What’s the real ROI of Executive Coaching?
You know, we often get questions from senior leaders in organizations like…
“I know coaching is good for the individual being coached, but what’s in it for our company?“
Or..
“I hear of other companies paying for their team to be coached – is that just an executive perk?”
But in fact, executive coaching not only helps the person being coached, it brings enormous benefit to the company too.
A study by Hecht Harrison (a global recruiting company) found the top five reasons why companies provide coaching to their leaders:
- For leadership development—70%
- For skill development or style differences—64%
- To retain top talent—40%
- As part of management succession planning—34%
- To ensure success after promotion or with a new hire—30%
From “How Is Coaching Used in Your Organization?”
– Lee Hecht Harrison
Another well-known study in the Manchester Review surveyed 100 executives from Fortune 1000 companies, who had participated in coaching.
The execs were:
- 30-60 years old
- 34 women, 66 men
- 50% of them holding VP or higher jobs
- 28% earning in the low 6 figures
- 19% in the mid six figures
They also interviewed, where possible, the executive’s’ boss and the HR Director.
The Manchester Review study found the average return on investment (ROI) from coaching was nearly 5.7 times the cost of coaching. In other words, for every $1 they spent on coaching they gained nearly $6 in savings, benefits, efficiencies, etc.
Execs in the study confirmed tangible and intangible benefits to their companies, including:
Tangible Benefits
Source: The Manchester Review
Intangible Benefits
Source: The Manchester Review
Since the Manchester study, numerous other organizations have quantified the ROI that organizations have found through coaching. An ICF Study found it was, on average, 7x the price of the coaching.
A Harvard Business Review study of companies that spent aggressively on employee development (How’s Your Return on People?) found that each outperformed the S&P 500 by 17-35%.
Of course, by looking at the financial ROI we may have a tendency to overlook some intangible benefits to the company that often are crucial.
- Leadership can be lonely. A trusted advisor outside is a big help when times are tough — ensuring a leader had a thinking partner and trusted confidante when they are leading others through difficult times can bring almost immeasurable benefit.
- Coaches typically work on the leader’s most pressing challenges– one of the reasons the ROI of Executive Coaching is so much higher with coaching than most training and development is that it is customized.
- Focus. A great coach cuts through the noise of 1000 emails and competing priorities to help the executive find the 2-3 levers that will have the most impact on results – theirs and the company’s.
Coach’s Questions:
If you’re a leader looking to grow, how might you approach your company for support so 2017 is your best year yet?
What investments do you need to make to boost your success and your team’s success? What’s that success worth? What’s the cost of not succeeding?
