Coaching Return on Investment (ROI)

The ROI Challenge

Most people who use a coach report feelings of renewed focus, enhanced work performance, a sense of achievement and improved confidence. These may be more than enough of a return on investment for the individual who is investing in the coaching themselves. However, what happens if their employer is funding the coaching? They will want harder measures to demonstrate value for money ... but how realistic is?

Measuring Benefits

The key is to agree the aims of the coaching programme and establish some measures before it starts. In large organisations, improving staff retention is a popular choice as it can establish a clear financial saving. However, this can take many months, or more likely years, before a clear trend appears. This is also the same for other financial measures: increased sales, reduced costs, repeat business, employee productivity and so on. These are valid and are used, but can only really be applied in the short to medium term and only in SMEs, with any degree of accuracy. The other issue is that there are many less tangible benefits to be gained from coaching and these can be hard to measure if they are not carefully planned in at the beginning of the coaching process.

ROI Measures

Some good ideas on gathering and measuring data are:

  • Attitude surveys. Completed before, during and after the programme by coach, coachee, direct reports, manager and, if appropriate, a supplier or customer. This ‘Likert’ technique presents a set of attitude statements which are scored on a scale of 1 to 5.
  • Interviews. Peers and direct reports can be interviewed before and after the coaching to establish a picture of the changes created by coaching.
  • Ad hoc data. Other ad hoc information can be gathered to build a picture of the impact of coaching: testimonials, case studies, comparison of appraisal reports, reviews, likeability ratings and getting the coachee to list the changes that have occurred.

ROI Realities

Hard measures of the financial ROI of coaching vary dramatically. A few quotes illustrate the divergence of opinion:

Training can improve performance by 22%. Training accompanied by coaching can improve performance by 88%. The International Personal Management Association

Coaching produced a 529% return on investment and significant intangible benefits to the business. Metrix Global survey

The actual investment in coaching was way below the training expense, yet the benefit was enormous (not just in financial terms). The payback was 2,000 to 3,000%. Geoff Hinsley Study

80% of managers believe they would benefit from coaching / more coaching in their place of work ...93% per cent of managers believe that coaching should be available to all employees, regardless of seniority. Coaching at Work survey 2002 conducted by Chartered Management Institute

Qualitative versus Quantitative

The key issues that come out of a look at coaching ROI is that quantitative measures are difficult to develop and to apply reliably, especially over the duration of a typical coaching programme. Indeed in only 30% of coaching interventions are quantitative measures used (Harvard Business Review Report, The Realities of Executive Coaching, Jan 09) but the same source reported that qualitative measures are used in 70% of cases. However, these must be planned in at the beginning of the coaching programme to be of real value.

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