Return on Investment
Success in coaching is not easy to measure. Improved communication and the effect on the efficiency of a department are not as easy to determine as e.g. higher turnover. Graham Hoult offered a way to do this in his presentation during a conference.
Evaluation of coaching always asks for instigated changes. Self-assessment and assessments by others in the system can be used. It is essential to get a clear picture of the situation at the beginning, e.g. with rating scales for coachee and his manager to describe the pre-post-situation.
Mandatory questions for an evaluation:
- Which coaching situation is to be described?
- Which are the parameters to be measured?
- Which data is already available?
- Which data still has to be accumulated?
Calculation of Return on Investment:
- Which change was due to the coaching?
- Which immediately noticeable improvements were visible?
- Which immaterial improvements can be deduced?
- In the coachees opinion: how much of this is due to the coaching? How sure is he with his estimation?
Example of Return on Investment Calculation (Executive Coaching):
Good relationship with employees:
|15% of the improvement due to coaching|
|2.||Making of difficult decisions:||
15% of the improvement due to coaching
|3.||Communicating the vision clearly:||
25% of the improvement due to coaching
|4.||Self-assessment of leadership skills:||20% of the improvement due to coaching|
Average: 18,75 % of the improvement due to coaching
To put figures to this improvement the yearly salary of the executive is used for the calculation:
salary: 80.000 €
18,75% of salary:15.000 €
Coaching created an immaterial value of 15.000 €. The costs for the coaching were 2.500 €.
ROI is calculated:
(15.000€ - 2.500€)/2.500 = 500%
For more information, my examples for ROI can be downloaded here: Return on Investment.pdf
A case study on "Return on Investment of Executive Coching" can be found here: