In a prior post, “Unlocking Value: The Quantifiable ROI of Executive Coaching for Private Equity Firms,” I explored the compelling financial and performance benefits that executive coaching delivers, demonstrating its significant return on investment. While the “why” of executive coaching is clear, the “how” of integrating it effectively into a private equity firm’s value creation playbook requires a strategic approach. This post will delve into overcoming common obstacles and provide a tactical guide for building a robust executive coaching program that maximizes human capital potential and drives long-term value creation.
Overcoming Barriers: Normalizing Coaching as a Strategic Asset
Addressing the Stigma: From Remedial to Reinforcement and Competitive Advantage
A significant inefficiency in private equity-backed executive access to coaching stems from the inherent “arms-length relationship” between investors and executives, coupled with the perceived stigma associated with coaching. Executives often hesitate to (or worse, never) proactively seek coaching resources, fearing that such a request might imply a deficiency or that “something must be wrong with the executive”. This perception is rooted in common stigmas, such as the belief that coaching is a precursor to termination, that seeking coaching makes a leader appear weak, or that it primarily involves receiving negative feedback.2
Beyond external perceptions, internal barriers also contribute to this reluctance. Many executives struggle with vulnerability, viewing profound openness as inconsistent with their leadership identity.1 This psychological barrier is a strategic obstacle. If executives perceive coaching as remedial or a sign of weakness, they will resist engagement, thereby undermining the investment. Overcoming this requires more than simply offering the service; it demands a deliberate cultural shift to reframe coaching.
Despite these historical perceptions, the past decade has witnessed a significant transformation in attitudes towards executive coaching.2 It is increasingly viewed not as a sign of weakness, but as a “competitive edge” for individuals serious about maximizing their impact and achieving peak performance, both professionally and personally.2
The Power of Proactive Engagement: Differentiating Your Firm in a Competitive Landscape
Enlightened private equity investors can strategically circumvent the inefficiency caused by executive hesitancy and stigma by proactively offering coaching programs by proactively offering coaching resources as a standard part of their value-creation playbook. This direct approach disarms the stigma associated with coaching and removes the burden from executives to initiate the request, positioning the PE firm as a supportive partner rather than a critical overseer.
The willingness to proactively offer coaching serves as a powerful differentiator for PE sponsors when engaging with target investment candidates. The provision of such resources signals a firm’s willingness to invest in the development of the executives they back, a compelling value proposition in a competitive deal environment. This proactive approach creates a “human capital moat” around each investment platform. In a competitive deal environment where financial terms may be similar, a firm’s demonstrated commitment to executive development becomes a unique selling proposition, attracting higher-caliber management teams and potentially securing higher-quality deals.
Building Your Coaching Playbook: A Tactical Implementation Guide
Starter Kit: A Streamlined Approach for Human Capital Centric Firms
For private equity sponsors with fewer resources or limited time, establishing a comprehensive coaching program might seem daunting. However, significant value can be unlocked by implementing a “starter kit” approach, focusing on the most impactful initial steps of establishing a coaching program. This streamlined model allows firms to begin realizing the benefits of executive coaching within their portfolio without the need for a full-scale infrastructure.
The starter kit focuses on two foundational elements of a coaching program:
- Proactively Offer Coaching to Portfolio Company Executives: As detailed in the section above, the act of proactively extending coaching as a resource, rather than waiting for executives to request it, is crucial. This immediately addresses the stigma associated with seeking coaching and positions the PE firm as a supportive partner invested in executive development. It also serves as a powerful differentiator in competitive deal environments.
- Curate a List of Coaches for Referral: Establish a list of 3-5 coaches to whom you offer to refer portfolio company executives. This list should still prioritize quality and ensure a basic level of fit, allowing executives to choose from pre-vetted options. In addition, it is wise to encourage portfolio company executives to evaluate other coaches not on your referral list. These practices provide the portfolio company executive with the essential element of choice, which is critical for successful coaching relationships. Keep in mind to be explicit with portfolio company execs that these coaches have no duty to you and that you expect that communication between the executive and coaches (both during the evaluation process and during a coaching engagement) is confidential.
By implementing these two simple steps, firms can capture a significant portion of the value attributable to a coaching program and begin to foster a culture of development, paving the way for more comprehensive programs in the future as resources and time allow.
Additional Program Elements for A Comprehensive Coaching Program
Once the foundational “Starter Kit” elements are in place, larger firms with more resources can create a more extensive list of coaching resources and implement additional program elements to establish a more robust executive coaching program..
- Establish a Transparent and Flexible Rate Card Structure: Creating and maintaining a rate card for coaches participating in the PE sponsor’s program is a practical step that brings transparency into each executive’s selection of a coach. It is important to acknowledge that not all coaches will offer their services at the same price; variations are expected and can even be a factor in an executive’s selection process. Coaching costs vary significantly based on several factors: the coach’s level of expertise and proven track record, the executive’s seniority (C-suite coaching commands higher fees due to greater complexity and business impact), the structure of the engagement (hourly sessions, structured packages over several months, or ongoing retainers), and the total duration of the coaching relationship.1 The point of establishing and maintaining a rate sheet is not for the purpose of the private equity and venture capital firms negotiating rates, but rather to empower portfolio company executives in making price-informed decisions that balance the quality and fit, experience of the coach, and cost.
- Foster Open Communication and Monitor Progress for Continuous Improvement: Maintaining open communication with executives about their coaching process and actively monitoring the program’s progression through regular check-ins is essential. This active involvement provides the PE sponsor with a valuable role in the coaching process and generates feedback that can inform better matching of executives with coaches in the future.
It is paramount that confidentiality remains a cornerstone of the coaching relationship.3 While monitoring progress, the PE firm must respect the confidential nature of individual coaching conversations. The goal is to ensure the program is delivering value and to provide feedback for future coach-executive matching, not to micromanage the coaching content. This delicate balance is key to maintaining the trust essential for effective coaching.
The PE sponsor would also be wise to check in with each coach on its roster periodically (I suggest no less than annually) to discuss progress with individual executives, changes in service rates, and to re-evaluate the fit of the coach with the PE sponsor’s coaching program objectives.
Conclusion: Investing in Executive Coaching is An Investment in Value-Creation
In the contemporary private markets, human capital, particularly the strength and capacity of executive leadership, stands as a pivotal, yet often underleveraged, driver of value creation.
The evidence is compelling: executive coaching leads to demonstrably enhanced individual performance, fosters improved leader wellbeing and mental toughness, and creates a positive ripple effect that transforms team dynamics and organizational culture. These improvements translate directly into significant financial returns, as evidenced by impressive ROI figures, substantial productivity gains, and measurable improvements in employee retention.
A proactive, well-structured executive coaching program offers a distinct competitive advantage for private company investors. Such a program is not merely a perk but a sophisticated, data-driven investment in value creation. It differentiates a private equity, growth equity, or venture capital firm in the highly competitive landscape of deal sourcing, attracting top-tier talent by signaling a genuine commitment to executive development. Furthermore, it mitigates critical human capital risks, ultimately maximizing the potential for increased portfolio company valuations and exit values.
I urge professional investors to recognize executive coaching as a strategic imperative and to formally add coaching to their value creation playbook. Investing in the “whole human and leadership capacity” of executives is a direct and highly effective investment in future value and sustained competitive advantage. This approach transforms human capital from an unmeasured cost center into a powerful engine for growth and long-term value creation.
Works cited
- Benefits of Executive Coaching – Feinberg Consulting, Inc., https://www.feinbergcare.com/benefits-of-executive-coaching-2/
- 3 Stigmas and Solutions in Executive Coaching | DHR Global, https://www.dhrglobal.com/news/3-stigmas-and-solutions-executive-coaching/
- How to Create an Internal Executive Coaching Program – Simply.Coach, https://simply.coach/blog/internal-executive-coaching-benefits/
