Thought Leadership

The Business Case For Executive Coaching

"Your vision will become clear only when you can look into your own heart. Who looks outside, dreams; who looks inside, awakes." - Carl Jung, Founder of Analytical Psychology

Having an executive coach no longer carries the negative stigma it once did. It does not mean you are in the penalty box on some form of remedial plan for poor performance. In fact, many organizations now have internal leadership development programs where promotion into a senior leadership role includes an engagement with an outside executive coach. Some Fortune 500 organizations even have in-house coaches to lead the development of emerging talent. The business world has gone through a profound paradigm shift since the 2008 financial crisis. Culture matters. Leadership matters. Performance expectations are higher. Companies are doing more with less, expecting employees to perform above and beyond.

I think of coaching the same way I think about athletic training. You cannot improve without training! Professional athletes have coaches to help them improve. No professional sports team would dare to field their players at the start of the season with all the coaches taking the remainder of the season off. Yet, that's what happens in the business world. Executives are promoted into roles with greater responsibility and expected to go it alone. However, times are changing.

During my 25+ year corporate career I learned one fundamental truth; humans are not without fault, no matter how successful. People cannot be expected to excel at everything. That's where coaching comes in.

What is the business case for coaching?

In terms of measuring the ROI of executive coaching Lee Hecht Harrison, a leading talent management consulting firm, defines three categories to use: People, Productivity and Profits. These categories help business leaders understand the measurable results of executive coaching, particularly when linked to coaching goals.

I begin every coaching engagement with a look inward, the self-assessment phase. The focus is on self-discovery; identifying specific values, strengths and areas of needed development. Personality drives behavior, and behavior drives performance. If someone has a condescending communication style, they will likely alienate peers and subordinates. Often individuals with annoying workplace habits don't realize what they are doing, nor do they recognize the impact their behavior has on others. Coaching helps identify areas of needed development; once identified the coachee can work on improvement. Executive coaching builds leadership capacity and individual competency, which can be linked directly to better team/group effectiveness. These intangible benefits can be significant. Positive behavior change and skill development exemplify the "people" measure of the benefits of executive coaching.

The ROI of executive coaching should also be measured in better employee retention rates and higher productivity. The value of retention as measured by reduced external hiring costs can be significant. The International Coach Federation (ICF) annual survey on the current state of coaching reports that leaders who participate in coaching saw 50 to 70 percent increases in work performance and effectiveness. The "productivity" measure is the second category to review when measuring the ROI of executive coaching.

What about more tangible benefits?

Identifying bottom-line financial benefits of executive coaching can be problematic and more difficult to quantify. However, it can be done. According to a global survey of coaching clients by PriceWaterhouseCoopers and the Association Resource Center the mean ROI for companies investing in coaching was seven times that of the initial investment. Another way to measure the ROI of coaching is through the calculated savings from customer retention, as well as the calculated savings from accelerated project delivery. Projects delivered on time save money. The idea is to move the needle - these forms of measurement have a direct impact on the bottom line. Improved "profits" is the final category to gage when making a business case for executive coaching.

As coaching becomes more accepted as an effective leadership development tool companies will reap significant benefits - some tangible, some intangible. Enlightened leaders who accept coaching as a way to improve performance, enhance productivity and financial results will quickly see the true ROI of executive coaching. When measured against these success categories, people, productivity and profits, the ROI benefits will multiply. Therein lies the business case for executive coaching.

Until next time...

Jim Ward