16. Developing People - Coaching v Formal Education
16. Choosing the Right Approach to Leadership Development
Training and development are essential for building a strong leadership team, but SME owners often struggle to decide whether to focus on coaching or formal education. Each method has its own benefits and drawbacks, and choosing the wrong approach can result in ineffective training, wasted resources, and leaders who are unprepared for real-world business challenges.
Owners often grapple with questions such as -
Should I invest in leadership coaching, formal education, or a combination of both?
How do I ensure leadership development is practical and relevant to my business?
What training methods provide the best return on investment?
How do I tailor development programs to fit different learning styles and leadership needs?
Failing to select the right training approach can result in leaders who lack confidence, struggle with decision-making, or fail to align with the company’s strategic direction.
The Solution – Understanding the Strengths of Coaching and Formal Education
Both coaching and formal education play critical roles in leadership development. The key is to understand the strengths of each and how they can be used effectively in different situations.
Option 1 - Leadership Coaching
Benefits -
Provides personalised, real-time feedback tailored to an individual’s needs.
Focuses on practical, experience-based learning rather than theory.
Helps leaders develop soft skills such as emotional intelligence, communication, and adaptability.
Encourages self-reflection and problem-solving through direct interaction with a coach or mentor.
Challenges -
Requires a skilled coach who understands both business and leadership dynamics.
Can be time-intensive and may not provide immediate measurable results.
Effectiveness depends on the willingness of the leader to engage in coaching sessions.
Option 2 - Formal Education (Courses, MBAs, Certifications)
Benefits -
Provides structured learning with a strong foundation in business theory and best practices.
Enhances technical leadership knowledge, such as finance, strategy, and management principles.
Offers networking opportunities with peers and industry experts.
Recognised credentials (e.g., MBA, leadership certifications) can add credibility.
Challenges -
Can be expensive and time-consuming, especially for small businesses with limited resources.
Theoretical knowledge may not always translate directly into practical leadership skills.
Less personalised compared to coaching, which focuses on real-world leadership challenges.
The Impact on the Business and the Owner
For the business, investing in leadership training strengthens long-term stability, improves decision-making, and enhances business performance. A well-trained leadership team is more capable of managing daily operations, executing strategic initiatives, and driving company growth.
For the owner, developing leaders through coaching and formal education reduces the burden of sole decision-making, builds a more resilient organisation, and ensures smoother leadership transitions when stepping back from daily involvement.
Key Considerations for SME Owners
Determining Individual Learning Styles – Do potential leaders benefit more from hands-on learning (coaching) or structured coursework (formal education)?
Balancing Cost and Time Investment – What is the best mix of affordability and effectiveness for leadership training?
Aligning Training with Business Needs – How does each training approach support the company’s long-term vision?
Measuring Development Outcomes – What metrics will track leadership growth and training effectiveness?
Blending Both Approaches – Can coaching and formal education be integrated for a well-rounded leadership development plan?
HR Best Practice
Leading organisations take a blended learning approach, combining coaching and formal education to create a well-rounded development experience. Best practices include -
Implementing mentorship programs where experienced leaders provide coaching to emerging leaders.
Encouraging participation in industry conferences, executive courses, and leadership workshops for continuous learning.
Providing on-the-job leadership experiences, such as project leadership roles, to develop real-world skills.
Creating peer learning groups where leaders exchange insights and best practices.
Psychological Perspective
Leadership development is not just about acquiring knowledge; it’s about building confidence and adaptability. Studies show that experiential learning (coaching, mentorship, real-world challenges) is often more effective in developing leadership skills than purely academic learning. However, formal education provides a structured foundation, ensuring leaders understand essential business principles.
Balancing coaching with formal education ensures that leaders develop both the hard skills (business acumen, strategy) and soft skills (communication, problem-solving, emotional intelligence) required for effective leadership.
Practical Tips
Develop a Leadership Development Plan – Map out learning objectives, training methods, and timelines for leadership growth.
Encourage Coaching at All Levels – Provide coaching opportunities for both senior leaders and emerging talent.
Leverage Online Learning – Enroll employees in online leadership courses or certifications that offer flexibility.
Combine Training with Practical Application – Reinforce learning with real-world leadership projects and challenges.
Evaluate Training Effectiveness – Use performance reviews and leadership assessments to measure the impact of training programs.
Create a Learning Culture – Encourage continuous education, skills development, and mentorship within the organisation.
The Long-Term Benefits of Leadership Training and Development
By strategically combining coaching and formal education, SME owners build a strong, adaptable leadership team that is well-equipped to drive business success. Long-term advantages include -
Stronger Leadership Decision-Making – Leaders with both theoretical knowledge and practical experience make better strategic choices.
Increased Business Stability – A well-trained leadership team ensures business continuity and resilience.
Higher Employee Engagement – Employees value opportunities for professional growth and career advancement.
Enhanced Business Growth and Innovation – Leadership training fosters a proactive, forward-thinking mindset.
Reduced Owner Dependence – Developing independent, capable leaders allows the business to operate successfully without constant owner oversight.
Golden Nugget - "Leadership is not just taught—it’s cultivated. A blend of coaching and education ensures leaders are equipped with both the knowledge and practical skills needed for success."