Measuring ROI of Coaching

Recent statistics on executive coaching point to the fact that in the United States alone, organizations spend more than $1 billion per year on coaching services. What’s more, coaching is no longer seen as a reactive tactic to correcting bad workplace behaviour. Instead, it is now more commonly used as a way to develop high potential talent and cultivate future leaders. However, even with this shift in coaching objectives, the desired outcome is still the same: organizations want better developed employees and they want to feel that their money has been well spent. How do they know, though, if the money they are spending is worth it? How do they know if success has been achieved?

It’s easy to understand the hang up on cost, considering coaches charge anywhere from $200 – $750 per hour and the average executive coaching engagement runs from $5,000 – $15,000. That said, we believe this is a small investment to make if a leader is committed to leveraging talent and leading change. Moreover, as you’ll read later in the article, the statistics on executive coaching are compelling and for good reasons. Coaching is specifically targeted to an individual’s unique goals and challenges; it offers a completely personalized action plan that doesn’t come with many other development activities. What’s more, results can be seen from the very first coaching session itself because the individual has an ability to immediately apply what they have learned.

We submitted a proposal for coaching services to a large organization. During the proposal process, we were asked how we measure the return on investment (ROI) of our coaching. As I thought about my answer, I knew I could take it one of two ways; the first being to recite the most recent ROI coaching statistic: “According to a recent global survey by PriceWaterhouseCoopers and the Association Resource Centre, the mean ROI of coaching is 7 times the initial investment, and over a quarter of coaching clients reported a stunning ROI of 10 to 49 times the service cost.” Or I could explain that measuring the ROI of coaching is a really difficult thing to do and that from a true scientific standpoint, ROI cannot be measured perfectly for any kind of development activity, coaching included.

Though the statistic is impressive, I opted for a more realistic answer and went with the latter. We won the proposal so I suppose my choice was a good one. I went on to explain that at Impact, we understand that you can’t put people in a bubble. Coaching is not an isolated activity, but rather, a developmental process that aims to align with all other business activities. We can control how we coach, but individuals are part of a larger system that is beyond any one person’s control. For example, if I am coaching an individual on staff management and a month later I see turnover in his division drop, I cannot attribute that event solely to my coaching. There are many external factors at play (staff changes, economic changes, internal policy changes, etc.) that could have contributed to this outcome. I would tend to believe that my coaching was one of those factors, but how can I prove that?

We need to redefine what we think of the word “return” when it comes to our investment in coaching. Rather than thinking in terms of monetary gains, we should focus our attention on the individual and how they have evolved over the course of the coaching engagement. During our feedback process, we always ask, “What are you doing differently now as a result of coaching?”. Have trust in your people when they tell you that coaching is valuable and when they can articulate how their actions or perspectives have changed. Most people are busy and there are only a certain number of hours in a day, yet they continue to meet with coaches because of the value it provides.

The biggest return on a coaching investment takes place when an individual appreciates the help of a coach but inherently believes they have changed in a way that makes them a better leader. If you ask a coaching client whether or not their coach helped them grow their business, a coach’s hope would be that they would say “No, I grew my business.” That’s the work of a great coach. Our goal is to help people be successful, not do the work for them. We aim to help individuals appreciate, own, and articulate the changes they are making as they develop into more thoughtful and efficient leaders. It is when we accomplish this, that our clients and our team recognize our success.

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