How do you prove the ROI of business coaching to executives? The answer lies in coaching statistics - which provide solid evidence to back up your claims. Within the coaching industry, a lot of advice exists - some great, some not so great. Lean into reliable sources such as coaching statistics from credible sources to help prove the ROI of coaching. 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 (1977) 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.
When applied to coaching, the four Kirkpatrick levels (see Phillips & Phillips, 2005) are:
- 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 industry 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 that 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.
Management coaches focus on training, motivating and developing workers for the future and the overall well-being of the organization. Executive and management coaches help managers and executives improve their leadership skills. Here are the benefits and ROI statistics of management coaching.
- 14% of coaching clients say that they hire coaches to improve their business management skills. (2009 ICF Global Coaching Study)
- 61% of coaching clients say they improved their business management skills thanks to coaching. (2009 ICF Global Coaching Study)
The Critical ROI Conversation
Now that you have your coaching statistics in order, you can move on to the practical steps of having that critical ROI conversation with your organization’s leaders. You can implement the following steps when discussing ROI:
- Outline the tangible metrics of business coaching ROI, as well as predicted long-term benefits, and shared objectives.
- Approach your internal team as you would an external client: be clear on the problem-solution equation - what are your organization’s problems? What solutions will business coaching provide to remedy these problems? What types of investments will business coaching bring to your organization and its team members?
When facing obstacles in getting coaching buy-in, get creative in your communication approach - try individual conversations with managers instead of group sessions. It is also beneficial to provide management and the leadership team with feedback from employees showing what your organization’s pain points are and why coaching is needed and will be beneficial to retention, which also impacts the bottom line. Let’s face it, 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. Provide talking points, research findings, and testimonials about the positive impact made by professional development on employees and on the company’s bottom line.
And finally, if you do succeed in achieving buy-in for professional business coaching, make sure that the ROI conversation isn’t just a one-time meeting. Arrange consistent meetings to demonstrate the ROI conversion. The more you can show that professional business coaching is improving the workflow and output of your organization, the more likely your organization will implement coaching training on a long-term basis.
Discussing Coaching with the Entire Management Team
Although it’s imperative that HR and finance are behind business coaching, it’s also critical that the entire management team is on board so they understand the value that business coaching will create. There’s no point in suggesting professional business coaching if you don’t know what strategic value it will add to your organization. So, be sure to do your research and be able to position professional business coaching as a strategic activity that will work in favor of employees and the organization as a whole. Approach the aim of professional business coaching as twofold: to help the employee grow and thrive, whilst also succeeding in business-critical matters.
Coaching should be approached like any other strategic goal. Successful execution requires commitment from the organization and the person being coached, a plan to obtain results, qualified coaches, and a follow-up evaluation.
Reputation Matters: Coaching for Talent Acquisition
When bringing forward your case for coaching, make HR 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.