What sort of impact can coaching have?
Asked for a conservative estimate of the monetary payoff from the coaching they got, these managers described an average return of more than $100,000, or about six times what the coaching had cost their companies.
There is no hard-and-fast science for evaluating the impact of coaching and there are starkly different views as to its purpose, its efficacy and the best methodology to use. One extreme is that we live in the age of assessment and diagnosis, and therefore today’s coaching solutions must be rooted in cutting-edge coaching technology, hard facts, leadership science and proven best practices. An alternative view is that evaluating and measuring coaching could be counter-productive and goes against the spirit of the learning intervention.
In our view, it is still important to evaluate coaching, when possible. This page will give you a sense of what is possible and what steps you need to take if you are a coach who needs to know what sort of impact coaching can have if, for example, you are in an organisation in which measurement is important.
The coaching process can be expensive in time and money. This is true, whether coaching is resourced through an in-house cadre of specialist coaches, by hiring externals or by training all line managers to adopt a coaching style of management. Identifying and measuring whether improvements have resulted from all that effort and expense is to be expected, and there are ways to do it.
When it comes to coaching evaluation, one size really doesn’t fit all. Every coaching programme will need a tailored approach that takes into account its particular circumstances.
The challenge to any organisation wishing to encourage mentoring and coaching activity is to:
- Accept it as a legitimate activity
- Support it with time and other resources
- Measure what is possible
- Listen to what people say about it and take them seriously.
Some initial questions to ask
If you are really serious about identifying and evaluating the impact that coaching can have you need to have set up some criteria before the coaching takes place. Here are some useful questions to ask at this stage.
- What are the goals for the coaching?
- Are there specific hard goals that can be monitored?
- What sort of measurement models does your organisation use in other areas?
- How are these goals linked to business objectives?
- Is benchmarking possible?
- Is there an exemplar that you can use for modelling?
- What metrics, such as sales volume increases, behavioural incidents or absence levels, can you put in place?
How will you estimate the return on investment?
There are many consultancies and products offering measuring or evaluation tools.
An estimate of the financial return on investment of an executive coaching engagement can be made by:
- Verifying changes in behaviour and results
- Estimating the financial benefit of these changes: for example, the business benefit of the faster implementation of the marketing plan
- Considering the role of coaching in enabling the changes
- Estimating the total financial benefit attributable to coaching
- Estimating the cost of providing coaching
- Calculating the return, in other words the benefit relative to the cost.
Most return on investment approaches use the formula:
Estimating the financial benefit can be difficult if the goals are not quantifiable. Also, the outcome of these calculations is only as reliable as the subjective information that is used as the base for the calculation.
Hard data is useful and gives clues about mentoring and coaching activity within a particular setting, but it can only give a partial picture. Performance indicators, such as increased sales figures, a better bottom line, staff retention rates and/or appraisal ratings are much more important, but are often only attributable to mentoring and coaching by association rather than with ‘straight numerical lines’. Consequently, qualitative indicators contribute to our understanding of mentoring and coaching as a natural and very human activity:
- Improved motivation and commitment
- Faster learning and sharper thinking
- Improved enthusiasm and relationships
- Increased ideas flow and improved understanding of issues
- Improved stress management
- Change/development achieved more easily
- Greater confidence and autonomy.
Evaluations, if conducted with the full involvement of the stakeholders, can engage the participants in a process of change and development through learning. This leads to high levels of ownership in the evaluation and furthers a continuous improvement process. It is our experience that the system under evaluation often evolves and changes as the participants engage in dialogue about their practice. This has the effect of developing the issue under investigation and producing best practice outcomes during the evaluation itself. Evaluation in this way becomes constant and meaningful and contributes to the learning process.
Here are two case studies that support the notion that coaching can improve business results.
This study examined the effects of executive coaching in a public sector municipal agency. Thirty-one managers underwent a conventional managerial training programme, followed by eight weeks of one-on-one executive coaching. Training – which included goal setting, collaborative problem-solving practice, feedback, supervisory involvement, evaluation of end results and a public presentation – increased productivity by 22.4 per cent. Training and coaching increased productivity by 88 per cent, a significantly greater gain compared to training alone.
A Fortune 500 firm recently engaged a coaching company to determine the business benefits and return on investment for an executive coaching programme. The bottom line? Coaching produced a 529 per cent return on investment and significant intangible benefits to the business, including the benefits from employee retention. The study provided powerful new insights into how to maximise the business impact from executive coaching.