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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:

  1. Which coaching situation is to be described?
  2. Which are the parameters to be measured?
  3. Which data is already available?
  4. Which data still has to be accumulated?

Calculation of Return on Investment:

  1. Which change was due to the coaching?
  2. Which immediately noticeable improvements were visible?
  3. Which immaterial improvements can be deduced?
  4. 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):

Parameters:

1. 

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:

http://www.coachfederation.org/includes/docs/053metrixglobal-coaching-roi-briefing.pdf