What return you can expect on your investment in coaching?

Q: Why coaching?

A: What's the return for investing valuable time in coaching?

Every organization has its own approach to performance management and coaching. But all models view coaching as interactive. When you coach, you listen actively, ask questions, share views, and negotiate solutions. You give and receive feedback.

Coaching helps individuals grow as professionals and contribute fully to the success of an organization. Done well, it can turn performance management into a collaborative process that benefits everyone.

Coaching focuses on what needs improvement and what's going well. The overall goal is to help people become more effective. You coach individuals to help them overcome personal obstacles, maximize individual strengths, and reach their full potential.

In today's environment of changing technology and evolving organizations, coaching can have a strategic impact. It provides continuous learning and develops people to meet current and future needs. Coaching is an investment that you make in developing your key resource people for the long-term benefit of your organization.

Due to the need for leadership development, increased management performance and succession planning, companies are focusing more closely on building the capability of managers and executives through coaching and mentoring programs. About 6 out of 10 (59%) organizations currently offer coaching or other developmental counseling to their managers and executives, according to a nationwide survey of more than 300 companies by Manchester, a human capital consulting firm. Another 20% of organizations said they plan to offer such coaching within the next year.

Since it's becoming harder to train and keep effective employees, it is clear that companies are interested in providing executive coaching to managers who are able to improve productivity by energizing, exciting and coaching their direct reports.

What does executive coaching really cost?

Typical executive coaching programs are a mix of both change-oriented coaching (changing certain behaviors or skills) and growth-oriented coaching (focused on sharpening performance).

Executive coaching programs typically last from 6 months to one year. Six months of individual executive coaching generally costs a company between $15,000 and $25,000 which includes one or more personal assessments and 40 minutes 3 times per month of telephone coaching.

Some executives decide to personally contract with a coach to achieve certain professional or personal goals. Signature, Inc. offers individual coaching to executives who do not have access to employer-paid programs. This individual coaching is targeted to the client's needs within personal budget limitations--beginning at only $500 per month. For more information on coaching fees, email us to communicate what interests you about a coaching relationship.

Case Study on the Return on Investment of Executive Coaching

A Fortune 500 firm wished to determine the business benefits and return on investment for an executive coaching program launched as an innovative leadership development effort to accelerate the development of next generation leaders. The participants in this effort were drawn mostly from the ranks of middle managers and from many different business units and functional areas. Leadership development activities included group mentoring, individual assessments and development planning, a leadership workshop and work on strategic business projects.

Coaching was considered to be a key enabler for this approach to leadership development because the participants could work privately and individually with his or her coach to develop specific leadership competencies. While participants spoke very highly of their experience with coaching it was decided to conduct a formal assessment of the effectiveness and business impact of coaching. It was intended that the results from this study be used to determine:

How did coaching add value to the business and what was the return on investment?
How could coaching be best leveraged in the future, especially if coaching was to be expanded to other business regions?

It was decided that the best way to isolate the effects of coaching on the business was through a questionnaire. The target population for the survey was 43 leadership development participants. These participants represented a cross section of the business and included those in sales, operations, technology, finance and marketing. All had been identified as potential leaders and executives. Thirty (30) of 43 leadership development participants returned their surveys for a 70% response rate.

Case Study Results

Coaching was a very effective developmental tool for the leadership development participants, producing financial and intangible benefits for the business. Coaching sessions were rich learning environments that enabled the learning to be applied to a variety of business situations. Decision-making, team performance and the motivation of others were enhanced. Many of these business applications contributed annualized financial benefits. Other applications created significant intangible benefits. Overall, the participants appreciated their coaching experiences and would highly recommend coaching to others.

Three-quarters (77%) of the 30 respondents indicated that coaching had significant or very significant impact on at least one of nine business measures.

Overall, productivity (60% favorable) and employee satisfaction (53%) were cited as the most significantly impacted by the coaching. Respondents defined productivity in this context as relating to their personal or to their work group productivity and half (50%) documented annualized financial benefits.

Program costs were tabulated for all 43 leadership development participants in determining the return on investment. Overall, the coaching process produced a 788% return on investment. Excluding the benefits from employee retention, a 529% return on investment was produced. While those clients who had customer or people responsibilities produced proportionally greater financial benefits, the realization of benefits to the business was fairly widespread throughout the group involved in this study.

Coaching Return on Investment Survey

A survey of 100 executives, mostly from Fortune 1000 companies, by Manchester, Inc. concludes that a company's investment in providing coaching to its executives realized an average return on investment (ROI) of almost six times the cost of the coaching.

Corporate benefits received:

delivered an average ROI of 5.7 times the initial investment (a return of more than $100,000)
executive productivity improvements (reported by 53% of executives)
organizational strength improvements (48%)
quality improvements (48%)
customer service improvements (39%)
greater retention of executives who received coaching (32%)

Personal benefits to the coached executive:

direct report and supervisor relationship improvements (greater than 70%)
improved teamwork (67%)
improved working relationships with peers (63%)
greater job satisfaction (52%)