How do you prove the ROI of business coaching to executives? The answer lies in coaching statistics - which provides solid evidence to back up your claims. Coaching statistics persuade your organization, and its executives, that your coaching efforts are having a positive ROI and influencing employees in positive ways. Let’s take a look at the coaching statistics that provide the ROI of coaching to executives, and discuss how to master tricky ROI conversations, conduct a needs assessment, and communicate coaching benefits for individuals, teams, and the whole organization.
How to Prove the ROI of Coaching: Follow This Formula
After many years of published research, the methodology for measuring the ROI on coaching has become increasingly accurate. Kirkpatrick proposed a now widely accepted four-level taxonomy for the evaluation of training programmes, which is regularly used to evaluate learning and development (L&D) interventions and has often been used to evaluate coaching programmes.
The four Kirkpatrick levels measure:
- Reactions of the participant and the coach to the coaching engagement;
- Learning from the coaching engagement (new knowledge, skills and understandings);
- Behavioral changes as a result of coaching; and
- Business-impact measures (e.g. productivity, quality, costs, time, client satisfaction, job satisfaction).
To the Kirkpatrick taxonomy, Dr Jack Phillips, a well-known expert in ROI methodology, added a fifth level: calculation of ROI. The formula for calculating ROI involves subtracting the costs of coaching from the estimated value of the outcomes of coaching, and expressing this as a percentage ([estimated coaching benefits – costs of coaching / costs of coaching] x 100%). You can use this formula when presenting coaching ROI to executives at your organization.
Coaching Statistics That Prove The ROI of Coaching to Executives
Now that you have solidified a formula to calculate your coaching ROI, it’s time to impress your organization’s executives and management with the best coaching statistics. If the executives are apprehensive about the cost of business coaching, present your findings in a PowerPoint presentation. You can use some of the following coaching statistics to make your case:
- According to the International Coaching Federation (ICF), 86% of organizations saw an ROI on their Coaching engagements, and 96% of those who had an Executive Coach said they would repeat the process again. Behind these results were tangible as well as intangible factors. Tangible factors were areas such as increased productivity, higher levels of overall employee performance, reduced costs, growth in revenue and sales, higher employee retention, and higher engagement of employees. Intangible factors were increased confidence of those being coached, improved communication, stronger employee, and peer-to-peer, and key stakeholder relationships.
- Manchester, Inc. surveyed 100 executives, most of which were from Fortune 1000 companies. Their research showed that a company’s investment in Executive Coaching realized an average ROI of almost six times the cost of the coaching. (Maximizing the Impact of Executive Coaching, The Manchester Review, 2001, Volume 6, Number 1, Joy McGovern, et.al.)
- A Fortune 500 company wanted to study the ROI of Executive Coaching. They found that 77% of respondents indicated that coaching had a significant impact on at least one of nine business measures. In addition, they uncovered that overall productivity and employee satisfaction were the most positively impacted areas (which in turn has an impact on customer satisfaction, employee engagement, quality, annualized financial results, and more). In all, their study concluded that Executive Coaching produced a 788% ROI. The study noted that excluding the benefits from employee retention, a 529% ROI was produced. (Executive Briefing: Case Study on the ROI of Executive Coaching, Merrill C. Anderson, Ph.D., MetrixGlobal, LLC)
Business Coaching Statistics
- A 2001 study by Manchester Inc. showed that businesses who employed a business coach saw an average return on their investment of 5.7 times the amount that they paid for the coaching services.
- According to Eric Schmidt, Google and Apple owe much of their trillion-dollar valuations to their business coach, Bill Campbell. (CNBC)
- A study conducted by MetrixGlobal LLC showed that businesses who paid for coaching saw a $7.90 return for every $1.00 spent on those services.
- 80% of coachees report increased self-confidence. (Institute of Coaching)
- 70% of coachees improve work performance, relationships, and communication. (Institute of Coaching)
Statistics such as the above illustrate just how effective business coaching can be for making a positive impact on individuals and organizations. Business coaching is an investment - and studies continually show how well it pays off.
Business coaching focus on training, motivating and developing workers for the future and the overall well-being of the organization. Executive coaching helps managers and executives improve their leadership skills, become great managers, keep the overview and solve leadership dilemmas on a day to day basis as well as strategically stear their organizations in the right direction. Here we describe some of the benefits and ROI statistics of executive coaching:
- A recent study found that running first-time managers through a leadership development program offered a 29% ROI in the first 3 months, and a 415% annualized ROI. This means that the business made $4.15 for every $1 spent on training.
- 61% of coaching clients say they improved their business management skills thanks to coaching. (2009 ICF Global Coaching Study)
Need we say more?
The Critical ROI Conversation
Now that you have your coaching statistics in order, you can move on to the critical ROI conversation with your manager or HR. You can implement the following when discussing ROI:
- Outline the tangible metrics of business coaching ROI, as well as predicted long-term values, goals and benefits of business coaching in general.
- Be clear on the problem-solution equation - what are your and/or your organization’s problems? Include metrics from survey’s and feedback from employees, if at all possible, to make it clear why business coaching is needed.
- Then explain why business coaching is the right intervention to solve the problems you are facing. What solutions will business coaching provide to remedy these problems? It could be, for instance, to make leaders more capable, make you/them better to solve conflicts, retain people, engage the workforce to the benefit of the customers or the like.
- Also, make a reference to the lost opportunity coast of NOT offering business coaching. For instance - it’s a lot more cost-effective to invest in the right business coaching than to constantly have to fill positions because people are leaving due to lack of training and development opportunities.
When you succeed in achieving buy-in for professional business coaching, make sure that the ROI conversation doesn’t end there. Make sure to enlist tangible goals which - when you reach them - prove the ROI of the coaching journey. The more you can show that professional business coaching is worth the money, the more likely your organization will offer business coaching on a long-term basis.
Reputation Matters: Coaching for Talent Acquisition
When bringing forward your case for coaching, it might also be a good idea to make HR and/or your management aware of how it can vastly improve your organization’s credentials from a talent acquisition perspective. A reputation for professional development will bolster your organization’s position, clearly demonstrating career development opportunities for both current and prospective team members. Although HR will be aware of this, it’s important to reinstate this point from an internal employee perspective. What’s more, training and development can also help your organization to recruit and retain employees by increasing employee satisfaction and employee longevity - and this is particularly important for millennials - the largest generation in the workforce today. According to a Gallup report, millennials want to work for organizations whose values match their own, who provide opportunities for growth and who offer coaching.
The benefits of coaching are abundant - and coaching statistics prove this - but communicating these benefits to reluctant HR, finance, and leadership teams can be a difficult sell. When discussing the need for coaching within your organization, make sure that you articulate its tangible benefits clearly: provide a precise definition and description, conduct a needs assessment, and outline factual ROI metrics. Remember - although you may be eager to implement coaching into your organization, for effective buy-in to occur, having HR, finance, and executive leadership teams on board are crucial. Use the steps outlined in this article to help you achieve your goals.
At Session, we are committed to help you and your team achieve highly effective business coaching outcomes. Reach out to learn more.