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HDA Associates Limited

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Executive Coaching – Measuring the Return on Investment

Astute businesses should only invest in executive coaching if a compelling business case can be presented; this inevitably requires an understanding of the return on investment executive coaching yields. In this short article, HDA goes some way towards proving the valuable role coaching plays in improving business performance, by showing evidence of the tangible business benefits observed as a result of coaching.

HDA has found that outcomes-focused executive coaching delivers tangible business benefits, particularly where the following combination of ‘success’ input elements are brought together:

Coaching is the ‘right’ approach for the individual
The ‘right’ coach is selected to match the coachee
Personal goals and objectives are closely linked to hard business outcome

It is important to bear in mind that there will always be extraneous factors that may influence the business benefits observed following an executive coaching programme. In any case, there have been many studies over the years which have analysed the Return on Investment (ROI) from coaching. HDA have collated some of the more recent research below in an attempt to demonstrate the business value of coaching.

Executive Coaching Delivers Significant Business Benefits

The results of a recent HDA survey showed that, 92% of organisations surveyed found that coaching delivers significant business benefits such as ‘higher ROI than training’, ‘reduced levels of stress and absenteeism’ and ‘increased retention’, while also providing value for money. In addition, over 80% of organisations surveyed agree that offering executive coaching to employees is an important component of building a successful employer brand. These findings are consistent with results from both the International Coaching Federation (ICF) and CIPD surveys.

The ICF survey found that over 98% of surveyed corporate coaching clients found coaching to be a valuable investment and overall coaching programs delivered ROI SIX times the cost of the coaching. In addition increases in productivity and retention; greater organisational commitment and improved bottom-line profitability were observed. In terms of individual benefits over 70% noticed an improvement in working relationships with direct reports and also with immediate supervisors.

The CIPD survey revealed that 99% of respondents agree that 'coaching can deliver a tangible benefit both to individuals and organisations', with over90% maintaining that coaching is an effective way to promote organisational learning and has a positive effect on bottom line.

Further Findings

Return on Investment over 500% - A study by MetrixGlobal LLC for a Fortune 500 firm and Pyramid Resource group found that coaching produced a 529% return on investment to the business, and the financial benefits from employee retention boosted the overall ROI to 788%. The Manchester Review (2001) also observed that companies investing in executive coaching received an average 500%+ return on investment. A study reported in the Washington Post (Joyce, 2004) found that a company utilizing coaching gained 3.3 million in 1 year which resulted in a 689% return on the company's investment.

Coaching more effective than training alone - An article in Public Personnel Management (Winter 97) found that training alone increased productivity by 22.4% while training plus coaching increased productivity by 88%. Similarly, the Xerox Corporation carried out several studies, one of which showed that in the absence on follow-up coaching, 87% of the skills change brought about by training or development programme was lost.

Coaching yields positive and measurable business benefits - Triad Performance Technology found that a six month coaching intervention at a global Telecom company resulted in more than $2 million positive and immediate impact to its bottom line. Coaching brought positive and measurable results in four key areas:

Coaching increases retention levels - Personnel Today (November 2007) reported that within six months of rolling out a coaching programme, staff turnover at Portman Building Society was reduced by 2%. After 12 months this reduction reached 5%.

How HDA measures success

HDA seeks to deliver a sustainable improvement in personal and business performance that can be effectively measured. To ensure this is achieved a business case behind the need for coaching is clearly established upfront and the business environment/culture in which the executive is expected to perform is fully considered. HDA bases measurement of success around Kirkpatrick’s four-level evaluation model, which essentially measures:

Reaction - what the coachee thought and felt about the coaching

Learning - the resulting increase in knowledge or capability, for e.g. coachee and corporate client set clearly defined goals at the start of the process and achievement of these goals is one measure of effective coaching

Behaviour - extent of behaviour and capability improvement and implementation/application. For e.g. coachee undertakes an assessment e.g. 360, at the start of the process, where appropriate. At the end they re-take the test and improved scores can indicate effectiveness of coaching;

Results - the effects on the business or environment resulting from the coachee's performance for e.g. business objectives set at the beginning of the process are reviewed at the end of the coaching programme. Has the business case been met? Executive coaching must primarily focus on delivering better results for the business, otherwise the business case fails.

For further information:
call 08452 60 95 40 or email info@hda.co.uk

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