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Executive Coaching. Used to identify and solve management issues. Invoked when preparing a high potential mid-level manager for transition to C-level. Or an objective external soundboard as a tool for self-reflection.
It’s all about enhancing maximum performance.
But how to measure return on investment?
Solving management issues
When personal issues are standing in the way of efficiency, measuring ROI of a Coaching process is fairly easy. This issue that needs attention is limiting results not only for the executive involved. Often it is influencing whole teams, if not departments or entire organizations. Costing you money day after day. For various reasons, simply replacing the executive is not always the most desired option. Whether he or she brings a lot of technical knowledge or other competencies, has a long working history within your company or is just going through a tough period on a personal level. You have decided to invest. So you hire an executive Coach.
Can Coaching always solve the issue? Unfortunately not. Based on an in-depth intake before starting the one-on-one Coaching, a competent Coach will advise you on setting realistic expectations for the desired outcome. In addition to this clear upfront goal setting, agreement on process and success measures is essential.
A tailored Development Center clarifies blind spots, personal barriers and strengths. These define where the emphasis will be in the Personal Development Plan. And that is why a good executive Coaching trajectory is much more than having regular one-on-one conversations. Although most of my Coaching trajectories grow more or less organic in the individual sessions, there is a specific plan, a clear goal and a timeframe to be followed.
In the end, when goals are achieved and Coaching was successful, everyone agrees there is no waste of time and money. Not only we succeeded in enhancing the productivity of your executive, we facilitated a positive impact throughout the entire organization. And not to forget, prevented you from making extra expenses for firing and hiring.
Preparing for transition
When Coaching is meant to support transitioning towards top management level or to anticipate for possible future positions, defining ROI is more complicated.
So you have this high potential. You know your manager. You have seen him or her working. And you expressed your confidence. But when is a person ready? You decide to support your talented manager by hiring an executive Coach. This allows you to monitor closely and set up a specific timeframe for the transitioning process.
Embedding a Development Center before Coaching gives you an additional insight in the true potential of your manager. Not only understanding a possible gap, but also knowing what is key for his or her talent. This gives us handles on where to focus during Coaching. Again, a Personal Development Plan leads the way through the one-on-one Coaching sessions and allows you to evaluate on development and growth of your high potential. When measuring ROI it is important to debrief not only at the end but also mid-Coaching. In my opinion, debriefing has to be done by the executive him/herself and not the Coach. After all, the manager is the one working on his/her progress, not the facilitating Coach.
In addition to solving issues or transitioning, executive Coaching is often used for having an objective external soundboard at the highest level. With raising expectations and responsibilities, managing not only your team, but managing your own time if not yourself, becomes more and more important. Even more, it differentiates good managers from great leaders. Not to mention the impact it can have on your quality of life.
But measuring ROI in this case can be tricky. For optimal results, should you hire a Coach with knowledge of your sector? Some would say you are looking for agreement and not challenge. Or maybe you should hire somebody who was working in a similar position? Or will that prevent him/her from thinking outside your box? The best athlete isn’t always the best Coach. Before choosing, think about the return you expect.
And know this. An executive Coach is not a Consultant. He/she will not tell you what to do and what to decide. You are at the top of your business and as I wrote before, your strengths are what brought you there. You are an expert in your field of work. You are leading a company. Your Coach should be an expert in enhancing performance. By challenging, reflecting, or maybe in saying just those things you don’t want to hear (and nobody dares saying). No hidden agenda. Facilitating you to reflect on your actions and the things triggering you. Striving for the best results possible.
In brief, the standard formula for calculating ROI involves subtracting the costs of Coaching from the estimated value of the outcomes of Coaching and then expressing this as a percentage ((estimated Coaching benefits – costs of Coaching/costs of Coaching) x 100%) (Anthony M. Grant, 2012).
A broad range of ROI figures for Coaching has been reported. These include estimates of 221% (Phillips, 2007), 545% (McGovern et al., 2001) and 788% (Kampa-Kokesch & Anderson, 2001), with figures of between 500% and 700% commonly reported as being thé ROI for executive Coaching (Anderson, 2008) (Anthony M. Grant, 2012).
Although these amazing financial ROI results are no doubt great marketing numbers for executive Coaches, recent research questions the validity of it. Why? Let’s say during Coaching your executive closes a one million deal. What is the impact and merit of the Coaching? Unless issues are specifically and adequately addressed, the financial ROI metric has limited validity. Only in cases where there are specific interventions, ROI may be able to provide some indications (Anthony M. Grant, 2012).
And so the question remains, how to measure ROI?
And should we look at it from a purely financial point of view? Or is it much more than that?
My belief is there is no ROI at all if we don’t succeed at embedding the individual Coaching results into your sponsoring organization. Of course, your executive will “learn” a lot, be challenged, be stimulated, be motivated. But there is no use in executives leaving your company after being Coached. Or maybe there is.
I guarantee my Coachees 100% confidentiality of what is discussed in the one-on-one sessions. Reporting to all stakeholders happens mid- and end-Coaching and is always done by the executive. I am only a facilitator of this Coaching and feedback process. I do this because I am a strong believer that executive Coaching is not as much a process between executive and Coach in the first place. It is a process involving an entire organization. And in my opinion, the real Return On Investment of executive Coaching is a stronger and healthier organization. A great place to work.
Do you agree? Let me know what you see as the real ROI of executive Coaching. Is it financial? Is it well-being? Engagement? How did you experience added value and how did executive Coaching benefit your company results?
Questions or remarks? Feel free to comment!
Sofie Varrewaere is the founder of BigFish4.me. After studying a Master in Psychological and Pedagogical Sciences, she ogled into the magical world of Recruitment, Selection and HR Services. Working for the world leader in HR, she has always been in an advisory role in relation to the larger goals of several multinational organizations. In 2013 she started her own company in International executive Coaching. Doing what she is good at, challenging others as well as herself.