The ROI of Coaching

There are two important trends that seem to be occurring whenever I discuss implementing a coaching program within an organization. First, I am impressed by the number of executives who have awareness of the value of coaching as an employee development tool. The second trend is one question that is most frequently asked by the CEO.


How am I going to measure the results?


That is a very fair and important question that should be asked. After all, successful organizations depend on their ability to measure results of just about every program they undertake. Shouldn’t a CEO be able to quantify his or her return on investment when it comes to a training program for employees?


I can honestly say that in all my years of coaching I have never had a coachee ask me about ROI. People love coaching. They love being coached and they know when they are experiencing results. That’s why I love to coach. I get handshakes, hugs, thank you notes and testimonials because people know that the program works for them.


So, if people are convinced it works, why be concerned about the ROI of coaching? There are several good reasons.


The economic challenges that have wracked every organizational budget in recent years caused some fairly significant and often painful financial choices. Budgets for employee development were particularly hard hit. As we slowly begin to recover from the recession, much of that funding is starting to be restored. However, with that reinvestment in training programs, executives are more closely scrutinizing the results they are receiving to ensure a maximum return (there’s that word again!).


Measuring the return on investment is also a smart way to build accountability into your coaching program and to demonstrate value to your stakeholders.


There are a few foundational principles that you’ll want to put in place as you design an evaluation metric for your coaching program. First, your team should determine the objectives for your coaching program. There are two critical components of that process. It is vitally important that the coaching be linked to your business goals. It is also important to set objectives for coaching that include the application of coaching to the workplace. In other words, you want to ensure that your employees put their learning into every day action. Whatever metric you choose to evaluate coaching should be directly tied to the coaching objectives.


Executives charged with implementing the coaching program should meet with the coach to agree upon the program objectives and to develop the evaluation plan. This is when you’ll want to determine specific metrics. For example, if coaching is being used to improve performance of your sales department, it stands to reason that you would compare current and future sales figures to track progress. The same principle would apply if the coaching goal is to reduce turnover in the organization.


Measuring ROI is trickier in other areas such as leadership development. How do you measure personal improvement and how do you isolate the effects of coaching on that growth versus other factors that may be involved? Those are conversations you’ll want to have in advance of the coaching initiative to help in determining the best metrics for each individual situation. There are numerous models that your can follow to apply to just about any situation.


The bottom line on ROI is that there is ample research that demonstrates that coaching is a cost effective and highly successful employee development tool. A Fortune 500 telecommunications firm found that executive coaching resulted in an ROI of 529 percent. A consumer products company believes their coaching intervention contributed to double-digit productivity increases as well as decreases in waste levels and overtime. A survey of executives revealed that coaching resulted in a 259 percent increase in executive retention.


Coaching can be measured. Meet with your coach and develop a carefully thought out ROI program that is tailored to your business needs and those of the people being coached and you should have a program that delivers tangible results for your organization’s bottom line.


Ross Woodstock, ACC is an executive coach/consultant and communications strategist with Kolt Communications, Inc.