capabilities for the future.”

Inspired by IESE Professor Juan Antonio Pérez López who predicted that what he called “managerial virtues” would be the growth area of the 21st century, Cardona began working alongside companies to develop competency systems. “But then I realized that having the system was useless, unless you train managers to really use it,” he says. “That’s when I got into coaching.”

Different From Life Coaching

Parallel to this was the rise of a related but different phenomenon known as “life coaching.” This pairs a coach-consultant with a business client, to help individuals improve their personal life-balance, enhance their personal skills and achieve some self-defined goals, which could be either personal or professional. From an industry that didn’t even exist a decade ago, there are now an estimated 25,000 coaches worldwide, with a recent survey finding that as many as 40 percent of Fortune 500 companies use life coaching with their executives.

However, much of this so-called “life coaching” has been derided for its association with New Age-style self-help gurus. Critics cite examples like Thomas Leonard, largely credited with founding the profession in the United States, who coached his yuppie corporate clients to answer such vexing questions as, “What color should my BMW be?” There is also a growing trend in the U.S. of psychologists closing their clinical practices to earn easy six-figure incomes coaching corporate clients via phone or e-mail from the comfort of holiday homes.
Cardona is quick to distance himself from this type of coaching, which, like most U.S.-born trends, is slowly making its way to Europe via London. “There are many psychologists who have found a money-making business offering this type of coaching. And let’s face it, there are lots of people out there who really need help. Managers are under a lot of pressure these days, and there is a lack of sources of help. Before, people had other support systems in place, such as family members, elders, mentors and spiritual advisers. As those other traditional support structures have eroded, people are seeking solutions to their problems elsewhere, and coaching fills that gap. At its most basic level, coaching is about understanding that people need support in their life. For some, having a coach has become a kind of replacement therapist.”

However, Cardona puts this kind of coaching into a different category from what he does. “A soccer coach trains people who are in good shape. Those with injuries go to the doctor. Likewise, managers should coach their people for their professional development in regular circumstances. If specific people are under stress or suffer from depression, then there are psychiatrists or psychologists who can give them the technical treatment they need.”

What does interest Cardona is helping management get the results it desires by developing people. “This is the true objective of management,” he says.

Cardona explains how coaching has evolved. “It used to be that in order to get results, managers would apply pressure, but applying pressure without anything else is dangerous. Then, during the 1990s until 2000, companies began to understand the need to control for competencies. Now, companies have the systems in place, but nothing is happening. Managers keep doing the same things as always. In most cases, they don’t care about competencies at all. Some think it’s just a stupid thing made up by researchers. So, they go back to getting results no matter what.”

“We’re now at the stage where you have two types of companies. Either you regard competencies as a very bureaucratic thing that is holding you back, or you take it seriously. To take it seriously means that managers know what to do with competencies, and they know their people and want to develop them. The next step is, how are we going to develop further? That’s where managerial coaching comes into play.”

Cardona adds that he has seen both types of companies, those that regard what he’s trying to do as an annoyance, or companies like BBVA who decided to make the competency model work.

In 2003, IESE worked with hundreds of high-level BBVA managers from different parts of the world, working with them to explain why coaching is part of their managerial responsibility. More recently, IESE led sessions for around 50 BBVA trainers, so that they could, in turn, train the next tier of management locally and internally in the art of coaching and talent development.

In this area, Cardona feels IESE has the edge, since the business school works alongside the company, equipping managers from within, rather than providing only outside perspectives. “We just don’t offer theories; we are able to consult and offer specific training, backed up by research, but rooted in real-life business practice,” he says.

He recommends employing an external coach-consultant as the exception rather than the rule. “I discourage companies from using external coaches ... It’s an artificial way to solve problems. It’s like keeping a person artificially alive with an external machine. The moment you take the electricity away, that person is dead. You need to have an internal source of talent development. Outside consultant-coaches can be brought in and help with personal problems, but for coaching on managerial competencies, the person who really understands that, in most cases, is the boss.”

He continues, “It’s part of management to understand the circumstances of your people, to understand how to help them develop their personal and professional competencies in the workplace. Maybe the manager has to redistribute some tasks, so that people can focus on specific development goals without jeopardizing the economic results of the team. The manager is the one who can understand better that maybe this person needs a different kind of project. She can handle more, or she cannot; he can take that international project or not. An outside person usually has no understanding or power to make those kinds of decisions.”

“Coaching is for those who are on the team. The coach is training the team for excellence. This is what a good manager does and always has done.”
Not a Fad

Recently, Cardona has designed a new program to train “master coaches.” The program is aimed at senior leaders within organizations who, once trained, will then cascade their knowledge, expertise and training throughout the rest of the company. Despite encountering openness to these ideas, Cardona says that the push is not coming from managers demanding more coaching in competencies, but rather, managers need to be better educated about the need for this. “We’re still at the early stages of convincing management of the importance of this field,” he says.

However, he is convinced that we will see something big happen in the field of managerial coaching, and that it won’t be long before it infiltrates other areas of society beyond business. “I can see it working well within the realm of teaching,” says the IESE professor, who has recently published a new book on the subject called How to Develop Leadership Competencies.

“Like business managers, teachers should be coaches of talent. They both have to master the dual role of judging for performance and coaching for improvement. I’m not sure how well coaching would work in other professions, but I think if it took hold in the two spheres of the workplace and education, then you would have touched a big portion of society, because most people have a boss or a teacher in their lifetime.”

Yet, like all other observers of coaching trends on both sides of the Atlantic, Cardona emphasizes, “This is not a fad. This is happening and it’s not going back.”
Cardona always starts his IESE courses on coaching by asking, “Have you ever had a good manager? Some people say, ‘Not the one I have now, but yes, I have had a good manager.’ Why was this person a good manager? Was it because he or she accomplished a better mathematical ratio of whatever objective you had, or was it because he or she helped subordinates create a learning experience?”

Cardona concludes, “The qualities you have always attributed to a good manager now need to be carried out more intentionally and more professionally. The 21st century business environment demands talent development.”