The ROI of Executive Coaching
How investing in one individual can transform an organization
By Margaret Gomez, BlessingWhite Executive Coach and Strategist, and David Hagerty, BlessingWhite Regional Vice President and Executive Coaching Practice Leader
When designing organizational change programs, we have many possible approaches. One powerful tool is executive coaching, and BlessingWhite increasingly incorporates targeted one-on-one coaching as part of organization-wide development initiatives.
While this approach may appear to be a significant investment at first glance — after all you are working with just one individual at a time — executive coaching has a deceptively high return-on-investment.
This is because a targeted investment in select individuals at the top can have a profound transformational effect across the whole organization. And when coaching is combined with formal leadership training, the impact on changed behavior of the executive is dramatic — nearly 4 times greater — increasing behavior change from 22% to 80% (Olivero, Bane, & Kopelman, 1997).
The power of executive coaching comes from its customized approach and ability to flex with the unique needs of each client. Effective executive coaching weaves personal development with the explicit needs of the business, and it delivers a far-reaching impact on the organization’s culture.
A measurable strategy
32% of coaches responding to a 2009 Harvard Business Review survey indicated that the ability to measure ROI was very important when hiring a coach, and 61% ranked clear methodology as very important.
The Hudson Institute, a pioneer in coach training and seminal thinking, finds that organizations are investing more in one-on-one coaching than in traditional training because the ROI is much easier to track. Recent workplace research provides some useful benchmarks. The International Coach Federation’s 2009 Global Coaching Client Study reported a median return of 7 times the initial investment. 19% indicated a measured ROI of at least 5,000%. The Manchester Review study calculated ROI of 5.7 times the initial investment in coaching. 75% of the sample surveyed indicated the value of coaching was “considerably greater” or “far greater” than the money and time invested.
And while a 2010 Conference Board Coaching Study confirmed that most formal program evaluation occurs in larger organizations, smaller ones can also greatly benefit from executive coaching.
Measurement, method, a contract and some standards
Pam McLean, CEO of The Hudson Institute, emphasizes the importance of foundational building blocks to ensure a strong ROI — a strong coaching methodology and effective contracting up front. She says, “Standards are another key ingredient. Data from stakeholder interviews and feedback other than from the leaders we are coaching help fortify the contract and track results that matter.”
As Pam points out, a big component of ensuring a strong ROI sits with the coach. Her message to coaches: “If you cannot measure ROI, you are not clear on the work you are doing.”
Lisa Ann Edwards, head of Talent Management at Corbis and founder of Bloom Coaching Institute, concurs: “Reporting back on a high ROI is less important than the accountability afforded by measuring ROI.”
Stakeholders, says Lisa, are more interested in knowing whether coaching accomplished the goals aligned with the business objectives, that behavior changed and that the change in behavior resulted in improved business impact.
She adds: “Key to the approach is to shift from an activities-based approach to a results-based approach. Better alignment of coaching to business results is a great start to ensuring that the coaching work is effective.”
Driving leadership behaviors
Over at H4B Chelsea, a unit of Havas Worldwide Health, Christian Bauman (Managing Director, Chief Creative Officer) was one of several executives to receive coaching as part of an initiative to establish common leadership behaviors across companies under shared leadership.
“Executive Coaching has been extraordinarily helpful to me and my role and my company. We were working together as I was transitioning into a new and larger role as well as preparing for another step up. Coaching was a critical help to think through problems, tackle things externally and prioritize. It enabled me to take informed action and see avenues of opportunity I had not considered before. Coaching benefited the company’s success as this was dependent on my success.”
“We move very, very quickly in our organization and sometimes we need to move people into roles fast. […] You identify people for new roles and they have to be equipped and ready to sink or swim. If they sink, their company sinks with them. Coaching helped me learn quickly, in weeks and months, what I would have taken longer to learn on my own. Coaching hyper-accelerated my development.”
“It is very motivating that the company cares about your future and it helps keep me here.”
“A year ago, when the promotion was broached to me, it was through my conversations with my coach that I was able to pull all the elements apart and see where I could be most successful.”
“By interacting with the coaches of others I was working closely with, it solidified how I could work better with them. Instead of vague feelings, I identified and quantified the parts which were about me and for which I needed to take responsibility. We’ve become stronger than ever in a shorter amount of time.”
Another coaching success story is The Dreyfus Corporation, where BlessingWhite executive coaching was a key component within an established, successful and well-respected leadership development program for BNY Mellon Asset Management.
Noreen Ross (EVP, Director of Marketing) describes the coaching as “absolutely transformational. One of the most simple, yet valuable, things was that it changed my mindset on how I show up for meetings — motivated and prepared — not just walking in and winging it.”
Noreen’s meetings with her manager have improved as well. “Our discussions are much more real and productive. Before, I would present a topic from both points of view and wait to get a mood read before I put out my POV. Now, I’m more confident and willing to put my opinion on the table and stand up to the debate.”
“One of the more tangible results of my coaching was that it helped identify a gap in our organization, which was a growing source of frustration for me and my senior staffers. Working with my coach, we developed a ‘Marketing Council’ which serves as a formal decision-making body between Sales and Marketing. This takes much of the guesswork out of what we do which leads to more consistent results.”
“I also have learned the value of strong leadership, and how it helps influence employees and bring them to the next level.” As an example, Noreen points to more productive goal-setting sessions: “I’ve asked each of my staff members to come prepared to discuss the next phase of their career, and now we work toward that. This gives us a better framework for discussion and enables me to provide targeted and valuable feedback.”
“We hyper-advanced the development of our employees by my being a stronger leader and mentor.”
The Dreyfus Corporation gave one person leadership lessons and executive coaching and, says Noreen, “I impact 50 people. Think of the multiples from that. They made that investment in me and the way it cascades throughout the organization is phenomenally powerful. There’s the ROI!”
This sums it up for Noreen: “I’ve had the ruby slippers on all the time and only now do I know how to use the power!”
Who we are and what we do
In our final example we look at BNY Mellon Asset Management. Here is where a Leadership Development Program designed and led by Dave DeFilippo, Chief Learning Officer, helps leaders reframe their role in service of their people. This represents a shift in the way they think about their jobs and a focus on “how they get stuff done.” Another emphasis is about leaders becoming comfortable in their own skin — “showing up at work actually congruent with who I am.”
Dave summarizes: “We have found that designing coaching engagements that are strength-based, outcome-oriented and individually tailored to be the most effective combination. Having a partner with the coaching acumen and worldwide capabilities that BlessingWhite offers has been game changing.”
A proven approach
Gone are the days when executive coaching was perceived as elitist entitlement or perk for the top-of-the-house. Today it is recognized as an effective organizational development tool that can be deployed as a stand-alone or as part of a concerted change program to accelerate the impact of a development initiative. Its flexibility as a tool and its proven ROI make it a compelling approach in the design of culture change activities, both to the benefit of the coachee and the organization at large.
Our special thanks to:
Lisa Ann Edwards, head of Talent Management for Corbis (Bill Gates’ privately owned global media company) and founder of Bloom Coaching Institute. She has authored, co-authored, and contributed to books on ROI and has provided a POV from her expertise on ROI.
Dave DeFilippo, Chief Learning Officer, BNY Mellon Asset Management, and Leadership Development Program leader. He provided insights and a POV on the importance of ROI in coaching engagements.
Noreen Ross, EVP, Director of Marketing at The Dreyfus Corporation, a unit of BNY Mellon, and
Christian Bauman, Managing Director, Chief Creative Officer, H4B Chelsea, a unit of Havas Worldwide Health. They generously provided a window into their experience and ROI from their respective BlessingWhite executive coaching programs.
Dr. Pamela McLean is co-founder and CEO of The Hudson Institute of Santa Barbara, one of the earliest and most eminent coaching schools to emerge in the 90s. She generously provided her POV, insights, and a cache of information for this article. firstname.lastname@example.org
Margaret A. Gomez, MCC, SPHR, BlessingWhite Executive Coach and Strategist. Margaret built her career in the talent management and development arena through senior leadership roles at global corporations and innovation leaders. These include Scali, McCabe, Sloves, The Olsten Corporation, and branding and advertising agencies at Omnicom and Interpublic. She is particularly skilled at navigating complex, demanding work systems, cultures, and transitions. Margaret received her formal coaching training at The Hudson Institute of Santa Barbara and is based in New York. mailto:email@example.com
David Hagerty, Regional Vice President and Executive Coaching Practice Leader for BlessingWhite, is based in Boston. He is responsible for shaping BlessingWhite’s POV around Executive Coaching, sourcing its broad network of coaches globally, and helping match these coaches with Blessing White’s clients’ leadership development needs.mailto:firstname.lastname@example.org