Return on investment (ROI) from 6-12 months coaching executives averages $100,000

Return on investment from 6-12 months coaching averaged nearly $100,000–or 6 times its initial cost–among executives (McGovern et al, 2001)

Objective/Subjects – McGovern et al (2001) evaluated the effectiveness of executive coaching for return on investment (ROI) as well as specific behavioral change and organizational outcomes among 100 executives who received coaching (6-12 months) between 1996 and 2000. Of the participants (aged 30-59 years, 66 male), 50% held positions of vice president or above; 28% had salaries of $100,000 to $149,000, and 19% earned $250,000 or more.

Methods –  Participants received customized coaching from, typically, PhD or MBA coaches with at least 20 years experience in organization development or management, plus training in executive coaching. Coaching programs were either change-oriented (55%, supplementing and refocusing skills), growth-oriented (29%), or both (16%). Coaching protocols included standard assessment procedures (personality instruments, multi-rater surveys, and interviews with members of the multi-rater survey sample). Executives and supervisors were informed of the participant’s goals and progress. Executives quantified the impact of coaching on their identified goals and provided an estimate of their level of confidence in that value. An upper limit of $1 million was applied to executives of high-end companies in order to eliminate outlier distortion. In addition, a number of adjustments were used to promote conservative estimates and isolate the ROI component that was actually associated with coaching, as opposed to other factors.

Results –  Overall, 86% of participants and 74% of supervisors reported they were either “very satisfied” or “extremely satisfied” with the executive coaching experience. Most-common coaching objectives chosen by executives were: enhanced leadership (14%), enhanced management skills (18%),  personal growth (e.g., work/life balance)(12%), improved business agility and technical or functional credibility (15%), and enhanced interpersonal skills (35%). Seventy-three percent of executives and 54% of supervisors reported that executive goals had been met either “every effectively” or “extremely effectively.” Eighty-five percent of supervisors reported executive goals were met “effectively” or better. ROI (Phillips, 1997) averaged nearly $100,000 among the executives (43) who reported on ROI, or 5.7 times the initial investment in coaching. Factors that the executives reported were associated with effectiveness of coaching were coach/participant relationship, quality of feedback, quality of assessment, participant commitment, and degree of support by managers at 87-, 62-, 57-, 51-, and 43%, respectively. Results of the study strongly suggest that coaches should be selected with care and organizational support for coaching should be provided.

McGovern J, Lindemann M, Vergara M, et al. Maximizing the impact of Executive Coaching. Behavioral change, organizational outcomes, return on investment. Manchester Review. 2001:6. Available at: http://www.coachfederation.org/includes/docs/049ManchesterReviewMaximizingImpactofExecCoaching2.pdf. (Accessed March 1, 2012)

Phillips JJ. Return on investment in training and performance improvement programs. Houston: Gulf Publishing Company. 1997.

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