The ROI Benefits of Executive Coaching

Coaching has become a core component of leadership development and training within many organizations. According to the 2012 International Coaching Federation survey, organizations spend close to $2.0 billion on executive coaching for their leaders. About 6 out of 10 organizations currently offer leadership coaching services or other developmental counseling to their managers and executives. Sherpa’s 2012 Coaching Survey reports companies are increasing spending on executive coaching skills for leaders and showing recovery from the decreases experienced during the economic downturn.

While executive coaching ROI studies are still limited, the available data is very compelling and speaks to why organizations seek to create a leadership development and training culture. Some of the most cited studies that document the value of coaching include:

  • Manchester Review Volume 6, Number 1 2001 showed an average ROI of nearly 6 times the investment
  • International Personnel Management Association found that training increases productivity by 22% and when coaching is added, it increases productivity to 88%
  • Booz Allen 2004 study showed coaching returned $7.90 for every dollar spent
  • Bersin & Associates 2009 study of over 1 million data points discovered executive coaching was the management process with the highest business impact of 22 practices measured
  • Bersin & Associates 2011 study on High-Impact Performance Management: Maximizing Performance Coaching revealed that organizations with a coaching culture where senior leaders “very frequently” coached had 21 percent higher business results. Those organizations with “excellent” cultural support for coaching had 13 percent stronger business results and 39 percent stronger employee results

Why do organizations most often utilize an executive leadership coaching program?

  1. To Develop Essential Skills of LeadersToo often leaders still rely on a directive style of management. As a skill set, coaching continues to be the weakest competency of front line sales managers; however with leadership coaching skills training, companies can get a lift of 17% to 25%. (Corporate Executive Board 2009)
  2. To Create a Leadership Pipeline Human Resource Executive Magazine reports that Dell Computer Corporation in Austin, Texas has been measuring ROI in executive coaching for more than five years and coaching has received more than a 90% satisfaction rate from company executives. Additionally, senior staff members who have received coaching tend to be promoted more often than those who do not participate in one-on-one coaching conversations.
  3. To Develop Talent and Teams at All Levels Leaders should seek coaching for their own development and team effectiveness: “when they feel that a change in behavior – either for themselves or their team members—can make a significant difference in the long-term success of the organization,” said Marshall Goldsmith, well-known executive coach and author of eighteen books, including The Leader of the Future (Jossey-Bass, 1996).

Our work with over 650 leaders in top organizations supports the following best practices to achieve maximum results from executive coaching.

  • Clearly define and agree upon the goal of the coaching assignment.
  • Define the timeline for the coaching assignment; 6 to 12 months remains the norm.
  • Understand the roles of boss, coachee, coach, HR players and understand the corporate culture.
  • Identify the key stakeholders in the process – it is important that the stakeholders are onboard with the goals of the coachee.
  • Collect feedback from key stakeholders – conduct confidential interviews to gather information, assess support, validate goal of assignment.
  • Keep and respect the confidentiality of coaching assignment.
  • Create an action plan that is developed and owned by the coachee.
  • Collect feedback through 360 assessment scores and re-interviews.
  • Measure success and make adjustments.

Effective coaching produces incredible impact and business results. Does your organization have a talent development process? What impact does executive coaching yield in your organization and how do you measure the results? Your leadership pipeline and business results may just depend on your answers.