Focus on Assets, Manage Liabilities

In my last two coaching blogs, I discussed the concept of a balance sheet applied to coaching.  I ended one blog with an important principle central to coaching:  that coaching is more effective when coachees focus on their assets rather than their liabilities.  This principle runs counter to conventional wisdom. Most people are acutely aware of their liabilities. In an effort to improve, they focus their energy on trying to overcome these liabilities.  Liabilities are viewed as blockers to success, so it is natural that people try to eliminate them.  Data suggest that working on eliminating liabilities has not proven to be very effective.  At best, we may see some improvement.  But what If we were to spend most of our time leveraging our assets rather than working to eliminate our liabilities?  How much more could be accomplished in the same time period?  This question needs to be answered through research.  Anecdotally, there are lots of examples that suggest working on assets is the better approach.  Such is the case of Kevin, described below.

Kevin is the head of a major North American distribution company.  He is introverted and soft spoken. Some see these attributes as liabilities when it comes to inspiring or motivating others.  Kevin’s lack of charisma could be a serious challenge to his ability to lead his team and the organization. His coaching involved creating a balance sheet based on a 360-degree feedback study that Kevin requested.  From this feedback, reflection on past experiences, and the Strength Finder, an assessment of strengths based on research done by the Gallop Organization and first reported by Buckingham and Clifton in their 2002 book, “Now Discover Your Strengths,” Kevin was able to identify his assets and liabilities. What Kevin was encouraged to focus on was his assets.  The assets that stood out were strategic focus, a thorough understanding of the business operation, trust, and integrity. 

Rather than trying to eliminate his liabilities, Kevin developed a plan to leverage his assets.  This was accomplished by sharing his vision and how he was going to help the company reach new heights with his team.  He also shared his balance sheet and identified those on his team who could help him manage his liabilities.  His team embraced his plan and gave him full support.  He was able to find more extroverted associates who became his spokespersons in communicating his vision and strategy for the company.  Kevin still addressed the workforce at town meetings, but he was clearly not as enthusiastic or animated as his appointed associates. Kevin was respected for his assets and his willingness to involve his team. His team admired his openness and willingness to share in the leadership of the company. As a result of Kevin’s leveraging his assets and managing his liabilities, the company had record years of sales and profitability.  His corporate leaders were impressed with Kevin’s leadership and promoted him to take over worldwide distribution.

Acknowledging and sharing assets and liabilities was important for Kevin.  While such public acknowledgement is a demonstration of human vulnerability, it has the power to lead to much stronger executive performance and positive organizational results.  Kevin was able to leverage his assets to move his company forward.  He also managed his liabilities through partnering with members of his team. The combination of leveraging his assets and managing his liabilities enhanced his leadership and performance.

Advantages of Balance Sheets as a Coaching Tool

In my previous coaching blog, I introduced the concept of a “balance sheet” as applied to coaching.  You may ask the questions, “Why balance sheets?” or “What advantages do balance sheets have over the more traditional methods of providing feedback on performance?”  In this blog, I will explain several advantages in support of the balance sheet approach to coaching.

Companies have a long history of basing performance feedback to their executives on failure to perform, weaknesses, or negative attributes.  This “norm” is based on the belief that if people could eliminate their negative attributes and behaviors, their performance would improve.  While there is logic to this approach, it has had negative consequences.  Let me offer an example.

Most executives dislike conducting performance reviews.  When asked why, a leading reason given is their discomfort in communicating negative information.  This reluctance in giving negative feedback may be due to avoidance of conflict or apprehension of disagreement with the recipient in response to negative feedback. By avoiding frank, candid feedback or by dressing feedback up to be less negative, the opportunity of improved performance is diminished.

From the perspective of the executive under review, is it okay to be open with weaknesses?  I believe most executives hide their weaknesses out of fear that the company will see them as weak or withhold opportunities for advancement if their weaknesses are revealed. This is one reason I chose the balance sheet as a method of sharing candid information.  By avoiding language about strengths and weaknesses, which are value judgments, feedback becomes less defensive and more positive.  It is much easier to accept the concept of a balance sheet of assets and liabilities than strengths and weaknesses.  This allows executives to view their effectiveness much like a financial balance sheet and not a personal critique of their value to the company. 

Executives seem to like the metaphor of a balance sheet for another reason. Rather than dealing with negative thinking, they prefer to think in terms of increasing their net asset value, thereby putting themselves in a better position to succeed.  They also prefer using a common business term to understand what is working for them and what may be holding them back or inhibiting their success.  This language offers more flexibility in creating change, as we will see when we address the principle of leveraging assets to overcome liabilities. 

To summarize, the concept of a balance sheet of assets and liabilities has several advantages over traditional feedback methods. It opens the door for a more candid, less defensive and flexible way of creating positive change in behavior.  The balance sheet concept offers coaches a powerful tool to help coachees improve their performance.

Using a Balance Sheet as a Vehicle for Change

 The accounting profession uses balance sheets to identify financial assets and liabilities of a company.  The greater the company’s assets relative to its liabilities, the healthier the company.  I borrowed the concept of a balance sheet as a method of assessing a coachee’s personal and work attributes.  A coachee’s balance sheet is a way of organizing attributes that either help or hinder a person from reaching his or her goals.

There are several methods of building a balance sheet.  These include:

  • Reflections of the coachee’s past experiences
  • Insights of the coachee
  • Behavioral  assessments
  • Insights gained from coaching sessions

Building a balance sheet is a continuing process.  It needs to be revisited and applied as an integral part of the coaching process.

Most coachees are not aware of their assets.  Even if they are aware of a skill or talent, they rarely understand how to effectively use their skill or talent to enhance their success.  Let me offer a personal example. 

I love analogies. I think with analogies. I use analogies to explain concepts.  I also used analogies to test both undergraduate and MBA students about concepts they were learning in my courses. I got complaints from some students who thought my analogy questions were unfair.  I discounted these complaints, thinking that the analogies were so simple that any student should be able to understand them.  What I was unaware of was that I had a way of thinking with analogies that others did not share. And, by using this way of questioning their knowledge, I was effectively setting them up for failure–not because they misunderstood the concept I was examining them on but because they were not able to understand the process I used to examine their thinking.  If I had realized that my use of analogies was not universally understood by others, I would have chosen another method of examining students.  My point here is that an attribute that could have been an asset if I used it appropriately was actually a liability because I assumed others had the same attribute. 

Understanding our assets gives us an opportunity to leverage them as a method of reaching our goals. Not understanding our assets can limit our ability to reach goals.  As an executive coach, I strive to help my coachees to become aware of their assets and learn how they can leverage them to become successful. 

From many years of coaching, I have concluded that people are more aware of their liabilities than their assets.  We seem to be conditioned to see our negative side.  It is important that we are aware of our liabilities. We need to learn how to manage these liabilities so they do not derail us in pursuing our goals.

Examples of liabilities are being overly critical, bossy, too direct, or being unaware of how others respond to you.  A few years ago, I coached a female coachee who was very competitive.  She had always been told that this was a negative attribute for a woman and she should learn to reign in her competitive behavior.  Indeed, this posed a problem for her.  She didn’t seem to fit in a large company environment.  It was a revelation to her that her competitiveness could be an asset as a business owner.   Rather than changing her behavior, she was able channel her so-called liability into an asset by redirecting her career.  Today, she is a successful owner of several franchise businesses.

This discussion of assets and liabilities leads to one of my major principles of executive coaching.  The role of a coach is to help coachees leverage their assets and manage their liabilities. By building the coachee’s balance sheet, the coach can create dialogue around how to use assets more effectively while managing liabilities to keep them from preventing success.  In my next blog, I will give examples of how the coachee’s balance sheet can be a vehicle for change.


Reflection: A Closer Look at Creating Change



In my last blog, I discussed how reflection can help promote change.  By recalling experiences, the coachee recreates situations that offer clues about how the coachee thought and acted at the time the situation occurred.  As before, I will use an example to help illustrate this point.

One of my coachees reflected on a situation that occurred when one of his employees failed to meet a deadline on an important project. The situation turned tense, and my coachee became angry, condescending, and demeaning toward this employee. He later learned that the missed deadline was due to circumstances outside the employee’s control. One of the coachee’s goals was to be approachable and fair with his management team. By recounting this experience, he was able to reflect not only on what he did wrong but also to consider alternative behaviors that would have been more fruitful in understanding the reasons for the missed deadline. Reflection allowed my coachee to realize he had missed not only the opportunity to solve a problem but had also fallen far short of his personal goal of being approachable. We next turned our attention to how he was going to reestablish positive rapport with his employee.

Here are some additional questions that helped in this case and will always help the coachee reframe reflected experience:

  • “What did I learn from this reflection and analysis?”  
  • “What mistakes could I have avoided by choosing a different approach?” 
  • “What could I have done differently that would bring me closer to a desired outcome?” 

Reflective coaching does not stop at recalling and analyzing past experiences; it also seeks to model desirable behavioral patterns.  Applying the new behaviors gained from reflection will enable the coachee to experience whether or not the new behaviors will lead to desired outcomes. Successful change will result from reframing reflections and applying and practicing new behaviors in new situations. It is not enough to reframe a situation in a coaching session. Applying the new behavior in new situations in real time is the true test of successful change.

Reflection: A Dynamic Method for Change

One technique to facilitate change discussed in my book, “Executive Coaching and the Process of Change,” is reflection.   Here is an example to illustrate how reflection was used to help a coachee develop stronger teamwork in his department.

 Bob was an aspiring executive in his family business. He was struggling to develop his department into a cohesive unit. His coach asked him to reflect on previous experiences with dysfunctional teams.  At first, he could not recall a negative group experience. With some prompting from his coach, he related his experiences playing professional basketball in Europe. He had been a college star basketball player and spent two years in Europe playing professional basketball.

 His experience in Europe left him discouraged about team play. His teams were dysfunctional and never jelled as a unit. The result was a poor record and a bad experience. When he described what happened, he related that the teams were made up of players from different countries, speaking different languages. The consequence of these heterogeneous groups was poor communication and every player independently working on his own agenda.

 We talked about what could have helped the team, and he came up with several suggestions, such as more team meetings, interpreters to help overcome language barriers, stronger emphasis on team play, and better preparation for rival teams. All suggestions were aimed at investing time and energy into building a stronger team. Using these suggestions, he began to see how things may have been different if this approach had been applied to his basketball teams. His insight helped him to develop a new approach to his current work team. He agreed to make changes based on his reflections and ideas that could help develop teamwork in his department.  At our next meeting, he articulated how he applied this new approach and the initial positive reception he received from team members. Several weeks later he reported a major breakthrough in aligning his team toward group goals.

The insights gained from reflection can be powerful.   Through practice and continued reflection with a coach, newly learned behaviors can be established to replace old behaviors that were less effective.  The coach and coachee need to continually monitor whether the new behavior is making a difference, and modifying the approach as needed. Recognizing and acknowledging progress is rewarding and will serve to reinforce change. This progress should be documented and kept on record to provide evidence of change.

 In summary, reflection works in coaching by articulating the coachee’s experiences, both past and present. The coach will need to ask probing questions to help the coachee gain a deeper understanding of the experience.  Creating new approaches to the reflected experiences will help the coachee to conceptually apply new behaviors to the reflected experience. Finally, applying the new behaviors to new situations, along with continued feedback about its effectiveness, will increase the likelihood that the change will be reinforced and sustained.


The Process of Coaching – A Case Study

In my previous blog, I described how the coaching process creates tension that, when resolved, leads to change.  I would like to present a case to help illustrate this process.  The coachee is the CEO of a growing manufacturing business.  He had just won a government contract for a million dollar order.  This was a very exciting, significant piece of business.  It also would require several hundred thousands of dollars of working capital to finance the order.  The company had a stellar credit rating with its bank so the CEO expected to borrow the working capital without any problem.  The loan officer of the bank had worked with the CEO for many years and they had a strong relationship.  So, when the loan officer delivered the message that the bank would not finance the working capital needed for this order, the CEO was livid. This was exacerbated by the loan officer suggesting the CEO, who was also the majority owner, finance the order by putting more equity into the company.  In his coaching session he expressed his frustration and anger toward his bank. He kept asking how they could let him down when he had been a long term, financially healthy company.  He also expressed a desire to change banks.

From a coaching perspective, the CEO was already full of tension. Unfortunately, this tension was aimed at the bank and not resolving his problem. The first step of the coaching process was to redirect the CEO’s tension by refocusing him on how he was going to finance the pending order.  Having some insight about how banks operate, the coach began asking questions about the current loans with the bank.  The company had all of its banking with this bank, including the mortgage of the building which was owned by the CEO and family members, equipment loans, an asset based, unsecured credit revolver loan for working capital, and the home mortgage of the CEO.  Further questioning led to the revelation that all the company and CEO loans resided in the small business loan group. Total interest and fees paid amounted to several hundred thousand dollars a year.  Then the coach asked questions that could, if true, lead to a confrontation with the bank.  “Do you think your total debt is high for the small business section of the bank?   Can you think of any reasons why your bank officer is reluctant to move you into the next level at the bank?  These questions raised serious concerns about how the bank viewed the CEO’s company and a possible explanation of why the loan was denied.  This conversation helped the CEO reframe being turned down for the loan.

Less angry and determined to confront the loan officer, the CEO asked for a meeting and an explanation of why the company was denied the loan.  He got the answer he expected.  The total indebtedness of the company would have required the loan officer to go to a committee that would probably deny the loan or recommend that account be moved to the mid-level lending group.  This could have had the consequence of changing loan officers.  It could also lead to the loss of business for the small business lending group, along with less income for the loan officer.  In a much stronger position, the CEO negotiated a loan, based on his loaning the company a third of what was needed and the bank financing the rest.  The tension was greatly reduced and the banking relationship was back to normal.

Looking back, two important shifts led to the desired outcome for the CEO and for the bank.  First was the shift in tension from anger with the bank toward trying to understand the reasons for the bank decision and focusing on how to finance the pending order. The second shift was in the negotiating power of the CEO.  This was influenced by the coach’s questions and the resulting insights gained by the CEO. In confronting the bank about how its internal politics were affecting his business, the CEO was able to gain concessions that would not have been possible if he had acted on his original frustration and anger.  And, the CEO was able to maintain the relationship with his loan officer who he really liked.

The Process of Coaching—Creating Tension and Probing Reality

The goal of coaching is to create change.  I have proposed that change can be realized through positive tension between desired outcomes and current reality.  Let’s explore the coach’s role in creating this tension. If the coachee already feels tension, the role of the coach is to create clarity around the desired outcome and the current state of affairs.  Clarity will be realized through asking questions that help the coachee focus on important, highly valued outcomes. Equally important is a thorough understanding of the current situation. How do coaches know what questions to ask? In my book, “Executive Coaching and the Process of Change” I present a model identifying four sources of information that help in asking clarifying questions.  I strongly believe that behavioral assessments give the coach a head start in learning how the coachee thinks and responds to work related situations.  Other sources of information come from the coachee’s insights shared with you, reflections of previous experiences provided by the coachee, and what you have already learned from previous sessions with the coachee. By helping the coachee identify clear goals and clarity about the  current situation, the first step in the coaching process is established.

If tension needs to be created, the second step is to identify the gap between desired outcomes and the current situation. This gap is essential to motivate the coachee to action  Body language and verbal responses from the coachee should offer a pretty good indication of tension,  Once tension is established, the coach plays a more subtle but just as important role. Let me explain.  When a gap is established, the coach will ask probing questions designed to get a deeper understanding about how the coachee approaches the gap, how the coachee intends to close the gap. and how the coachee has responded in the past when dealing with similar circumstances.  This probing will lead to several possible outcomes. Some responses may lead to dead ends. In other words, these responses were not helpful in closing the gap. Other responses may be leads with very little emotion or tension reduction. And then there are the “hits” when the tension is strong. This is when the coach senses that a “nerve” has been struck; when probing leads to breakthroughs.  This is also when the coachee gains insight about what is creating the gap.  It is important to note that although the coach asked the questions which led to the insight, it is the coachee who owns the insight.

What I just described is a coaching process that creates and then reduces tension through a process of asking probing questions.  A coach will never have enough data to support a more calculated approach.  Choosing what questions to ask needs to be determined by what you already know about the coachee and what additional information he/she gives in the coaching session. While it may seem that the coach has no agenda or preset questions, this is far from the truth. Effective coaches use the coachees responses to guide their questions,  A coach’s preparation is being familiar with the challenges or opportunities confronting the coachee, being attentive and having a strong intuitive sense about how to ask questions that lead to insights.  And, the coach does this in a way that allows the coachee to do the “heavy lifting”.

One last point.  It takes many hours of practice to get comfortable and confident in the process described above.  Most aspiring coaches struggle with the lack of ready to be asked questions.  It takes confidence in the process to get comfortable with allowing the dialogue to shape the questions.

Is the creation of constructive tension a part of your coaching process?