Executive Coaching Metrics That Matter

Measuring return on investment (ROI) for executive coaching is possible and the positive impact can be seen in increased sales, productivity, and customer satisfaction.

The return on investment (ROI) for executive coaching.  As long as I’ve been in the business of leadership coaching the quest for this magical, elusive measurement has haunted me.  I know I am not alone as I have read countless books, articles, and reports on the topic; honestly anything I could get my hands on.  I have attended conferences and presentations where the topic was drilled and dissected by experts with impressive credentials and long careers in coaching and data analysis.  After years of searching for answers or at least a glimmer of direction, I finally stepped back to reframe the challenge out of pure frustration and desperation.
 
As a business person, ROI means something very specific.  It is highly quantifiable and will withstand the scrutiny of the company’s CFO. The well-known formula for ROI is:
 
ROI = (Net Profit / Cost of Investment) x 100
 
Some investments can easily provide us with a measurable return.  For example, if I invest $100 in the purchase of a stock and then sell it a year later for $130 my return on investment is:
 
ROI = ($30 / $100) x 100 = 30%
 
It seems pretty straightforward and credible in this example.  But applying this same formula to coaching, where defining the “net profit” portion of the equation is nebulous, presents an entirely different challenge.  
 
Understanding ROI for coaching requires that we apply some type of assessment to how coachees have used their new skills or insights to improve performance in ways that support business goals – this is what provides the “net profit” segment for our equation above.  Our approach must enable us to establish the link between the coaching and the behavior and/or skillset change to show how that development process has impacted the business (e.g., increased revenues, improved margins, greater customer satisfaction, retention of talent, etc.).
 
Right Management has frequently used the Metrics That Matter™ (MTM) tool in Learning and Development programs that we design and deliver to assess the impact and value of learning events.  A few years ago we started to think about how to apply a similar approach to evaluating coaching engagements.  While we knew it would require starting our own repository of data to benchmark against (because coaching isn’t really a training event) this didn’t deter us.  We customized the MTM survey for coaching engagements, taking care to not disrupt the intention and integrity of each question, and set out to see what we would learn from the data.
 
Fourteen months into our new way of assessing the impact of coaching we are pleased to share a few results:
 

 

Wow!  Now these are executive coaching metrics that matter! If you’re currently using or considering coaching as part of your leadership development program, these results can help you quantify the value and make a strong business case. I see the positive impact every day and these numbers underscore it:  coaching has the potential be a true game-changer in helping talented individuals reach their potential as leaders and drive high performance throughout an organization.
 
Related Articles on Executive Coaching: 
Can You Afford Not to Provide Executive Coaching for Your Senior Leaders?
Does Group Executive Coaching Work?
Executive Coaching Conversations: Face-to-Face or Virtual?
Corporate Coaching: Weighing the Internal vs External Decision