Verification of Coaching Results (ROI)

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As presented at the International Coaches Meeting in Prague, February 2011

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  • We’ll talk about what counts today: what counts is a discussion: by the end of it you’ll have a better sense about the payoff of coaching, and about a few methods to verify its effects; I see this as a facilitating role where I provide some fodder for discussion.
  • It’s a compilation – there’s research out there, not a whole lot conclusive or reliable The biggest value at meetings is in the conversation: the mode of working is changing, let’s be inclusive and collaborate don;’t want to be preaching to the converted: take part in the discussion` Good effort to contact the original researchers – haven’t succeeded, but am quoting sources
  • Others have said it better: (Bacon and Pool from LORE, now acquired by Korn/Ferry)
  • Behavioural coaching can be short-sighted; the value comes in once the behaviour is guided by aligned values/relationships: this is where the biggest value of coaching comes into play: don’t play in the sandbox, go to the beach! ...” Coaching is a "how to get there" process, not a "where to go" process. If the people that are being coached are headed in the wrong direction, behavioral coaching will only help them get there faster!” (Marshal Goldsmith) Challenge: the bigger the result, the harder to quantify? Coaching seems to make a significant difference in overall organizational effectiveness by improving teamwork and ability to execute strategy, esp. when it’s focused on behavioural change rather than cultural change, and when the emphasis is on the outcomes. Most org’s, though, are in the early stages of learning to use coaching in a systematic, effective way. (What coaching can and cannot do, ICF) 
  • There are numbers (in relative terms here) that are showing us that the moment you guide authentic action, the added value of coaching adds up to significantly more
  • Create your own process
  • It’s in the very beginning that you want to ask the right questions – and, based on the answers decided whether to measure or not.
  • As evident from the following opinions, there is a variety of opinions and no easy answers.
  • Comp’s/people do not make coaching decisions based on ROI (see data); ROI is important for business; people/org’s would go back to coaching regardless of measurement (figures b/w 69%-99%) – so, what gives? Dagley, Executive Coaching, 2009: in association with the Australian Human Resources Institute A group of 20 HR professionals with extensive experience in purchasing and managing executive coaching services completed 90-minute interviews regarding their experiences of working with exceptional coaches. A number of purchasers suggested that the most effective approach was simply not to measure. “ People want quantitative data, but a big part of the change is at a personal level and you are not aware of what that is - but it is obvious behaviourally at work.” “ [Measurement] is very important. [But] the people here just intuitively know [coaching] is good, so no one is jumping up and down for results. They would probably see that as a waste of time.” “ We give more weight by far to qualitative data. Numbers alone don’t give a full picture. One question we rely on is whether the executive would recommend the coaching to others. Ninety-five percent say ‘yes.’” The availability of the option not to measure would vary on a case-by-case basis, depending on the answers to the above questions. Purchasers did, however, offer advice regarding the key features that need to be in place if effective measurement is to occur.
  • Measurement suggests quantitative, but qualitative provides good info, too. That’s why talking about verification makes more sense than measurement
  • Ask the right questions – and formulate the answers as a business initiative; make the links to business goals plenty clear. exc_Executive_Coaching_ROI_article.pdf Merrill C. Anderson, Ph.D. : Once the sponsors’ expectations for coaching are known, then these expectations are translated into strategic objectives for the coaching initiative. So, for example, an objective for coaching could be: “Increase by 10% the high potential leaders who are ready for immediate promotion.” Setting an objective like this ensures that the link from coaching to delivering expected business value is clear. Communicating this clear link to business leaders, coaches and clients reinforces in their minds that coaching is not only a developmental initiative, it is a business initiative. Coaching is therefore in a stronger position to be perceived as adding value to the business as well as to the individual participants.
  • That’s why talking about verification makes more sense than measurement; Assn, 2004 : If purchasers are to gain a robust quantifiable ROI figure (or just a clearer view on the quantifiable benefits) more work needs to be directed at estimating the monetary benefit of coaching be it a quantitative or a qualitative benefit.
  • “ Typically the evaluation would be both quantitative and qualitative, but the 90%weighting would be on the agreed outcome and its measurement. – typically KPI’s; Exceptional Executive Coaching Dagley, 2009
  • Savings in costs based on own time saved Savings based on time saved by direct reports/team PRODUCTIVITY STANDS OUT A STUDY ON THE EFFECTS OF COACHING (2007_ 020ASTUDYONTHEEFFECTSOFCOACHvarious20012002.doc   The authors found that while their training intervention with managers increased manager productivity by 22 %, adding a one-to-one (8-week) coaching intervention after the training pushed productivity to 88 %. Key fact: Coaching re-engages individuals and leads to increased productivity, according to 38% of coach purchasers
  • That’s nice, but.... How do we know it’s right? 2009, ICF Global Client Study: Would clients choose to be coached again? Given the same circumstances that previously lead them to seek coaching, almost all (96%) clients indicated that they would indeed repeat the process.
  • Assn for Coaching, 2004 What are the qualitative benefits from coaching? There is a disconnect between what purchasers of Coaching services and coachees believe is the primary qualitative benefits of Coaching. However, there is a shared agreement on the second most popular benefit, improved job motivation. The disconnect may occur because the purchasers casts their net wider i.e. they seek feedback from the manager and other staff to establish the qualitative benefits of coaching. While coachees focus directly on what they experience. Coachees could be encouraged to not only rely on their own observations about their performance, but also ask for feedback from their managers, peers and team members. This may highlight other seemingly indirect benefits they had not been conscious of.   Key fact: Purchasers of Coaching stated better people management skills resulted in 58% of coaching programmes and increase job motivation in 53% of coaching programmes. While coachees stated improved work life balance resulted in 48% of coaching programmes and improved job motivation in 42% of coaching programmes. Other: 1. Improved teamwork 2. Increased employee engagement 3. Better performance management 4. More effective decision-making 5. Accelerating culture change
  • So, now you can coach.. And conduct periodic check-ups as you go along to make sure you’re on the right track.
  • We can measure behaviour, but unless it’s aligned w/relationships/values, it won’t have a big impact. Authenticity counts – equally for individuals and for organizations. Challenge: the bigger the result, the harder to quantify? Coaching seems to make a significant difference in overall organizational effectiveness by improving teamwork and ability to execute strategy, esp. when it’s focused on behavioural change rather than cultural change, and when the emphasis is on the outcomes. Most org’s, though, are in the early stages of learning to use coaching in a systematic, effective way. (What coaching can and cannot do, ICF)
  • What performance-driven organisations are measuring today – sinickas – change in behaviour is what gets measured, not satisfaction which was the craze of the 1980s; we’re no longer looking at satisfaction – it’s about the impact of our actions on AUTHENTIC behaviour!
  • The Hawthorne effect is a form of reactivity whereby subjects improve or modify an aspect of their behavior being experimentally measured simply in response to the fact that they are being studied, [1][2] not in response to any particular experimental manipulation. The term was coined in 1950 by Henry A. Landsberger [3] when analysing older experiments from 1924-1932 at the Hawthorne Works (a Western Electric factory outside Chicago). Hawthorne Works had commissioned a study to see if its workers would become more productive in higher or lower levels of light. The workers' productivity seemed to improve when changes were made and slumped when the study was concluded. It was suggested that the productivity gain was due to the motivational effect of the interest being shown in them. Although illumination research of workplace lighting formed the basis of the Hawthorne effect, other changes such as maintaining clean work stations, clearing floors of obstacles, and even relocating workstations resulted in increased productivity for short periods. Thus the term is used to identify any type of short-lived increase in productivity
  • Obviously, the majority of verification methods gets applied at the close. Let’s see what some of them are?
  • Generic business measures: includes ROI; we’ll look at it as an output, not as a verification method Qualitative can also be measured- see Sinickas/behavioural changes
  • This is an estimate and a conversation starter: what do you think? Feedback from the coachee is the predominant coaching evaluation mechanism, followed by feedback from the coachee’s manager. Line managers typically provide the insight as to quantitative benefits derived from the coaching.   “ American Express, GE, Johnson and Johnson, UBS - use 360 degree feedback as part of an overall process to help align corporate values and individual behaviour.”
  • 101218_icf_GlobalCoachingStudyExecutiveSummary2008.pdf Future Challenges for the Profession • A strong need still exists to collect and to document global Return on Investment (ROI) data and any evidence-based research which serves to validate the impact or the effectiveness of coaching. Industry organizations must commit to making future investments in this research in order to validate the coaching profession in a more substantive way. Interesting: (ICF Client Coaching Study, 2009: Only 30% of clients consider the cost of coaching a critical factor in their decision making; 50% of clients consider it somewhat critical – so, how important is it to verify?
  • ICF Global Coaching Client Study, p. 10 – define the study (give details) 100% means that the investor earned their money back. The key findings for individual and company ROI include: 􀂅 Individual ROI: Just over two thirds (68%) of individuals indicated that they had at least made back their initial investment. The median suggests that a client who achieves a financial benefit from coaching can typically expect an ROI in the range of 344% or 3.44 times the amount spent.
  • 􀂅 Company ROI: The vast majority (86%) of those able to provide figures to calculate company ROI indicated that their company had at least made their investment back. In fact, almost one fifth (19%) indicated an ROI of at least 50 (5000%) times the initial investment while a further 28% saw an ROI of 10 to 49 times the investment. The median company return is 700% indicating that typically a company can expect a return of 7 times the initial investment.
  • 􀂅 Company ROI: The vast majority (86%) of those able to provide figures to calculate company ROI!!! indicated that their company had at least made their investment back. In fact, almost one fifth (19%) indicated an ROI of at least 50 (5000%) times the initial investment while a further 28% saw an ROI of 10 to 49 times the investment. The median company return is 700% indicating that typically a company can expect a return of 7 times the initial investment.
  • You’ll want to make sure that you know how to use the ROI
  • .. And that you know how to isolate the effect of coaching: again, any which verification method (often control groups), apply
  • Case Study: Evaluation Data collected through written survey and follow-up interviews (N = 43) 70% response rate (30 respondents) Data collection was rigorous, thorough Limited access to data validation (third party assessments, business indicators)
  • Study overview Communications to LE participants 2.Orientation with clients / coaches 3.Matching clients (43) with coaches (9) 4.Coaching conducted for about 5 mos. 2 –3 hours per month Periodic progress reviews with vendor 5. Evaluation conducted for ROI Data collected through written survey and follow-up interviews (N = 43) 70% response rate (30 respondents) Data collection was rigorous, thorough Limited access to data validation (third party assessments, business indicators)
  • Alan Goldsmith, Ask, Learn, Follow-up: 1993, Peter Drucker said, “The leader of the past was a person who knew how to tell. The leader of the future will be a person who knows how to ask.” The traditional hierarchical model of leadership will not work effectively for major organizations in tomorrow’s changing world.
  • Alan Goldsmith, Ask, Learn, Follow-up: 1993, Peter Drucker said, “The leader of the past was a person who knew how to tell. The leader of the future will be a person who knows how to ask.” The traditional hierarchical model of leadership will not work effectively for major organizations in tomorrow’s changing world.
  • What difference has this made in your life? How would you rate your life on a 1-10 scale before coaching, and how would you rate it afterwards? If you had to estimate the impact coaching has had on your overall effectiveness, what would you say? If you had to place a dollar value on this change, wha is that worth to you?
  • Verification of Coaching Results (ROI)

    1. 1. Coaching: does it pay off or not? Jitka Holt, Holt Communications Inc. International Coaches Meeting in Prague February 3 – 4, 2011
    2. 2. “Not everything that can be counted counts, and not everything that counts can be counted.” -- Albert Einstein
    3. 3. Agenda• What kind of coaching brings results?• It’s all in the process• To measure or not to measure?• What results do we verify?• How do we verify results?• Designing your process
    4. 4. What kind of coaching? Who do I want to be? What am I What do I want made of? to create? What do I need to do?Source: MetrixGlobal LLC
    5. 5. The bigger the agenda, the bigger theimpactSource: MetrixGlobal LLC
    6. 6. The bigger the agenda, the bigger theimpactBut how do we measure it? Or do we?Source: MetrixGlobal LLC
    7. 7. It’s all in the process
    8. 8. Same old, same old... It’s all in theprocess: set it right Verify impact
    9. 9. Same old: ask the right questions Verify impact• Build alliances• Decide: measure or not to measure• Ask the right questions
    10. 10. To measure or not to measure?
    11. 11. Ask the right questionsFor example:• What measurement will be possible?• Who are the measurement data for?• What sort and quality of data can be obtained?• What effects will attempting to measure have on the coaching work?• What measurement will suffice given organisational limitations and demands?Source: Exceptional Executive Coaching, Dagley, 2009
    12. 12. Verification make senseHaving a quantifiable measure of the return on investment (ROI) from coaching is: 48% 24% 12% Important Not now Not Verification makes senseSource: Association for Coaching, 2004
    13. 13. What do you think?In your experience, how important is it to verify the coaching results?
    14. 14. Same old: start with the end inmind Verify impact• Build • Engage a alliances sponsor• Decide: • Find a good measure or fit between not to coach and measure coachee• Ask the right • Agree on questions measuring methods and metrics
    15. 15. Overview of quantifiable benefits*(example)* According to purchasersSource: Association for Coaching, 2004
    16. 16. Confidence in quantitative measures (in %)Percent of clients Percent confidence Source: Association for Coaching, 2004
    17. 17. Qualitative benefits (example)** According to purchasersSource: Association for Coaching, 2004
    18. 18. Same old? Make sure you’re on track:measure as you go Verify impact• Build • Engage a • Conduct alliances sponsor periodic• Decide: • Find a good check-ups measure or fit between • Debrief not to coach and measure coachee• Ask the right • Agree on questions measuring methods and metrics
    19. 19. Challenge (individuals):The impact is in the values, but it’s the behaviours that we measure: authenticity counts.Source: MetrixGlobal LLC
    20. 20. Challenge (organizations): BehavioursThe impact is in the values, but Organizational goals it’s the behaviours Values that we measure: Vision authenticity counts. Mission
    21. 21. Challenge: how do you know it’sworking?What gets measured, gets done, so... . . .watch out for the Hawthorne effect.
    22. 22. Same old? Measure a bit more Verify impact• Build • Engage a • Conduct • Interview alliances sponsor periodic • Conduct• Decide: • Find a good check-ups feedback measure or fit between • Debrief • Informal not to coach and • Structured measure coachee • 360• Ask the right • Agree on •… questions measuring methods and metrics
    23. 23. Some verification methods PercentSource: Exceptional Executive Coaching, Dagley, 2009
    24. 24. ESTIMATEVerifications methods overview Context Qualitative/ Reliabi- Impact on Ease of (Individual/or- quantitative lity coaching admini- ganizations) outcome (Low/Mediu stration m/High)Feedback Client Individuals/ Qualitative H H Easy Organizations Peer-to- Organizations Qualitative H HHH Medium peer 360 Organizations Qualitative/ H H Complex QuantitativeInterview Organizations Qualitative Medium M EasySurvey Organizations Quantitative M/H L ComplexFormal Organizations Qualitative M/H May impede MediumdebriefPerforman- Organizations Qualitative/ H May impede Mediumce review Quantitative
    25. 25. What do you think?What has been your experience with using some of the verification methods? (+, Δ, comments)
    26. 26. Return on investment: what is it? Return on investment is a way to quantify that you are getting your value for moneyWhat it is What it is not• One way of showing • A way of replacing intangible business value value• Feedback about how to • A “final grade” about increase value performance• Important for us to do as • A defence of last resort to business people justify our programsSource: MetrixGlobal LLC
    27. 27. ROI: where is it at for individuals?• Just over two thirds indicate they had at least made their ROI money back 344% on• On average: 344% avrg Initial invest mentSource: ICF Global Coaching Client Study, 2009
    28. 28. ROI: where is it at for companies?• The vast majority* had ROI 700% at least made their on avrg investment back.• On average: 700% Initial invest* Of those about to provide company ROI mentSource: ICF Global Coaching Client Study, 2009
    29. 29. ROI: where is it at for companies? • 19% indicated an ROI of at least 50 (5000%) times the initial investment • 28% saw an ROI of 10 to 49 times the investmentSource: ICF Global Coaching Client Study, 2009
    30. 30. ROI is a versatile toolROI level When DataEstimation Done before program is Previous studies of similar fully developed or programs deployedForecast Done during the pilot Estimation by pilot phase of the program participantsPost-program Done after the program Estimations, pre-/post has completed and metrics, control groups learners had a chance to apply what they learnedSource: MetrixGlobal LLC
    31. 31. Isolating the effects of coaching• Personal interview with each respondent• Causal connection established: Coaching -> behaviour change -> impact• Effects of coaching were isolated – Estimate of change due to coaching – Estimate of confidence (error)Source: MetrixGlobal LLC
    32. 32. Example: personal productivityCaptured in terms of hours saved per week. Respondents noted how coaching led to behaviour changes and then estimated the hours saved per week from these behaviour changes.Respondent: “Focused on business priorities... Get more done in shorter time.... Leading more effective meetings.”Estimated at 3 – 5 hours/week3hrs @ $75/hour x 48 weeks = $10,800$10,000 x 80% (coaching) x 75% (confidence)Net benefit = $6,480Source: MetrixGlobal LLC
    33. 33. Comic relief
    34. 34. Example: business impact andmonetary benefitsBusiness % total % total $ benefitsimpact citing identifying (discount- Individual conversationsarea significant $ benefits ed by impact estimators revealed that 77% (23 ofWork 30 20 $947, 208 30) cited coaching asoutput having significant impactProductivi- 60 50 277,526ty on at least one businessCostcontrol 3 3 67,200 area. Sixty percent (18)Employee 27 13 660,000 were able to quantifyretentionSales 10 10 311,200 this impact in monetaryvolume terms.Total $2,263,134benefitSource: MetrixGlobal LLC
    35. 35. Nortel Networks ROI calculationThe total cost for 43 participants was $255,000, which included all costs for administration, vendor, advisory council and time for clients to be coached.ROI = [(Payback - Investment)/Investment)] x 100 $2,263K - $255K x 100% = 788% $255KSource: MetrixGlobal LLC
    36. 36. Quite new: keep on going Verify impact• Build • Engage a • Conduct • Interview • Agree on alliances sponsor periodic • Conduct ongoing• Decide: • Find a good check-ups feedback feedback measure or fit between • Debrief • Informal process with not to coach and • Structured client measure coachee • 360• Ask the right • Agree on •… questions measuring methods and metrics
    37. 37. Ongoing feedback, a way tocontinue coaching• “... it’s not about the coach, it’s about the people, a good leader is the least visible – for feedback/effectiveness, ask around!”Source: Ask, Learn, Marshall Goldsmith, 1997
    38. 38. How to build your case: unsolicitedadvice
    39. 39. How to build your case: unsolicitedadvice• Before you start, agree on a verification process unique to each engagement• In organizations, • Engage the sponsoring leader • Set responsibilities for reporting • Offer clients the ability to select their coaches• Manage the entire coaching process on an ongoing basis to ensure consistency and quality• Trust is a two-way street: allow each coaching relationship to follow its own path• Open up dialogue to learn from the coaching experience
    40. 40. What do you think?• How will you build your case for your next engagement?• What process will you propose to verify the results?
    41. 41. For more information contact Jitka Holt at: • E-mail: jitka@holtcommunicatons.ca • Web: www.holtcommunications.ca • Skype: jitkainvancouver • Tel: +1.604.724.4597

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