When New York University psychology student Elizabeth Hutton graduated from Baylor University two years ago, she considered two options: spend the next seven years studying to be a clinical psychologist, or do a two-year graduate program that would launch her into a career as an executive coach.

The decision was easy.

"Being a clinician is a hard life," says Ms. Sutton. "I'd rather be able to pay off my student loans and work in a place where I can have a lot of influence.

More than ever, young graduates and even established psychologists are rejecting careers in traditional therapy as health insurers put the squeeze on mental health reimbursements and patients choose Prozac over couch time. Instead, they are moving to corporate settings where they can charge up to $10,000 a day, far more than they can earn as a traditional therapist.

Of course, some worry that psychologists unfamiliar with the business world might blur the line between personal therapy and career development in this largely unregulated industry.

Still, New York, long overpopulated with psychologists, is a mecca for the booming field. Demand for services, which include individual career counseling and staff motivation, is being fueled by businesses' awareness of the importance of an emotionally healthy workplace in the aftermath of Sept. 11, corporate scandals and downsizing.

"A lot of businesses have budgets for executive coaching these days," says Aliza Herzberg, an employment lawyer and partner at Morea & Schwartz who often refers clients to executive coaches trained in psychology.

Over the last five years, the number of people entering and graduating from New York University's industrial and organizational psychology program has doubled, with many established psychologists also taking classes. The applied psychology program at NYU's Steinhardt School of Education, which offers similar training, saw applications jump 37% in 2005, compared with 2004. Ranks of professional organizations are also swelling, with as many as 100 professionals now attending monthly meetings at Metropolitan New York Association of Applied Psychology, about 40% more than two years ago.
  

Helping them get in touch

Time Warner, Verizon and Sony are just a handful of the top corporations that have hired workplace psychologists to help managers get in touch with their emotional side, say executive coaches who have worked with those companies.

"This is a booming industry," says Richard Wexler, president-elect of the New York State Psychological Association's industrial organization personnel division.

Demand is coming from companies that, in the wake of so many corporate scandals, are more aware of the impact of a chief executive's personality and the importance of ethical behavior in offices and boardrooms. The events of Sept. 11, which had a profound effect on many in the workplace, also made bosses more receptive to the idea of bringing psychologists on site. The fact that managers are more overworked and have less time to listen to employees also creates a need for more psychological services.

"There's much greater acceptance of the fact that work is personal and therefore psychological," says Kerry Sulkowicz, a psychiatrist and founder of Manhattan consulting firm The Boswell Group.

Dr. Sulkowicz, who writes a column called "Corporate Shrink" for Fast Company, just added four psychologists as principals to The Boswell Group's existing team of three to keep up with the needs of about 45 active corporate clients, including about 15 Fortune 500 firms.
  

Standards needed

The boom has its downside. The executive coaching field has been growing so fast that Mr. Wexler, a psychologist who has helped more than 100 fellow professionals make the transition to office work, has formed a committee to help establish standards for this unregulated industry.

"There are a lot of charlatans coming into this area," he says.

Currently, almost anyone can fashion him- or herself into an executive coach. The job involves anything from helping human resource departments with feedback on 360-degree job performance reviews to making personality assessments during the recruitment process or helping managers build a more productive work environment.

But a psychologist making the jump from couch to coaching needs to be seasoned in business and has to understand the fine line between private therapy and coaching with a more practical business aim. An executive's angst about being a middle child might come out in the course of a session, for example, but such personal information should never be disclosed to his colleagues or bosses.

"I could see a potential lawsuit arising with a green coach," says Ms. Herzberg, the attorney.

Psychologists say that their training in ethics and doctor/patient privilege makes them less likely than others in the executive coaching field to cross the line.

"I keep focused on the specific business results," says Dan Fisher, a clinically trained psychologist and managing partner in Fisher Rock Consulting who refers executives elsewhere if he thinks they need more personal counseling. "I'm not there to do therapy."

Comments? SMarshall@crain.com