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Executive
Briefing:
Case Study on the Return on Investment of Executive Coaching
Prepared
by:
Merrill C. Anderson, Ph.D.
MetrixGlobal, LLC
November 2, 2001
A
Fortune 500 firm and a coaching services company, recently engaged MetrixGlobal
LLC to determine the business benefits and return on investment for
an executive coaching program. This executive briefing was excerpted from
the final report of the study and is intended for the private use of MetrixGlobal
clients and professional associates. Please contact Merrill Anderson,
merrilland@metrixglobal.net.
Coaching produced a and significant intangible benefits to the business. The
study provided powerful new insights into how to maximize the business
impact from executive coaching.
Introduction
A Fortune 500 firm launched an innovative leadership development effort
that was expected to accelerate the development of next generation leaders.
The participants in this effort were drawn mostly from the ranks of middle
managers and from many different business units and functional areas.
Leadership development activities included group mentoring, individual
assessments and development planning, a leadership workshop and work on
strategic business projects.
Coaching
was considered to be a key enabler for this approach to leadership development
because the participants could work privately and individually with his
or her coach to develop specific leadership competencies. The client organization
engaged a coaching group to provide coaching to the leadership development
participants. While participants spoke very highly of their experience
with coaching it was decided to conduct a formal assessment of the effectiveness
and business impact of coaching. It is intended that the results from
this study be used to determine:
1. How did coaching add value to the business and what was the return
on investment?
2. How could coaching be best leveraged in the future, especially if coaching
was to be expanded to other business regions?
Data Collection Procedures
It was decided that the best way to isolate and capture the effects of
coaching on the business was through a questionnaire. This questionnaire
had two parts. Part one was completed electronically via email and examined
clients initial reaction to coaching, what they learned, how they applied
what they learned and captured their initial assessment of business impact.
Part two was conducted over the telephone with each respondent and probed
more deeply into business impact and the financial return on investment.
The target population for the survey was 43 leadership development participants.
These participants were drawn from two regions: Eastern United States
(37) and Mexico (6). These participants represented a cross section of
the business and included those in sales, operations, technology, finance
and marketing. All had been identified as potential leaders and executives.
Thirty (30) of 43 leadership development participants returned their surveys
for a 70% response rate.
Results
Coaching was a very effective developmental tool for the leadership development
participants, producing financial and intangible benefits for the business.
Coaching sessions were rich learning environments that enabled the learning
to be applied to a variety of business situations. Decision-making, team
performance and the motivation of others were enhanced. Many of these
business applications contributed annualized financial benefits. Other
applications created significant intangible benefits. Overall, the participants
appreciated their coaching experiences and would highly recommend coaching
to others.
Three-quarters (77%) of the 30 respondents indicated that coaching had
significant or very significant impact on at least one of nine business
measures. In-depth discussions were conducted over the telephone with
each respondent to further explore the business impact of coaching. Sixty
percent of the respondents were able to identify specific financial benefits
that came as a result of their coaching.
Overall, productivity (60% favorable) and employee satisfaction (53%)
were cited as the most significantly impacted by the coaching. Respondents
defined productivity in this context as relating to their personal or
to their work group productivity and half (50%) documented annualized
financial benefits. Employee satisfaction was viewed both in terms of
the respondents being personally more satisfied as a result of the coaching
as well as the being able to increase the employee satisfaction of their
team members. The respondents could not quantify this benefit in financial
terms. Employee satisfaction, then, was a significant source of intangible
benefits. Customer satisfaction (53%) was also a significant source of
intangible benefits.
The next most frequently cited as being significantly impacted by coaching
were work output (30%) and work quality (40%). Twenty percent of the respondents
identified financial benefits as a result of increased work output. Many
respondents reported improvements in work quality, however, they were
not able to quantify these improvements in terms of dollar benefits. Work
quality improvements were considered an intangible benefit of the coaching.
Program costs were tabulated for all 43 leadership development participants
in determining the return on investment. A 529% return on investment was
produced by the coaching process (excluding the benefits from employee
retention). While those clients who had customer or people responsibilities
produced proportionally greater financial benefits, the realization of
benefits to the business was fairly widespread throughout the group involved
in this study.
Recommendations were made to maximize the business benefits from executive
coaching:
1. Manage the entire coaching process to ensure consistency and quality.
Though the content of individual coaching sessions should always be confidential,
the coaching process itself needs to be managed to ensure that the coaching
clients and the coaches are following the appropriate process and leveraging
best practices.
2. Prepare clients in advance for coaching and don't force coaching
on anyone. Because coaching remains a relatively new development technique,
people may not understand how the coaching process can help them become
better business professionals. The sooner they understand the process,
the sooner they will see results.
3. Offer clients the ability to select their coaches. Chemistry
is important to build an effective coaching relationship. Provide prospective
coaching clients with information about the coaches including biographies,
education, coaching credentials, functional expertise, industry experience
and other background information.
4. Provide coaching strong organizational support. Those being
coached should receive encouragement and support from their immediate
managers. Also, coaching should be conducted in the context of other developmental
efforts such as competency development, assessments, mentoring and leadership
workshops.
5. Ensure coaches are grounded in the company’s business and culture.
Coaches are more effective when they can identify with and talk about
the realities of their client's environment.
6. Allow each coaching relationship to follow its own path. A major
difference between coaching and training is that coaching allows the individual
to determine what works best for him or her at a very personal level.
Coaches need wide latitude to work with “the whole person” and
help each client be more effective as a person as well as to be more effective
as a business leader.
7. Build performance measurement into the coaching process. Evaluation
of coaching should be designed into the process from the beginning to
better set performance expectations and open up new learning opportunities
for making coaching more effective while the coaching is being conducted.
For example, coaching can be refocused to deal with issues or to ensure
that business priorities will be met. In this way, the evaluation of coaching
becomes more than just a measuring stick – it becomes a structured
approach to deepen the business value of coaching.
About MetrixGlobal, LLC
MetrixGlobal LLC is a professional services firm specializing in performance
measurement solutions that increase accountability for bottom-line business
results. Whether it’s developing a scorecard for a corporate university,
determining return on investment for a human resources program or conducting
a business impact study on an organization change initiative, MetrixGlobal
consultants partner with clients to create powerful measurement methodology.
Please visit our web site,
www.metrixglobal.net
to learn more about us.
How can your company achieve at least a 529% ROI from coaching?
It's Easy:
1. Call us for your Free, No Obligation,
Confidential Consultation to learn more and decide about coaching for
yourself at: 800-887-7214 (toll free in the US and Canada) or 239-415-1777.
(We answer the phone by the fourth ring.)
2. Request that we call you for your Free
Consultation by clicking here,
3. Contact us by e-mail
by clicking here
4. Or learn more about coaching and TCC
before acting!
(after all, we made a lot of promises and sales coaching and TCC might
be new to you)
You are invited to select the starting point that
best suits your level of knowledge.
your executive
goals faster...
the return on your investment dollars...
your
life more ...
your free time...
the person you want to be...
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