Is there an ROI for Executive Coaching?

Coaching as a management development tool

Any investment should be judged on its return on investment or ROI – what is the cost of what we put in, and what will be the value of the return.  For the more familiar financial investments the calculations are relatively simple.  A group management development programme, on the other hand, is also an investment and the most important consideration should again be the return on investment. Although arriving at numbers in this case can be challenging, the process is no less important.  We need to know the costs of the programme and we need to know the value of the results.

When it comes to a set programme, we need to be aware that the ‘cost’ extends beyond the fee paid to the provider. Take into consideration the costs associated with travel and accommodation and perhaps more importantly, the loss of the participants’ input in the workplace for the duration of the programme.  All of these add to the ‘cost’.

Quantifying the value of the results of the programme also presents a challenge. When providing sales training one can measure the impact on the individuals’ sales achievements; when providing skills training one can look for an improvement in the trainee’s work and there may even be a hard measure that one can use. However, when it comes to management, measurement is a problem. The work of an executive/leader is complex – they have to deal people both internally and externally and they are also ultimately responsible for important processes, whether these be marketing, production or financial. Gauging the effect or results of any executive development programme on the various components of the business for which an executive is responsible is often not possible. What then of the contribution of the individual executive’s area of responsibility to the ‘bottom line’ of the company? Again this is an area of measurement fraught with variables. An apparent improvement in contribution may well be attributable to a fortuitous factor such as a favourable change in exchange rates. Events outside the control of the executive can have a significant impact on measurements deemed to be associated with development programmes. Businesses exist in a turbulent and multifaceted environment where output measurement is not a simple process.

Most companies are aware of the above problems of measurement of ROI when it comes to executive development programmes and turn instead to looking for action of some sort. Any action! A change in attitude – to work, staff and peers; a questioning of business processes; the making of changes or experimentation.  Probably the most important action sought, however, is a sharing with direct reports and peers of that which the executive has been exposed to while on the programme – a leader becomes complete only after giving something back. Despite this range of potential ‘action’ results there is an all too common cry from senior executives of, “We’ve sent these individuals on programme A, then programme B and there has been no progress – where’s our return?” Placing the blame on the shoulders of the provider of the executive education is not the solution but handing over the process to an executive coach may well be.

Unlike the situation in a lecture room of 30 – 50 participants, an executive being coached has no place to hide. There’s no daydreaming or dozing. No anonymity in a ‘syndicate’. No blaming the lecturer. In a coaching relationship the executive coach accepts a more direct responsibility for the success of the coaching engagement and is involved in measuring the results. The executive on the other hand is encouraged to take responsibility for their own growth and development.

A good executive coach helps clients bridge the gap between what they have been asked to do and what they have been trained to do. During the coaching process executives are constantly being challenged while also being provided with regular feedback. Clients come away from coaching sessions with action plans, not heads filled with jargon. Coaching is customised and directed towards achieving mutually agreed upon objectives. Small wonder then that many executives are choosing coaching as a proactive component of their professional lives.

Having gained a measure of the outputs, let’s go back to the input costs.  The fee for a six month executive coaching engagement (under R70 thousand) and no big chunks of time away from the office compares very favourably with the average cost of a four week executive education programme (R140 thousand plus).  Effective outputs combined with reasonable costs make for a highly acceptable ROI for an executive coaching intervention.

Is coaching an effective management development tool?  It would certainly seem so.  Not only is the duration of the coaching engagement a period of customised inputs and measured outputs, but the experienced coach will encourage and create a habit of continuous learning.  Dr Marty Nemko, writing in U.S. News & World Report advises people to take responsibility for their own development, “Find a mentor who is a real-world expert in your career. Craft a program of regular discussions, read articles, attend workshops offered by professional associations, apprentice with the best in your field. … you develop an efficient plan for learning what you really need to know.”  Who better to provide support in a self-structured management development programme than an experienced executive coach?

Coaching has an important role to play in management development.  Executives are assured of effective individual attention; companies are rewarded with a highly acceptable return on investment.


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2 Responses to Is there an ROI for Executive Coaching?

  1. Jan Combrink says:

    The key is in the agreed and measurable outputs, monitored and reported, and action taken when not according to agreement, even if it means ending the agreed coaching/mentoring contract.

  2. Pieter Bezuidenhout says:

    We are currently considering executive coaching for a director. It appears you suggest executive coaching in favor of an executive training course? Based on an ROI evaluation, how would you derive such conclusion?

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