The ROI of Executive Coaching
While every executive can agree that developing leaders is essential
to success, “leadership” is an intangible asset that cannot be quantified
on a balance sheet. Certainly, executive coaching is beneficial to the individual,
and by extension, an organization – but does it hold up to the challenge of true
While every executive can agree that developing leaders is essential to success, “leadership” is
an intangible asset that cannot be quantified on a balance sheet. As government agencies
face the large number of looming retirements, they are under increasing pressure to
compete for talent. When this is coupled with the organizational changes government
agencies are facing, CIO’s and IT managers are being required to exhibit a whole
new set of competencies.
Many might say that the expense associated with executive coaching is difficult to
justify. Certainly, executive coaching is beneficial to the individual, and by
extension, an organization – but does it hold up to the challenge of true ROI?
And what are the specific benefits a government agency can expect at the bottom line?
Coaching, Not Training
Executive coaching – sometimes referred to as leadership coaching – is
intended to provide continuous, individualized support for professionals in an effort
to develop the competencies associated with good leadership. Good leadership, in turn,
motivates employees, boosts productivity, impacts service and product quality, stimulates
employee morale and retention, and ultimately, helps an agency to focus on its core
Unlike internal training, which focuses on technical skills and is almost always delivered
to a group of people rather than an individual, coaching relies on the relationship
between an employee and the coach to achieve changes in thinking, attitude and behavior. Some
of the intangible benefits leadership coaching delivers include:
- Helping executives understand themselves and gain insight into others, which
improves their relationships and their effectiveness as managers;
- Providing a rich learning environment where individuals can evolve
professionally and personally;
- Preventing serious employee issues through support from emotionally mature managers;
- Building a committed, engaged and proactive workforce;
- Optimizing decision-making, team performance and innovation;
- Developing passionate employees who are satisfied with their contributions
to and impact on the organization;
- Encouraging greater mental flexibility to see things from several different perspectives,
tolerate ambiguity and uncertainty, adapt to change, learn from mistakes and solve
problems in new ways.
Previously, these benefits were not measurable, but several recent studies deliver
a compelling argument for the investment in executive coaching and the specific returns
organizations can expect as a result.
Real Numbers, Real Results
In 2001, Fortune magazine reported the results of a poll of executives and upper level
managers who had six to 12 months of coaching with a Masters or Doctoral level executive
coach. The executives were asked to give a “conservative estimate of the
monetary payoff from the coaching you received.” The survey results showed
that the recipients valued the executive coaching at six times the cost of the service. In
other words, a nine-month, $18,000 executive coaching program investment for a vice
president produced a $108,000 return on investment. Another study, conducted
by Manchester, Inc., mostly among Fortune 1000 companies, also concluded that a company’s
investment in executive coaching realized an average return on investment of almost
six times the cost of the coaching.
These studies indicated specific organizational and personal benefits received from
an executive coaching program:
||Executive coaching delivered an average ROI of 5.7 times the
initial investment (a return of over $100,000)
||Quality improvements (48%)
||Retention of coached
||Direct report and supervisor
with peers (67%)
||Job satisfaction (52%)
A Competitive Edge
In recent years, many more companies have discovered the competitive edge that executive
coaching delivers. In April 2006, Fast Company magazine reported that many of
America’s CEOs and senior executives had embraced the benefits of executive coaching:
- 43% of CEOs and 71% of senior executives had worked with a coach;
- 63% of organizations say they plan to increase their use of coaching
over the next
- 92% of the executives coached said they plan to use a coach again.
To find out how executive coaching can deliver clear benefits to your company’s
bottom line, click here.
EDIZEN Insights #27
© 2007 by Edizen Corporation. All Rights Reserved.
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Feel free to call Edizen at 202-230-2130 / Toll Free 866-334-9362.
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