Is executive coaching just another fad? No, not really. It has grown in popularity and acceptance over the last decade, and that would not be the case if it were not a worthwhile investment for businesses to make. The key thing most businesses want to know before agreeing to fund executive coaching, though, is what business benefits they can expect to gain for their investment. Put in straightforward business terms, they want to know the return on investment (ROI).
Evaluating ROI of Executive Coaching
Coaching is inherently difficult to quantify, because it involves personal development and that is hard to express in a spreadsheet. There are some business indicators, though, that can indirectly measure the return on coaching dollars invested.
Behavioral Changes – Individuals who have had executive coaching and taken the lessons to heart will show some behavioral changes. These may show up as better coaching/management of their own employees, greater engagement in business planning, or some other specific behavior that was identifies as needing improvement prior to the start of coaching.
Performance Changes – These benefits may show up as greater efficiency, higher productivity, or larger sales volume. Another indicator to watch is overall performance of the coached executive’s department or team. Successful coaching will lead to better leadership, and this often improves performance for the entire team.
Outside References – External stakeholders will often notice something is different following a successful coaching process. Sometimes they will notice specific improvements, other times they will notice that something is different but they will not be able to articulate exactly what it is. Some businesses will actively solicit comments from external people, while others will simply listen and take note of unsolicited comments and feedback.
Doing the Right Thing
Many businesses view executive coaching as simply the “right thing” to do. They know that the money they spend, when spent on a good coach for a promising employee, will pay off both directly and indirectly. They look at the coaching investment in much the same way you might look at your retirement savings – it may be tough to put that money away each month when you could be spending it elsewhere, but you know it will benefit you in the end so you do it anyway. You monitor the performance of your money over time, make small adjustments as necessary, and watch it grow into something bigger and better than it was at the start.
When you think of executive coaching in these terms, it is much easier to understand the connection between good coaching and positive business benefits.
