Why Coaching is More Effective than Consulting for Improving Long-term Business Performance

Introduction

When it comes to improving business performance and efficiency in an organization, one strategy that is often considered is to hire external consultants. However, the downside of this approach is that when the consultants leave, they take their expertise and knowledge with them. This can make it difficult to sustain the changes they have implemented.

An alternative approach to consider is coaching. Coaching is a collaborative process that helps individuals and teams reach their full potential. It focuses on developing competencies, building confidence and fostering a growth mindset. In addition, coaches can provide ongoing support and accountability to ensure that progress is maintained.

In this article, we will take a closer look at the differences between consulting and coaching, and why you should consider using coaches instead of consultants to improve your organization’s performance now and in the future.

Defining Consulting and Coaching

The International Coaching Federation (ICF) defines coaching as “partnering with clients in a thought-provoking and creative process that inspires them to maximize their personal and professional potential“.

The most common form of consulting is management consulting, defined as a professional service that helps organizations improve their performance and efficiency by providing expert advice and guidance.

While coaching and consulting may sound similar, in practice they are quite different, as consulting is most often delivered through contractors who are hired on a temporary basis to provide specific services or carry out specific tasks. In contrast, coaching is more focused on helping individuals and teams achieve their goals and objectives, rather than providing advice and guidance to the organization as a whole.

The Growth of the Consulting Industry

The management consulting industry has grown significantly over the past 20 years, with the global market estimated to reach $263.41 billion by 2024. The IT consulting industry is estimated to be worth $647.4 billion in 2020 and is expected to reach $822.0 billion by 2027, growing at a CAGR of 3.5% (Statista).

The so-called Big Four – Deloitte, Ernst & Young (EY), PricewaterhouseCoopers (PwC) and KPMG – have become household names. These firms have steadily growing revenues and operate in almost every country in the world in both consulting and coaching, employing thousands of people (Statistica), and regularly use subcontractors as consultants.

The Challenges of Consulting

Organizations turn to external consultants for their expertise and knowledge of industry best practice, but successful implementation is often elusive. Differences in culture, values, resources and external factors can make it difficult to transfer a successful practice from one organization to another.

Moreover, consulting engagements from large consulting firms typically run into the tens of millions of dollars, but success rates drop precipitously once projects exceed $1M. Projects costing more than $10M have a dismal success rate of 14% (Standish, 2018).

These engagements most often involve a large IT component staffed by IT consultants who, due to the nature of the contractual relationship, rarely fully understand the intended business outcomes and customer impact, leading to a failure to fully integrate the desired changes into the organization.

An example of this is the recent layoff of more than 1,000 agilists at CapitalOne. The reason given for the dismissal was that the agilists were not integrating agility skills across the organization. Unfortunately, whether it is employees treated as consultants or external consultants, such changes often have a temporary rather than a permanent impact. CapitalOne is now trying to figure out on its own how to have the impact it hoped the agilists would have.

Why Consider Coaches Instead

Coaches differ from consultants in their approach and focus. While consultants provide advice and guidance to organizations, the coaching approach focuses on helping individuals and organizations build internal skills and competencies, making it a more sustainable solution for long-term performance improvement.

The majority of coaching engagements focus on personal and professional development (79%), while a smaller percentage focus on business or organizational development (11%). Coaches help individuals develop the skills and confidence to tackle problems themselves, rather than simply providing technical solutions.

According to the International Coach Federation (ICF), the majority of coaching clients are satisfied with the services they receive, with 99% saying they are satisfied or very satisfied and 96% saying they would repeat the process.

In addition,

1. Coaching has been proven to have a positive impact on business performance in terms of increased revenues and profits, better customer service, improved employee morale and productivity, and enhanced team effectiveness (Burchard, 2018).
2. According to a study conducted by the American Management Association, organizations that invested in coaching for their employees saw a 529% return on investment (Hansen, 2019).
3. A study of over 500 executives found that 94% of executive coaching clients saw positive results from the coaching, including improved communication, better team productivity, and improved leadership skills (Kellerman, 2016).
4. A survey of 1,000 business owners found that 83% of them said coaching had a positive impact on their business performance (Hansen, 2019).
5. An independent study of over 200 organizations found that those who used coaching saw an average improvement in performance of over 20% (Geller, 2018).

While consulting is still useful depending on the context, organizations are first and foremost their people.

I worked as a consultant for close to 20 years, and it is an honourable profession. Yet, when it is used more in the staff augmentation sense while being portrayed as offering independent advice and guidance, it will not contribute, in my experience, to long-term business performance improvements. If on the other hand, the remit for the consulting engagement is to guide employees toward developing the competencies the consultants bring with them, then it can be a very powerful way to integrate their guidance with that of coaches working with the same individuals and teams.

While the most common form of consulting focuses on improving things, coaches focus on helping people improve, which will have a far longer-term positive impact on your organizations overall business performance. If the two can be used to compliment one another to fast-track employee competency development, it can prove to be a powerful combination.

Getting Started

To get started on maximizing the potential of your people and your organization, contact Jason Beres to get your team onto The Hive, and Larry Cooper to learn more about Strategic Diversity Analytics and how it can maximize your investment in coaching.

About The Hive Professional Network

At The Hive, we are committed to providing people and organizations with the insights, coaching, and mentoring they need to become who they are meant to be so they can realize their true potential in work and in life. To do this we are building an ecosystem for coaches and those seeking coaches to find their perfect match through our proprietary matching algorithm, unique platform, and strategic partnerships.

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Author

Larry Cooper is the Chief Strategy Officer and A/CTO at The Hive Professional Network.