return on investment in executive coaching

Return On Investment in Executive Coaching "The goal of coaching is the goal of good management: to make the most of an organization’s valuable resources.” Harvard Business Review

Topics
Introduction
What is ROI?
Do we need to calculate ROI on Executive Coaching?
Why is so important to do that?
International Findings & Case Studies
Manchester Review (2001)
Association for Coaching (2004)
2 Case Studies of Defining & Evaluating the Return:
Executive Team Coaching – corporate company, Romania (2008)
1 to 1 Executive Coaching – CEO, Romania (2007)
5 Practical Ways to Deliver a 500% ROI Executive Coaching Program
ROI-proven Applications of Executive Coaching
Q&A

What is Return on Investment?
A performance measure used to evaluate the efficiency of an investment or to compare the efficiency of a number of different investments.
Return on investment is very popular because of its versatility and simplicity.
To calculate ROI, the benefit (return) of an investment is divided by the cost of the investment; the result is expressed as a percentage or a ratio.
ROI = Gain of Investment – Cost of Investment / Cost of Investment

Do we need to calculate ROI?
NO, concerning a life-coaching agreement. Too many incalculable variables.
NO, in the case of a business client without any form of internal or overall performance appraisals. Almost nothing to adapt for a ROI calculation.
YES, on every business-related issue in “1 on 1” coaching.
YES, on every team/corporate coaching contract.
“ The Bottom Line: Coaching produced a 529% return on investment and significant intangible benefits to the business. The study provided powerful new insights into how to maximize the business impact from executive coaching. ” MetrixGlobal, LLC 2001

Why is it so important?
Increases responsibility: fully engages the client.
Develops accountability: best decisions “money can buy”.
Creates an ongoing, clear coaching environment.
Establish a higher degree of trust.
Offers better control on process & outcomes.
Defines clearly the “out of the comfort zone” benefits.
Diffuses the (self) manipulative strategies.
Easier to sell: a history of ROI-related, powerful impact.
Re-selling & clients who bring clients.

International Findings (1)
Manchester Review, 2001 – more than 300 companies
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 (48%)
Quality improvements (48%)
Customer service improvements (39%)
Retaining executives who received coaching (32%)
Direct report and supervisor relationship improvements (greater than 70%)
Teamwork (67%)
Working relationships with peers (63%)
Job satisfaction (52%)

International Findings (2)
Association For Coaching, 2004 – more than 600 companies (42 answered!)
Key fact : Purchasers of Coaching stated better people management skills resulted in 58% of coaching programs and increase job motivation in 53% . While coachees stated improved work life balance resulted in 48% of coaching programs and improved job motivation in 42% .
Key fact : 48% of purchasers of coaching stated having a quantifiable measure of the ROI from coaching is important.
Key fact : In 72% of cases purchasers of coaching use coaches to develop individuals’ business performance.
Key fact : In the majority of cases coaches received between 4 and 7 Coaching sessions!

Local Case Study (1)
A. Executive Team Coaching - relevant data:
The Team Coaching Program duration:10 months (6 meetings).
12 people extended board team (central management & heads of production units).
General profile: experienced senior managers (more than 10 years in management positions), multicultural (3 different nationalities), high income (more than 100k euro per year).
Non-individual, systemic approach during 5 assisted board meetings (plus 1 kick-off coaching program meeting).
Average impact of board decisions: more than 1 mil. Euro per meeting.
Estimated ROI (2 months after): 750%.

B. Measurable criteria:
General time effectiveness in board meetings (up 78%)
Time effectiveness related to agreeing on a decision (up 66%)
Quantity of decisions per meeting (up 54%)
Quality of decisions taken (impact, sell-ability to peers, etc) (up 44%)
Information sharing and distribution (up 88%)
Managerial risks taken on new projects (both strategic & tactic) (down 33%)
Degree of project/task delegation downwards (up 54%)
Group management skills and benefits (up 67%)
Stress and pressure level (down 54%)
Profit share increase based on assisted team’s decisions (up 2.5%)

A. One to one Executive Coaching Program
The Executive Coaching Program duration: 12 months (24 meetings).
The client profile: CEO, late 40’s, English & German language, 5 years experience as CEO in 2 companies, more than 200k Euro income. Wife, 3 kids, 2 houses, 2 cars, passionate about leadership books and models, all-time traveler, strong tennis player (ouch!).
The coaching contract: developing broader strategic business perspective, building up a managerial team, defining & implementing a new brunch of the company.
Estimated ROI: 800%.

B. Measurable results:
Leaving the office before 6 p.m. (80% attained)
Elaborating a 3 years P.D.P. for myself. (attained)
Stop upward delegation and confront all the manipulative “games”, as they appear. (90% attained)
“ On the spot” strategic evaluation of executive decisions taken. (90% attained)
A minimal 3 options needed before any decision. (attained)
Building strong & supportive relations with direct reports (attained, 4 out of 6)
Creating & implementing an “internal crisis cell” (attained, 5 crisis solved)
No papers on my desk! (attained, 2 nd time)

5 Ways to deliver a 500% ROI Executive Coaching Program
Establish the executive's accountabilities - what specific measurable desired results (not activities), are to be delivered to whom, and by when?
Establish the resources the executive will have at his/her disposal.
Forecast the likely results the executive is likely to produce: given history, and plans and projects in place (the most likely case & best case predictable outcomes).
Create a set of outcomes , beyond the most likely case, as the context for coaching. And outcomes, that if/when achieved would show an ROI of ...?
The set of outcomes will be expressed as a coaching plan : with milestones, tracking and reporting mechanisms.

ROI-proven applications of Executive Coaching
Over 93% of leaders who have received coaching would
recommend it to others. The areas where coaching has been
most beneficial include:
Reducing executive isolation, facilitating increased feedback and growth, being a “sounding board” for new ideas
Moving out of the urgent tactical issues to hold a more strategic view
Building interpersonal skills and developing higher emotional intelligence
Supporting key personnel through change and shifts in culture
Increasing managerial effectiveness
Increasing productivity and time management
Stress reduction and adjusting work / life balance
Supporting executives in new positions
Talent retention
Building high performance teamwork
Bottom line profitability

Thank You! 
" We shall not cease from exploration,
and the end of all our exploring will be
to arrive where we started
and know the place for the first time."
(T.S. Eliot)

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return on investment in executive coaching

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