The Leadership Lens Summary:
The Leadership Compound Effect is always running. In a previous article, I focused on how it plays out through leadership selection decisions. This article takes it into equally consequential territory: coaching. Specifically, what it means to partner with a leader in a way that develops them and activates what they produce in the organization around them, and why that distinction determines whether the Leadership Compound Effect works in your favor or runs on default.
Most organizations are already investing in coaching to some degree. And they’re capturing only a fraction of the return available to them. I have no doubt the coaching itself is good. Though the design intent behind it is where value gets left on the table.
In my original Leadership Compound Effect article written through the lens of leadership selection, I pointed out that every leader hired sets off a chain reaction that runs through an organization for years. And it compounds in whichever direction the decision is pointed, for better or for worse. And I’ve seen it go in both ways. The same effect is at work in coaching. Every engagement either steers a deliberate positive compounding effect or leaves it to chance.
What almost never gets asked before the first session is the most consequential question of all. How do the leader’s goals align with what they are going to produce, enable, and leave behind as a result of this partnership? And that’s what a different kind of coaching creates: a genuine partnership between the organization, leader, and coach and one that extends beyond the leader. It’s the kind of coaching that develops the leader personally, and in context for what their leadership needs to produce beyond them. That’s what separates coaching that captures a single leader’s worth of return from coaching that steers the Leadership Compound Effect in the right direction across the organization.
The Compound Effect Is Already Happening. The Question Is Whether You Are Steering It.
The Leadership Compound Effect doesn’t wait for you to design for it. It’s active right now, in every leader you have invested in, in every coaching engagement currently underway, and in every selection and development decision those coached leaders are making about the people around them.
And the compounding runs in both directions. A leader whose coaching sharpens their judgment, builds their self-awareness, and develops their capacity to elevate others produces a return that multiplies outward through every person, decision, and initiative they touch. A leader whose coaching was well-intentioned but narrowly focused on individual improvement produces a return that stops largely at the individual level.
It’s the same investment, except one organization develops a leader, and the other steers the organization’s leadership. That’s the gap and the opportunity cost the budget never shows.
Coaching for the Leader vs. Coaching Through the Leader
This is the distinction that determines both trajectory and ROI.
Coaching for the leader is targeted at the individual. It might focus on one particular growth opportunity, or one particular challenge at first, but inevitably brings focus to their judgment, presence, self-awareness, and their effectiveness in their current context. All of it matters. And when coaching stops here, it returns one leader’s worth of value.
Coaching through the leader starts in the same place but is oriented from the outset toward something larger. The leader is the point of entry. The leader and the organization are the points of return. The coaching is designed from the start to develop the leader not only for who they are becoming, but for what their leadership is producing, enabling, and leaving behind in the people and teams around them.
Partnership is the operative word. This is coaching built with the leader, in full view of their goals, the organizational context they’re navigating, and with a shared commitment to what their development is designed to activate beyond them. That shared intent, and the choices it triggers, changes everything about how the engagement runs, how goals are set, how progress is evaluated, and ultimately what the investment returns.
Everyone Elevates
When the coached leader becomes the developer of others, the multiplier effect takes hold. And it’s where coaching conversations most often stop short.
When the coaching partnership is designed through the lens of what the leader produces and enables in others, something specific and powerful happens. The leader’s impact strengthens exponentially by elevating their own effectiveness, as well as the effectiveness of others. The leader develops and begins to replicate the development discipline in the people around them. They internalize the coaching they’re experiencing, and start delivering it. It becomes visible in how they develop their team, how they provide feedback, how they build the conditions for people around them to think more clearly, decide more soundly, and lead more deliberately.
Ultimately, they not only become leaders who lead like coaches, their effectiveness elevates as they elevate the effectiveness of those around them.
That capacity, once built, scales beyond the initial investment. Every person they develop carries a version of what the partnership produced forward into the organization. And every selection decision they make is now being made by a leader with sharper judgment and a more intentional approach to developing the people around them. The Leadership Compound Effect, steered deliberately through one coaching engagement, multiplies through every layer they touch.
It’s tempting to call this a residual effect of good coaching. The truth is this is the Leadership Compound Effect at full force. And it happens when the coaching was designed to produce it.
McKinsey’s research on organizational health is unambiguous on this point: leadership behavior is the single highest-leverage variable in sustained organizational performance.
The Return Nobody Puts in the Budget
The published coaching ROI figures are worth knowing. But they are largely measuring first-order individual outcomes. They represent the floor of what is possible, not the ceiling.
McKinsey’s research on organizational health is unambiguous on this point. It shows that leadership behavior is the single highest-leverage variable in sustained organizational performance. What that finding implies, and what most organizations have not fully acted on, is that developing the leader is only half the equation. The other half is what that leader’s development sets in motion in the layers around and beneath them. One well-designed coaching partnership, oriented toward what the leader produces and enables in others, activates that second half of the equation. Few coaching investments intentionally design for this.
The ceiling elevates when you follow the chain. A leader whose coaching partnership produces genuine inner development, sharper self-awareness, cleaner judgment, clear principles, and reduced internal interference in their decision-making, carries those gains outward. They make better selection and development decisions, which compound through every hire they influence. Second, they develop the people around them more deliberately, which raises the ceiling for their entire team. They model what examined, intentional leadership looks like, which changes the culture beneath them in ways that outlast their tenure.
The return is on every leader that leader develops, selects, and shapes over the remainder of their time in the organization. It’s multiplicative, not additive. And it’s almost never reflected in how organizations budget for coaching or evaluate its impact.
The organizations getting this right are designing their leadership with greater intention. And the trajectory difference compounds from there.
What Steering This Looks Like in Practice
Across thirty years of evaluating, selecting, and coaching leaders, here’s the pattern I’ve seen consistently. And the one that triggers an external executive search.
Let’s consider two organizations with comparable coaching investments, yet fundamentally different design intent.
The first partners with a leader around a targeted individual outcome. The engagement is productive, the leader gains self-awareness, refines their approach, and increases their effectiveness in a meaningful way. Those are typical outcomes, measurable at the individual level, and the return largely stops there. Over time, the organization cultivates a stronger leader, yet the bench beneath them remains largely unchanged. The leadership chain and culture has not measurably shifted.
The second partners with the leader with a wider view of the organization. The inner development work is identical in rigor. The coaching is oriented from the start toward what the leader is wrestling with, and how it impacts their effectiveness and those around them. The work is focused on what the leader is activating in themselves and how that growth activates outward. How the leader grows impacts how they develop their team, how they make selection decisions, how they build the conditions and coach the people around them to lead with greater clarity, intention, and decision capacity. Over time, the organization has a stronger leader, a stronger bench (or leadership bridge), a more deliberate leadership culture and pipeline. And the payoff of a succession picture that reflects the compounding return of a well-designed partnership.
It’s the same investment, steered differently. That’s the Leadership Compound Effect applied to coaching in practice.
The Design Question Steers Everything
If you want this kind of outsized return, you need to design it from the start. That means getting intentional about how you frame the engagement, align your goals, measure growth, and define success.
The question separating a coaching investment with compounding returns from one that stops at the individual is simple: does this partnership build a leader, or a leader who develops leaders?
That question is foundational to this kind of coaching and sets the stage for a compounding effect. It changes the intake process and the context mapping that should precede any engagement. The goal-setting conversation and whose voice needs to be in it changes too. When you ask that question you change how progress is defined and what evidence of meaningful change looks like. Ultimately, this shifts the return from a mere current-year development expense into a long-term organizational performance investment, and one where compounding value continues running well beyond the initial engagement.
The organizations asking that question before the first session take the first step in steering their Leadership Compound Effect. The ones who aren’t leave the most valuable part of the investment on the table.
Like It Or Not
The Leadership Compound Effect is already active in every leader you coach, every partnership you commission, and every selection and development decision those leaders go on to make. The only variable is direction.
Coaching through the leader, with genuine partnership and deliberate design intent from the start, is how organizations move from hoping the compound effect is working in their favor to knowing it is.
That’s the difference between developing one leader and designing your organization’s leadership.
Is your organization coaching for the leader, or for them and through them?
This is the work of LTA’s Executive & Leadership Coaching. With three decades of experience evaluating, selecting, and coaching executives, we partner with leaders and organizations to steer the Leadership Compound Effect in the right direction.
The difference between where you are and where you want to be is in the steps you haven’t taken yet.
LTA | Leadership Intelligence
