return on investment in executive coaching

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return on investment in executive coaching

  1. 1. 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
  2. 2. Topics <ul><li>Introduction </li></ul><ul><li>What is ROI? </li></ul><ul><li>Do we need to calculate ROI on Executive Coaching? </li></ul><ul><li>Why is so important to do that? </li></ul><ul><li>International Findings & Case Studies </li></ul><ul><li>Manchester Review (2001) </li></ul><ul><li>Association for Coaching (2004) </li></ul><ul><li>2 Case Studies of Defining & Evaluating the Return: </li></ul><ul><li>Executive Team Coaching – corporate company, Romania (2008) </li></ul><ul><li>1 to 1 Executive Coaching – CEO, Romania (2007) </li></ul><ul><li>5 Practical Ways to Deliver a 500% ROI Executive Coaching Program </li></ul><ul><li>ROI-proven Applications of Executive Coaching </li></ul><ul><li>Q&A </li></ul>
  3. 3. What is Return on Investment? <ul><li>A performance measure used to evaluate the efficiency of an investment or to compare the efficiency of a number of different investments. </li></ul><ul><li>Return on investment is very popular because of its versatility and simplicity. </li></ul><ul><li>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. </li></ul>ROI = Gain of Investment – Cost of Investment / Cost of Investment
  4. 4. Do we need to calculate ROI? <ul><li>NO, concerning a life-coaching agreement. Too many incalculable variables. </li></ul><ul><li>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. </li></ul><ul><li>YES, on every business-related issue in “1 on 1” coaching. </li></ul><ul><li>YES, on every team/corporate coaching contract. </li></ul>“ 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
  5. 5. Why is it so important? <ul><li>Increases responsibility: fully engages the client. </li></ul><ul><li>Develops accountability: best decisions “money can buy”. </li></ul><ul><li>Creates an ongoing, clear coaching environment. </li></ul><ul><li>Establish a higher degree of trust. </li></ul><ul><li>Offers better control on process & outcomes. </li></ul><ul><li>Defines clearly the “out of the comfort zone” benefits. </li></ul><ul><li>Diffuses the (self) manipulative strategies. </li></ul><ul><li>Easier to sell: a history of ROI-related, powerful impact. </li></ul><ul><li>Re-selling & clients who bring clients. </li></ul>
  6. 6. International Findings (1) <ul><li>Manchester Review, 2001 – more than 300 companies </li></ul><ul><li>Delivered an average ROI of 5.7 times the initial investment (a return of more than $100,000 ) </li></ul><ul><li>Executive productivity improvements (reported by 53% of executives) </li></ul><ul><li>Organizational strength (48%) </li></ul><ul><li>Quality improvements (48%) </li></ul><ul><li>Customer service improvements (39%) </li></ul><ul><li>Retaining executives who received coaching (32%) </li></ul><ul><li>Direct report and supervisor relationship improvements (greater than 70%) </li></ul><ul><li>Teamwork (67%) </li></ul><ul><li>Working relationships with peers (63%) </li></ul><ul><li>Job satisfaction (52%) </li></ul>
  7. 7. International Findings (2) <ul><li>Association For Coaching, 2004 – more than 600 companies (42 answered!) </li></ul><ul><li>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% . </li></ul><ul><li>Key fact : 48% of purchasers of coaching stated having a quantifiable measure of the ROI from coaching is important. </li></ul><ul><li>Key fact : In 72% of cases purchasers of coaching use coaches to develop individuals’ business performance. </li></ul><ul><li>Key fact : In the majority of cases coaches received between 4 and 7 Coaching sessions! </li></ul>
  8. 8. Local Case Study (1) <ul><li>A. Executive Team Coaching - relevant data: </li></ul><ul><li>The Team Coaching Program duration:10 months (6 meetings). </li></ul><ul><li>12 people extended board team (central management & heads of production units). </li></ul><ul><li>General profile: experienced senior managers (more than 10 years in management positions), multicultural (3 different nationalities), high income (more than 100k euro per year). </li></ul><ul><li>Non-individual, systemic approach during 5 assisted board meetings (plus 1 kick-off coaching program meeting). </li></ul><ul><li>Average impact of board decisions: more than 1 mil. Euro per meeting. </li></ul><ul><li>Estimated ROI (2 months after): 750%. </li></ul>
  9. 9. Local Case Study (1) <ul><li>B. Measurable criteria: </li></ul><ul><li>General time effectiveness in board meetings (up 78%) </li></ul><ul><li>Time effectiveness related to agreeing on a decision (up 66%) </li></ul><ul><li>Quantity of decisions per meeting (up 54%) </li></ul><ul><li>Quality of decisions taken (impact, sell-ability to peers, etc) (up 44%) </li></ul><ul><li>Information sharing and distribution (up 88%) </li></ul><ul><li>Managerial risks taken on new projects (both strategic & tactic) (down 33%) </li></ul><ul><li>Degree of project/task delegation downwards (up 54%) </li></ul><ul><li>Group management skills and benefits (up 67%) </li></ul><ul><li>Stress and pressure level (down 54%) </li></ul><ul><li>Profit share increase based on assisted team’s decisions (up 2.5%) </li></ul>
  10. 10. Local Case Study (2) <ul><li>A. One to one Executive Coaching Program </li></ul><ul><li>The Executive Coaching Program duration: 12 months (24 meetings). </li></ul><ul><li>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!). </li></ul><ul><li>The coaching contract: developing broader strategic business perspective, building up a managerial team, defining & implementing a new brunch of the company. </li></ul><ul><li>Estimated ROI: 800%. </li></ul>
  11. 11. Local Case Study (2) <ul><li>B. Measurable results: </li></ul><ul><li>Leaving the office before 6 p.m. (80% attained) </li></ul><ul><li>Elaborating a 3 years P.D.P. for myself. (attained) </li></ul><ul><li>Stop upward delegation and confront all the manipulative “games”, as they appear. (90% attained) </li></ul><ul><li>“ On the spot” strategic evaluation of executive decisions taken. (90% attained) </li></ul><ul><li>A minimal 3 options needed before any decision. (attained) </li></ul><ul><li>Building strong & supportive relations with direct reports (attained, 4 out of 6) </li></ul><ul><li>Creating & implementing an “internal crisis cell” (attained, 5 crisis solved) </li></ul><ul><li>No papers on my desk! (attained, 2 nd time) </li></ul>
  12. 12. 5 Ways to deliver a 500% ROI Executive Coaching Program <ul><li>Establish the executive's accountabilities - what specific measurable desired results (not activities), are to be delivered to whom, and by when? </li></ul><ul><li>Establish the resources the executive will have at his/her disposal. </li></ul><ul><li>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). </li></ul><ul><li>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 ...? </li></ul><ul><li>The set of outcomes will be expressed as a coaching plan : with milestones, tracking and reporting mechanisms. </li></ul>
  13. 13. ROI-proven applications of Executive Coaching <ul><li>Over 93% of leaders who have received coaching would </li></ul><ul><li>recommend it to others. The areas where coaching has been </li></ul><ul><li>most beneficial include: </li></ul><ul><li>Reducing executive isolation, facilitating increased feedback and growth, being a “sounding board” for new ideas </li></ul><ul><li>Moving out of the urgent tactical issues to hold a more strategic view </li></ul><ul><li>Building interpersonal skills and developing higher emotional intelligence </li></ul><ul><li>Supporting key personnel through change and shifts in culture </li></ul><ul><li>Increasing managerial effectiveness </li></ul><ul><li>Increasing productivity and time management </li></ul><ul><li>Stress reduction and adjusting work / life balance </li></ul><ul><li>Supporting executives in new positions </li></ul><ul><li>Talent retention </li></ul><ul><li>Building high performance teamwork </li></ul><ul><li>Bottom line profitability </li></ul>
  14. 14. Thank You!  <ul><li>&quot; We shall not cease from exploration, </li></ul><ul><li>and the end of all our exploring will be </li></ul><ul><li>to arrive where we started </li></ul><ul><li>and know the place for the first time.&quot; </li></ul><ul><li>(T.S. Eliot) </li></ul>

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