The return on executive coaching is measurable, and when the engagement is set up correctly, it is substantial. Independent studies put it between a 5:1 and nearly 8:1 return. Boards hesitate because some of the value looks intangible at first. It is not. Here is what the ROI of executive coaching actually looks like, how to measure the return on investment, and when the spend is worth it.
To appreciate the value – tangible or not – of executive coaching, you have to understand the premise of coaching in any setting offers an opportunity for increased awareness.
When leaders have a goal to obtain, it requires a change in behavior in order to meet or exceed it. The most difficult behavioral change to achieve is one requiring high-level skills and high motivation to implement those skills.1
Executive coaching works as the bridge between a leader’s goal and the successful behavioral changes by raising the leader’s level of awareness through reflection. Proven strategies such as linking the goal to an individual’s values and celebrating the incremental progress as it is made in achieving the overarching goal, are provided in the coaching framework.2
You may think that because many of the benefits of executive coaching are intangible, there is a level of subjectivity involved in determining the return on investment and you’d be correct… to a degree. It is difficult to place a numeric value on things like improved communication and increased collaboration, but it’s not difficult to track productivity and retention metrics.
According to data from a Metrix Global case study discussed in a recent Forbes article, the benefits of executive coaching outweigh the investment by a landslide. In fact, the study concluded that coaching produced over a 5:1 return without including the financial benefits of employee retention. When considering that critical factor, the ROI jumps to nearly 8:1 or 788%.
A successful coaching engagement results in healthier and more productive work environments with empowered leaders who are more self-aware and open-minded. According to the International Coaching Federation, coached executives experience a 70% increase in individual performance, a 50% increase in team performance and a 48% increase in organizational performance.
The intangibles such as improved communication and increased confidence aren’t only beneficial in a professional setting though. The value for coached leaders goes beyond the improvements realized at the office as many feel the positive impact of the engagement in their personal relationships.
You do not have to guess at the ROI of executive coaching. Set the baseline before the engagement starts, then measure against it. Track productivity against the goal the coaching is meant to serve. If the engagement targets a leader stepping into a larger P&L, measure the outcomes of that unit. Track retention, both the coached leader’s and the team reporting to them, because a more self-aware leader holds a team together. Use 360-degree feedback at the start and the end to capture the shift in how the leader is experienced by the people around them. And tie the engagement to a specific business objective at the outset, so the return is judged against something real rather than a vague sense of improvement.
Coaching earns its return most clearly when the cost of getting leadership wrong is highest. A newly promoted executive taking on scope they have not carried before. A strong operator who has hit a ceiling on how they lead others. A leader navigating a transition, a turnaround, or a rapid expansion. In each case the behavior change is high-stakes and the margin for error is thin. That is exactly where the 5:1 return lives.
CONSIDERING EXECUTIVE COACHING?
An executive coaching engagement typically lasts six to twelve months and includes monthly sessions. Kincannon & Reed Executive Coaches are certified and have proven experience in both coaching and food & agriculture. Each coach brings a unique perspective to support executives building their leadership potential. If you would like to connect with a K&R Executive Coach and learn more about how you can reach your full potential faster e-mail us at KRCoach@KRSearch.com.
RESOURCES:
Kincannon & Reed incorporates validated interview techniques and evaluation tools to accurately assess candidates. We have the capability to measure personality traits, motivations and evaluate specific competencies and behaviors. The right assessments provide a balanced approach to understanding potential as much as experience.
Coaching empowers executives to reach their full potential faster, benefiting your organization. We partner certified coaches with executives and use a strengths-based approach to guide leaders through a process that maximizes their potential to drive success.
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