How to Evaluate Coaching’s Return on Investment
Coaching needs to provide a good return on investment for coaching to be sustainable and viable as a profession.
How to Evaluate Coaching’s Return on Investment
Coaching needs to provide a good return on investment to be sustainable and viable as a profession. We saw in last week’s blog that the coaching leadership style is the most effective for developing talent, accountability, and responsibility for personal and organizational results. However, the time coaching takes from daily operations is a cost that must be considered. Therefore, what are the benefits of coaching?
Coaching improves a leader’s effectiveness and efficiency. It improves ‘soft-skills’, such as their ability to interrelate with others, resolve conflict, communicate persuasively and develop high performing teams. It is difficult to demonstrate return on investment (ROI) on these soft skills in purely monetary terms; however, there are tools we can use such as the Kirkpatrick Model (1983) to evaluate ROI.
The Kirkpatrick Model looks at four criteria:
1. What were the reactions to the program and planned action?
2. What was the learning?
3. Were the behavioral goals reached?
4. What were the business results?
For example, McGovern applied the Kirkpatrick Model to measure ROI in a study called, “Maximizing the Impact of Executive Coaching,” (The Manchester Review, 2001, Volume 6, n°1). His study measured the impact of executive coaching on 100 executives (66% male, 34% female, age 30-59, 50% were vice-presidents or above). Also included in the study were immediate supervisors or human resource representatives (stakeholders).
What were the results?
1. Reaction to the program:
• 86% of participants and 74% of stakeholders were very/extremely satisfied with the coaching process.
2. Participants reported that they learned the following:
35% enhanced personal skills, 18%, enhanced management skills; 14%, enhanced leadership skills; 15%, enhanced business agility, and technical or functional credibility; 12% fostered personal growth.
3. 85% of participants reported their behavioral goals were reached.
Success of the coaching process was attributed to the quality of the relationship between the coach and the leader, by the quality of the coach’s feedback, and assessment tools. Also instrumental was the leader’s commitment and the manager’s support of the coaching process.
What detracted from leaders’ reaching their goals were lack of commitment and availability, little organizational support, and miscommunication between the coach and the leader.
4. The organizational Outcomes
The outcomes were increased productivity and bottom line profitability, improved quality, increased organization strength, more customer service, reduced complaints, a better retention rate and consequently less turnover. There were also intangible impacts such as an overall improved relationship with peers, stakeholders, reports, and clients. Consequently, there were less interpersonal conflicts.
5. ROI
ROI was estimated as follows: ROI = $100’000 or 5.7 times the initial investment. Seventy-five percent of participants considered the value of coaching as far greater than the investment in time and money.
The Kirkpatrick Model is a viable means to measure return on investment and will be a tool that will be increasingly used as many organizations select coaching as a way to support leaders to improve their performance in a rapidly changing and increasingly complex environment. As leaders are constantly pressured to do more with less coaching is often offered as a support to prioritize and strategize better. Leaders also expect more personal satisfaction and autonomy from their employers. Coaching help leaders to develop autonomy and align their personal needs to those of the organization.
From McGovern’s research using the Kirkpatrick Model, it is evident that coaching has a high return on investment and makes business sense.
The Kirkpatrick Model is put one tool. What other ways do you have to evaluate coaching’s effectiveness?
For more information, you can check out our leadership coaching programs or talent development programs and access our free podcast on Excellent Executive Coaching and subscribe on iTunes.
References:
Anderson, M. (2001a). Executive Briefing: Case study on the return on investment of executive coaching. Retrieved 20 September 2006, 2006, from http://www.metrixglobal.net/images/pdfs/metrixglobal_coaching_roi_briefing.pdf
Kirkpatrick, S, Gelatt, C.D. Jr., Vecchi, M.P. (1983) Optimization by Simulated Annealing, Science, Volume 220, Number 4598. http://wexler.free.fr/library/files/kirkpatrick%20(1983)%20optimization%20by%20simulated%20annealing.pdf
McGovern, J., Lindemann, M., Vergara, M., Murphy, S., Barker, l. & Warrenfeltz, r. (2001). Maximizing the impact of executive coaching: Behavioural change, Organizational Outcomes, and Return on Investment. The Manchester review 6, 1–9.
