Anytime you make an investment – of money, time, effort – you expect a meaningful payback, right? Resources are limited, many competing demands. So, how can investment in executive coaching – which promises no guaranteed outcome – be justified?
Truthfully, I’ve never been asked for a projected ROI. But I can say that coaching – done right – is a time-efficient self-discovery process that motivates new behaviors and differentiates impact that can be valued like any other investment. In my coaching practice we begin by getting crystal clear on a client’s aspirations, which serves as the North Star for the engagement, and concludes with a summary of their coaching journey and the progress made toward those aspirations – the payback for their investment…more about this later.
Here’s how I think about the ROI of executive coaching, informed by my experience.
1. Desired Outcome – Every client wants to make forward progress from “here” to “there.” Understanding what outcome a client desires informs the client-coach agreement and project fee, as well as guides a tailored coaching engagement (The Work) that closes their gap between “here” and “there.”
There are tangible outcomes that are observable or quantifiable, like goal attainment, increased throughput or employee satisfaction scores. Then there are the intangible outcomes that are more felt and sensed, like improved emotional intelligence, engagement, or sense of well-being. Clarity on a path forward can provide immense relief and motivation, even if intangible.
A great coach is guided by the client’s desired outcome as the North Star throughout The Work and, at the same time, keeps an eye out for hidden desires – those that were pre-language or suppressed at the start of the engagement and emerge through the exploration and discovery process. I call these The Unknowables because they just can’t be articulated by a client at the beginning of The Work and may not be fully appreciated until several months after conclusion.
2. Learning – At its core, coaching is a learning process. Session time is used to unpack the complexity of the client’s challenges, glean insights and plan the next step. The real work of coaching is often not in the presence of the coach, but between sessions as new approaches are attempted, real-time feedback is obtained, and the client processes and reflects.
Big commitments are usually beyond a client’s ability or they would be taking action without coach support. Experiments are small steps the client has some energy to pursue toward their goal. An experiment for someone seeking visibility might be to prepare one question to ask at a meeting – one low-risk action – and tune into how they felt, what their experience was. Small actions motivate positive behavior change.
3. Behavior – Many coached behaviors are positive and beneficial, but a profitable behavior directly links to the desired outcome. For our visibility-seeking client, preparing for conversations with influential stakeholders to demonstrate value contribution is directly linked to enhancing awareness.
Profitable behavior change happens in two waves, first when the client notices the impact that their new approaches are having and secondly when those around them take notice, recognize and reward them. An exciting sense of accomplishment, empowerment and self-efficacy sparks more experimentation and discovery, which ripples to create more profound impact.
4. Impact – Consistently demonstrating profitable behaviors shows up as making forward progress toward the desired outcome. A broader robust network, greater team collaboration, more fluid operational agility, and improved executive communication are some examples of observable impacts that pay dividends and differentiate achievement.
5. Sustainable Outcome – I mentioned earlier that, at the conclusion of The Work, I summarize my client’s journey – the work we co-created, their experiments and discoveries, and the new impacts they are now able to achieve that weren’t accessible before. There are always intangible outcomes to track – they have a greater sense of self and others. Sometimes there are already tangible results – got a pay raise, a promotion, or a new job. It serves as a documented reference of what they have learned and what they commit to achieve moving forward.
Six to nine months afterward, I’ll check in to learn how the client has been able to perform and flex in new ways as they have had to navigate new challenges. With perspective over several months, permanent change and payback can be discerned.
If a situation warrants coaching investment, chances are several other interventions have already been activated, like skills training, stretch assignments, or mentoring. At minimum, a great deal of thought has been expended to resolve the challenge. Isolating the impact of coaching can feel squishy. However, ROI is a mechanical calculation…here is an example:
Context: Coached high potential director to enhance strategic planning and critical thinking skills in order to gain consideration for future vice president role.
Amount Invested: $44,200
- $37,500 cost of coaching engagement
- $6,700 cost of client and stakeholder time
- No assessments needed
Amount Returned: $105,080 within 9 months of end of coaching engagement
- Developed and presented annual budget and plan to demonstrate enhanced strategic planning and executive presence abilities
- Newly capable to serve as interim VP during 4-month recruitment – company saved $30,080 differential salary
- Selected for different new VP position – company saved $75,000 recruitment
Investment Gain: $60,880
ROI: 137.74%
Or – put another way – if coaching contributed 42% or more of the client’s enhanced ability to perform at a higher level, ROI is positive.
This all seems very clinical, doesn’t it?
In the end, ROI and the value of The Work is assessed by the client. If coaching is the catalyst that gets a frustrated client unstuck and energized to move forward, that payback may feel priceless. Coaching is a catalyst for self-discovery that sparks action and forward progress toward a desired outcome…and maybe to something currently Unknowable. A better question to ask might be “What is the ROI of doing nothing?”