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?

Will Executive Coaching be the “New MBA”

In the past, coaching had gained the reputation as a last resort for failing executives. If executives were assigned a coach, it was often seen as a signal that they were in trouble because of failure to meet expectations or bad behavior. Coaching was also perceived as delving into the personal life of executives, raising concerns that coaching was akin to therapy. In fact, some coachees call me their “shrink” or “Doc” and refer to coaching sessions as psychological tune-ups.

The fact is, executive coaching does address gaps in executive behavior and performance and it is about psychological change, But the perceptions that coaching is reserved for executives who are at risk and that it is therapy are misguided and need to change.

Executive coaching is a dynamic process designed to help executives learn new roles and behaviors that will enhance their knowledge and skills of leadership and problem solving. Today, when an executive is chosen for coaching, it is usually because the sponsoring company is investing in the coachee, This investment is usually a sign of optimism that the executive is coachable and will be more effective as a result of coaching,

The idea of coaching likely evolved from athletics where coaches are hired to help improve performance. Athletic coaches observe athletes and offer advice on how to change habits that interfere with or prevent optimal performance. A coachable athlete is motivated to re improve, thus willing to spend the time and energy in learning and practicing new ways of performing, Effective coaches have a good grasp of methodologies that help athletes to change. It is important to acknowledge that almost all successful athletes work tirelessly with their coaches to improve their performance.

There are no schools that offer degrees on how to become a successful executive.  And, after decades of failed training programs, seminars and hiring MBAs as potential leaders, it became obvious that the so-called “soft” skills like emotional intelligence were not taking hold with the executives responsible for leading companies. Something more intense and developmental was needed to eliminate ineffective behaviors and to replace them with more effective behaviors. This has led to the realization that the coaching, which had been so effective in helping athletes to improve performance, may also help executives to perform better.

The stigma of only coaching executives who had failed began to give way to coaching for maximal performance. Learning how to lead, engage, delegate and empower earned their respect alongside technical and critical thinking skills. Executive coaching has become the preferred method to help executives master these behaviors. Unlike athletics, executives need to apply their skills in the context of an ever-changing, highly complex business environment.

It will take time to reverse the negative perception of coaching, particularly in traditional industries and smaller companies. Executive coaching needs to demonstrate its effectiveness to gain momentum in creating healthier, sustainable companies.

So, will executive coaching be viewed in the future as important as the MBA is now perceived as the route to top jobs in organizations?