Executive & Corporate Coaching Work? Prove it!
I’ve been on both sides of the fence when it comes to corporate coaching. I have been the executive whose company hired a coach for the team, and the actual coach hired by the company. One common discussion or argument that comes up is, how do we measure if this works? What are we going to look at to determine the impacts? Let’s be honest here. Most companies allow the exploration of coaching to die here. It stays in some squishy, ambiguous space that ends up feeling like you’re hiring family therapy, or a counselor to listen to your team/exec bitch about what’s wrong. What I have attempted to do with Sims Coaching & Consulting is position our solutions in a way where there is solid measurable evidence of the accomplishments made and build sustainable programs that live on past the coaching period. At the end of the program it should become part of the corporate DNA, not a program.
While there is widespread acceptance that executive coaching and corporate team coaching works to improve performance, providing data driven metrics that measure this improvement can be somewhat challenging, as human change can be a very complex process. This can be compounded by confidentiality issues that may restrict access to specific data regarding progress made by the executive. However, there are several tools I believe can be highly beneficial in determining whether detectable behavioral advancement has taken place and what, if any, impacts this made on the actual business or bottom line. Here are a few we use to prove the results!
Read all the way to the last point. It’s the one everyone really cares about!
Narrative Evidence Sesh
While certainly the least “scientific” of measurement methods, narrative feedback on the coaching process is probably the most prevalent and, in many ways, the most meaningful way to judge the success of a coaching program. Talk in the hallways or around the “water cooler” about changes in the executive’s or team’s performance or the executives sharing insights into their own coaching experiences can have a massive impact on a company’s conclusion about the overall effectiveness of coaching than any formal analysis or team survey.
Impact 360° Sesh
By re-conducting a compressed version of the original 360° Seshtaken during the executive’s assessment, it is possible to secure an unambiguous measurement of improvement against the 2 or 3 primary developmental goals specified during the creation of the action plan. This accentuates the importance of having well-documented coaching goals at the outset of the coaching process. The follow-up 360° can be as a quick, simple online survey with around 5 questions sent to the same raters who participated in the original assessment. This allows measurement of improvement as perceived by the executive’s leader(s), peers and direct reports. In order to measure the lasting effects of the coaching, this Impact 360° Sesh should be conducted 3, 6, and 12 months after the completion of the coaching program.
An appraisal measuring the satisfaction of the coaching client, leader, and other stakeholders can be sent out 2 and 6 months after the completion of coaching. This simple questionnaire can also canvas these individuals, and teams, for insights into the business impact from the coaching. This not only provides feedback to the executive coach, but also identifies executive coaching success components and helps the company improve for future coaching initiatives.
So here it is, the one everyone really cares about! This is the one that any good executive would want to know before signing any check for coaching.
Return on Investment (ROI)
Executives like to say that the company’s most important asset “goes up and down the elevator each day” or “are the butts in those seats each day”. Good people have become the hottest commodity out there today. If this is the case, logic would require that an intelligent, strategic plan of investing in this “human capital” (e.g. through executive coaching) should lead to a greater return on the organization’s core assets.
However, investing in ‘people power’ is not the same as investing in a piece of equipment like a server or a new software program. For one thing, measuring the return on an investment in a person is a bit more difficult than, say, measuring the increase in the number of Chia Heads per hour produced by the Chia Head machine that has just been installed on the factory floor.
While it is more difficult to calculate an ROI for the investment in a coaching case, it is definitely NOT impossible.
The formula is straightforward:
% ROI = (Benefits Achieved – Coaching Costs) ÷ Coaching Costs X 100
The trick here is clearly identifying the Benefits Achieved through the coaching program and assigning monetary value to those specific benefits.
We can increase the chances of calculating the estimate of the bottom-line impact of coaching by carefully identifying the highest priority objectives before the outset of the program – and take an “objective” measurement of these areas of interest before and after the coaching occurs.
Again, while the specific areas identified for improvement will vary case-by-case, some examples include:
- Meeting or exceeding KPI’scompared to prior months/years.
- Increase in project completion rates or reduction in project completion times
- Communicating clearly and effectively with leaders, peers, reports, customers, investors, etc.
- Consistently delivering business results that meet or exceed the competition, and/or forecast
- Managing the team in an efficient and effective manner
- Providing developmental opportunities and support for others
- Encouraging and rewarding innovation
- Demonstrating vigilance regarding costs, quality and customer service
- Discovering new and innovative solutions to the business.
After identifying the highest priority objectives for the coaching program, we can then consider the results that arise from either achieving or falling short of our objectives.
Some results are more “tangible” than others and are, therefore, easier to translate into monetary value or bottom-line impact. This is not to say that the tangible outweigh the intangible in terms of importance. In fact, intangible changes in the client’s behavior can often have a wider-ranging impact than, or may actually lead to, the more tangible benefits of coaching.
Examples of “Intangible” Benefits from Coaching:
- Reduced conflict
- Improved employee morale
- Better work/life balance
- Better customer service
- Better teamwork
- More productive meetings
- Improved development of subordinates
- Increased job satisfaction
Examples of “Tangible” Benefits from Coaching:
- Fewer customer/employee complaints
- Increased sales
- More customers called on
- More new accounts opened
- Shorter time to market
- Decreased costs
- Decreased employee turnover
- Improved productivity
- Decreased absenteeism
- Fewer customer/employee complaints
There are several vehicles for measuring the benefits achieved (again, conducted both before and after the coaching occurs). They may include:
- The Impact 360° Sesh surveys of the client’s leader(s), peers and reports
- Climate surveys
- Customer surveys
- Surveys of sales, costs, employee turnover and other business results
To officially calculate ROI, we have to take the time to convert these benefits into dollars. Of course, while executive coaching can have a considerable influence on business results, other factors obviously have an impact. For example, sales volume is subject to many complex factors, only one of which is coaching. The level of sales is also impacted by: economic conditions, product developments, seasons, competition, pricing, customer demand, etc. To the extent that we have confidence that the coaching influenced sales volume to some extent, we can apply a percentage adjustment or weighting to the monetary value of the sales increase to reflect this impact.
For example, if we believe that 20% of a $2 million increase in sales can be attributed to behavior change prompted by the coaching, we would add $400,000 to our “Benefits Accomplished” number in our ROI formula. This adjustment allows us to isolate the effects of the coaching.
An Example of Calculating Executive Coaching ROI
For illustrative purposes, let’s look at a very simplified example of calculating the ROI for an executive coaching case. Using a real-life scenario, we will focus on a singular, tangible benefit accomplished due to coaching.
A divisional head of a mid-size, private technology company was being considered for promotion to a recently vacated COO position. However, this particular executive had a reputation for micro-managing and was considered by peers/reports to be “aggressive” and “intimidating”. A 6-month coaching program led to breakthroughs that transformed his entire reputation as a leader to one of collaboration and empathy, not easy to do inside an existing environment at that level. The coaching also helped the executive to improve his strategic use of time through greater delegation of responsibility. The CEO and SVP of HR both cited these changes when naming him the new COO and insisted that without these improvements, a new COO would have been sourced from outside the company and this executive would have been passed by. The coaching program cost $30,000.
One key benefit from this coaching case was avoiding an outside search for a new COO. Let’s estimate the monetary value of this benefit.
- Executive search agency fee of 30% of annual compensation ($300,000) is saved – $90,000.
- Assuming the company’s internal recruiter spends 75 hours on the search, including reviewing candidates, scheduling interviews, preparing assessments, conducting reference checks, notifying unsuccessful candidates, etc., this cost can be estimated at approximately (75 hrs./2,000 hrs. annually X $75,000 recruiter annual salary) – $2,800.
- Assuming the search would have taken approximately 3 months, the cost of lost productivity resulting from the vacant COO position can be estimated at 25% (one quarter of a year) of annual compensation – $75,000.
- Assuming a new COO recruited from outside the company is contributing at a 75% productivity level for the first year on the job as the corporate culture, policies, practices, etc. are learned, the cost of this lost productivity can be estimated as 25% of annual compensation – $75,000.
If we stop here, we see we have already surpassed a 700% return on the coaching investment. Of course, this calculation is incomplete, as we have not included the savings related to onboarding and training a new hire. We’ve also excluded other tangible and intangible benefits resulting from the behavioral improvements from the coaching, many of which may be quite substantial.
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