Is coaching a strategic or soft leadership style?

In the workplace, leadership styles are evolving, with the coaching approach now becoming central to many organisations. While some view coaching as a “soft” or people-oriented style, evidence increasingly shows its strategic importance, especially as businesses navigate complexities characterised by the BANI and VUCA frameworks.

What is a coaching leadership style?

A coaching leadership style focuses on fostering individual growth by guiding team members towards their professional goals rather than solely directing or controlling them. Leaders who coach often engage in one-on-one interactions to understand and nurture the skills, aspirations and motivations of their teams. This approach goes beyond merely achieving short-term objectives; it aims to unlock the long-term potential of individuals, aligning personal growth with organisational success.

According to the International Coaching Federation (ICF), companies that use coaching see an average return on investment of seven times the initial cost, a statistic that underpins the tangible benefits of the coaching style in fostering both individual and organisational growth. By investing in this leadership style, companies report improved employee retention, performance and a more resilient workforce which is better prepared to adapt to changing demands.

Why coaching is essential in today’s complex environment

Modern business environments are often described using frameworks like VUCA (volatility, uncertainty, complexity, and ambiguity) and BANI (brittle, anxious, non-linear, and incomprehensible). These models depict the unpredictable and fast-paced world that many organisations operate within, and in these contexts, employees need leaders who provide more than instructions. They need support to build resilience, develop skills and continuously adapt.

Coaching offers a strong response to these pressures by empowering teams with adaptability and self-reliance. In BANI and VUCA environments, leaders can struggle to make quick decisions alone. A coaching style that develops the team’s decision-making and problem-solving skills is critical for more sustainable success. When employees are equipped to adapt independently, leaders can delegate more effectively, focusing on strategic goals without micromanaging.

Prominent leaders who embody a coaching style

Some of the world’s most respected leaders exemplify the coaching approach.

Indra Nooyi, the former CEO of PepsiCo, is a prime example. Known for her personalised, empathetic leadership, Nooyi focused on developing her team’s capabilities and potential. She often attributed her success to creating a workplace that encouraged open communication and constant learning, fostering a high-performing, resilient workforce.

Similarly, Microsoft’s CEO, Satya Nadella, is celebrated for his coaching-oriented leadership, which has been instrumental in transforming Microsoft’s corporate culture. Under Nadella, Microsoft shifted from a competitive “know-it-all” culture to a “learn-it-all” mentality. This change resulted in significant performance improvements, including growth in Microsoft’s market value and the re-establishment of the company as a leading innovator. Nadella’s leadership highlights how coaching can drive not only personal growth but also organisational success, emphasising its strategic value.

The strategic impact of coaching in leadership

Research underscores the effectiveness of the coaching leadership style. Gallup, for instance, has reported that teams or business units with high levels of engagement (often a product of good coaching) show 23% greater profitability, along with higher productivity and lower turnover. When employees feel supported and engaged, they contribute more creatively and take the initiative, directly influencing organisational success.

In an increasingly knowledge-driven economy, where agility and innovation are paramount, coaching enables employees to become self-starters. Rather than relying solely on top-down decision-making, teams are encouraged to bring their own solutions, which drives innovation and adaptability. This strategic value is particularly visible in industries that face rapid technological advancements or shifts in consumer demand, as empowered teams can respond swiftly and effectively.

Coaching leadership style: Collaboration over competition

Another reason coaching is highly strategic is its impact on senior leadership team dynamics. Research by Next Advisors as reported recently in Harvard Business Reviewhas highlighted that senior teams often struggle with collaboration and cohesion, leading to internal dysfunction. Coaching addresses this by promoting open dialogue and mutual respect, which helps eliminate toxic competition and unproductive power struggles. In place of the often-cutthroat dynamics of competitive environments, coaching encourages alignment and cooperation. Leaders focused on coaching invest in building trust within their teams, ensuring that each member feels valued and motivated to contribute constructively.

In Nadella’s Microsoft, this shift was pivotal. Instead of teams working in silos, they were encouraged to collaborate across departments, aligning their efforts to meet shared goals. This approach not only improved team morale but also made strategic initiatives easier to implement, as teams were more willing to work together to achieve Microsoft’s broader vision.

Why coaching is neither soft nor rigid

Critics sometimes argue that coaching is a “soft” leadership skill. However, the clear organisational benefits of coaching challenge this view. Effective coaching enhances decision-making, boosts resilience and improves employee performance - all critical components of a sustainable business strategy. As we have seen, much research suggests, a well-coached team experiences less dysfunction, which directly impacts an organisation’s ability to execute strategies efficiently.

In today’s global business environment, where navigating change and complexity is essential, coaching offers a way to align people’s growth with organisational goals. Leaders who leverage this style undeniably position their teams for success, developing a culture of innovation, resilience and sustained performance.