What is the return on investment of coaching?
27th December, 20120 Comments
When considering a purchase, we have an innate capacity to assess a product’s value to ourselves. To us, the product is only worth buying if its value exceeds its cost. That is why consumers pay both the painful cost of standing in a queue outside Selfridges early on a cold January morning, and also the discounted price of the product, in order to acquire an object of greater value at the Sales.
Likewise business people evaluate the benefit and value to their companies of business “solutions”. Coaching is often offered as a solution, but what evidence is there that the outcomes of coaching are much more valuable than its cost?
A 2007 study (Bowles) of inexperienced leaders who were coached, compared with an experienced uncoached control group, revealed that “those coached leaders were able to perform at or above the previous levels of more experienced but uncoached previous leaders”. The study concludes that “these results suggest that organizations may achieve a significant return on investment in coaching for managers in speeding up their development as leaders.”
A 2008 survey (CIPD) revealed that only 20% of organizations actually evaluated coaching, but McGovern computed ROI on coaching as 5.7 and is cited by Feggetter in her evaluation of coaching at the MOD which confirms “coaching provides a financial ROI” and cites one employee saying “Coaching has worked for me – it has made me do things differently permanently in a way other techniques have not done so successfully”.
Some organizations evaluate coaching by measuring Key Performance Indicators. This, and the examination of testimonials of employees who have been coached, are the principal evaluation tools used. Less than 10% actually attempt precise metrics for return on investment. But net expenditure by UK private and public organizations on coaching is continuing to rise (CIPD 2011). That must say something about evidence-based faith in the effectiveness of coaching to raise levels of competence, creativity outside-the-box, and leadership.
Bowles, S. (2007). Coaching leaders in middle and executive management. Leadership and organization development journal 28(5): 388-408.
CIPD Chartered Institute of Personnel and Development (2008). Learning and development annual survey.
CIPD Chartered Institute of Personnel and Development (2011). The coaching climate.
Feggetter, A. (2007). A preliminary evaluation of executive coaching. International coaching psychology review. 2(2): 129-142.
McGovern, J. (2001). Maximising the impact of executive coaching. Manchester review 6(1): 1-9.
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