Written by: Sara Sheehan, Executive Contributor
Executive Contributors at Brainz Magazine are handpicked and invited to contribute because of their knowledge and valuable insight within their area of expertise.
In this article, I would like to share with you three research studies and one HBR article that supports the overwhelming return-on-investment value of executive coaching. These research studies and articles support the impact of executive coaching and the benefits it provides for overall business performance and employee performance.
The support of executive coaching, especially through business and employee performance is so strong that each individual or organization seeking to make significant changes in their zone of excellence should engage an executive coach as soon as possible. Engaging an executive coach can deliver positive tangible and intangible benefits that you wished could have been integrated sooner, discovering that an executive coach is a secret weapon you’ve been seeking to exceed business objectives and outcomes.
Executive coaching can also provide significant results in improved relationships with reports, stakeholders, peers, and clients. While this is an intangible benefit, it’s an absolute competitive advantage to anyone that wants to increase sales, build better teams, or take on a higher level or more challenging leadership role. The top four tangible benefits include productivity increase, quality improvement, organizational strength, and customer service. These deliver remarkable results and real top-line and bottom-line business growth. Working with an executive coach helps you become more aware, helps you understand how others perceive you and can help you solve dilemmas with an objective, third-party advisor. When you take all of this into consideration, why wouldn’t every organization want to be focused on building a culture of employee development?
The first and most widely quoted study on the return on investment for executive coaching is one performed by a Fortune 500 firm, Pyramid Consulting Group, a coaching services firm and MetrixGlobal LLC. The findings from the study were published in November of 2001 (Executive Briefing: Case Study on the Return on Investment of executive coaching. Merrill C. Anderson, Ph.D., MetrixGlobal, LLC, SlideShare.net posted on Nov 23, 2011).
The bottom line in the report is that coaching produced a 529% return on investment and significant business benefits. Including the financial benefits from employee retention boosted the overall ROI to 788%. The study provided powerful new insights into how to maximize the business benefits of executive coaching.
The two main research questions in the study:
How did coaching add value to the business and what was the return on investment?
How could coaching be best leveraged in the future, especially if coaching was to be expanded to other business regions?
Rather than getting into the details of the study, I’d like to focus on the findings and the staying power of the return-on-investment research 20-plus years later.
Benefits Drive Significant Business Value
The second study with similar findings is by Manchester Consulting. They surveyed 100 executives, most of which were from Fortune 1000 companies. Their research showed that a company’s investment in Executive Coaching realized an average ROI of almost six times the cost of coaching. (Maximizing the Impact of Executive Coaching, The Manchester Review, 2001, Volume 6, Number 1, Joy McGovern, et.al.)
Both studies by MetrixGlobal LLC and Manchester Consulting reveal very consistent findings across the board with the actual percentages included below from the Manchester study.
The tangible business impacts include:
Productivity Increased 53%
Quality Improvements 48%
Organizational Strength 48%
Customer Service 39%
Reduced Complaints 34%
Employee Retention 32%
Cost Reduction 23%
Bottom Line Profitability 22%
Top Line Revenue 14%
Reduced Turnover 12%
Other Business 7%
Intangible business impacts included:
Improved Relationships: reports 77%
Improved Relationships: stakeholders 71%
Improved Teamwork 67%
Improved Relationships: peers 63%
Improved Job Satisfaction 61%
Reduced Conflict 52%
Increased Organizational Commitment 44%
Improved Relationships: clients 37%
Other business 31%
Improved Performance and Desire to Continue Working with a Coach
Third, the International Coaching Federation (ICF) reports the following statistics on the benefits of executive coaching based on their own research:
70% increase in individual performance along with measurable goal attainment, clearer communication, and higher satisfaction.
50% increase in team performance evidenced through better conversations, improved collaborations, and enhanced work performance.
48% increase in organizational performance through business results of an increase in revenue, increase in employee retention, and higher customer satisfaction and customer advocacy.
86% of organizations saw an ROI on their Coaching engagements, and 96% of those who had an Executive Coach said they would repeat the process again.
Focus on Employee Development Drives Shareholder Value
The final piece of data I’d like to share is from an HBR article. In “How’s Your Return on People?” (Harvard Business Review, March 2004), Laurie Bassi and Daniel McMurrer note that three stock portfolios filled with only companies that "spend aggressively on employee development" outperformed the S&P 500 by 17 - 35% during 2003. When your company invests in coaching and the growth of its people, tangible business benefits follow. That’s a remarkable increase in business performance!
Invest in Your Future and Get a Huge Return-On-Investment
Consider the facts about how an executive coach could impact your performance and your business results. Let’s take a look at how this investment could impact your life and career trajectory. You are a senior leader in a mid-sized company and you have not been promoted in a number of years. You are not challenged at work, and you have raised your hand for some stretch opportunities and initiatives. You finally take action and engage an executive coach on your own. You commit to six months of coaching with the option to extend based on the results you realize. Here’s an example of what you would be committing to do, using my Pinnacle Executive Coaching program over six months as an example:
Meet weekly for up to an hour.
Complete a couple of assessments that help shine a light on your strengths, how you interact with others, and how others perceive you.
Talk through your performance feedback, as well as what your aspirations are.
Create at least three goals, as well as the strategies and actions to achieve them.
Start to work on the plan to achieve your goals.
Be accountable for the actions you are taking each week.
Increase your visibility at work with strategic actions.
Demonstrate thought leadership to differentiate yourself from your peers.
Take the time to rebuild relationships and resolve conflict.
Set up an advisory team to help you be even more successful.
One of my clients saved her company one million dollars in just twelve weeks of coaching. Many coachees get recruited into new companies with at least a 20% increase in compensation or get promoted within their organization. The research supports a significant return on investment. If you planned consistent action with a trusted coach, what could you accomplish?
Sara Sheehan, Executive Contributor Brainz Magazine
Sara Sheehan, PCC, is a consultant and Executive Coach who works with C-Level executive leaders designing organizations, developing business strategies, managing change, optimizing talent and leadership development, and solving complex human performance problems. Through executive coaching, Sara helps leaders sprint their way up the corporate ladder and increase their performance.