Due to the need
forleadership
development,
increased management performance and succession
planning, companies are focusing more closely on
building the capability of managers and executives
through coaching and mentoring programs. About 6
out of 10 (59%) organizations currently offer
coaching
or other developmental
counseling
to their
managers and executives, according to a nationwide
survey of more than 300 companies by Manchester, a
human capital consulting firm. Another 20% of
organizations said they plan to offer such coaching
within the next year.
Here's
why: Most
organizations need to improve productivity to fuel
growth and profitability. Productivity doesn't
happen when people are only focusing on the
financial or technical issues. They also must build
the capability of managers to help their employees
with the intangible elements of human
interaction---because the work gets done through
personal relationships. The key to ROI is
developing and sustaining individual and group
behaviors through personal relationships to achieve
the desired business results. Executive coaching
builds the organizational capability to get this
done.
Since it's
becoming harder to train and keep effective
employees, it is clear that companies are
interested in providing executive
coaching
to managers
who are able to improve productivity by energizing,
exciting and coaching their direct reports.
What's
the return for investing valuable time in coaching?
Every
organization has its own approach to performance
management and coaching. But all models view
coaching as interactive. When you coach, you listen
actively, ask questions, share views, and negotiate
solutions. You give and receive feedback.
Coaching helps
individuals grow as professionals and contribute
fully to the success of an organization. Done well,
it can turn performance management into a
collaborative process that benefits everyone.
Coaching focuses
on what needs improvement and what's going well.
The overall goal is to help people become more
effective. You coach individuals to help them
overcome personal obstacles, maximize individual
strengths, and reach their full potential.
In today's
environment of changing technology and evolving
organizations, coaching can have a strategic
impact. It provides continuous learning and
develops people to meet current and future needs.
Coaching is an investment that you make in
developing your key resource people for the
long-term benefit of your organization.
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"Executive
coaches are not for the meek. They’re for
people who value unambiguous feedback. All coaches
have one thing in common, it’s that they are
ruthlessly results-oriented." FAST COMPANY
Magazine
"If
ever stressed-out corporate America could use a
little couch-time, it's now. Trust in big companies
is at an all-time low. Baby-boomers have been
burned; Gen Xers aren't expecting the Corporation
to take care of them. Under the circumstances,
employees are much likelier to go outside and get
independent advice to help them be better managers"
Karen Cates, Assistant Professor of Organizational
Behavior, Northwestern's Kellogg Graduate School of
Management.
"Between
25 percent and 40 percent of Fortune 500 companies
use executive
coaches"
Recent survey by The Hay Group, an International
Human Resources consultancy
What
does executive coaching really
cost?
Typical
executive coaching
programs
are a mix of
both change-oriented coaching (changing certain
behaviors or skills) and growth-oriented coaching
(focused on sharpening performance).
Executive
coaching programs typically last from 6 months to
one year. Six months of individual executive
coaching generally costs a company between
$7,000
and $25,000 which includes one or more
personal assessments and one hour per week of
telephone coaching.
Some executives
decide to personally contract with a coach to
achieve certain professional or personal goals.
Signature, Inc. offers personal coaching to
executives who do not have access to employer-paid
programs. This individual coaching is targeted to
the client's needs within personal budget
limitations.
Case
Study on the Return on Investment of Executive
Coaching
A Fortune 500
firm wished to determine the business benefits and
return on investment for an executive coaching
program launched as an innovative leadership
development effort to accelerate the development of
next generation leaders. The participants in this
effort were drawn mostly from the ranks of middle
managers and from many different business units and
functional areas. Leadership development activities
included group mentoring, individual assessments
and development planning, a leadership workshop and
work on strategic business projects.
Coaching was
considered to be a key enabler for this approach to
leadership development because the participants
could work privately and individually with his or
her coach to develop specific leadership
competencies. While participants spoke very highly
of their experience with coaching it was decided to
conduct a formal assessment of the effectiveness
and business impact of coaching. It was intended
that the results from this study be used to
determine:
1. How did
coaching add value to the business and what was the
return on investment?
2. How could
coaching be best leveraged in the future,
especially if coaching was to be expanded to other
business regions?
It was decided
that the best way to isolate the effects of
coaching on the business was through a
questionnaire. The target population for the survey
was 43 leadership development participants. These
participants represented a cross section of the
business and included those in sales, operations,
technology, finance and marketing. All had been
identified as potential leaders and executives.
Thirty (30) of 43 leadership development
participants returned their surveys for a 70%
response rate.
Case
Study Results
Coaching was a
very effective developmental tool for the
leadership development participants, producing
financial and intangible benefits for the business.
Coaching sessions were rich learning environments
that enabled the learning to be applied to a
variety of business situations. Decision-making,
team performance and the motivation of others were
enhanced. Many of these business applications
contributed annualized financial benefits. Other
applications created significant intangible
benefits. Overall, the participants appreciated
their coaching experiences and would highly
recommend coaching to others.
Three-quarters
(77%) of the 30 respondents indicated that coaching
had significant or very significant impact on at
least one of nine business measures.
Overall,
productivity (60% favorable) and employee
satisfaction (53%) were cited as the most
significantly impacted by the coaching. Respondents
defined productivity in this context as relating to
their personal or to their work group productivity
and half (50%) documented annualized financial
benefits.
Program costs
were tabulated for all 43 leadership development
participants in determining the return on
investment. Overall, the coaching process produced
a 788% return on investment. Excluding the benefits
from employee retention, a 529% return on
investment was produced. While those clients who
had customer or people responsibilities produced
proportionally greater financial benefits, the
realization of benefits to the business was fairly
widespread throughout the group involved in this
study.
Coaching
Return on Investment Survey
A survey of 100
executives, mostly from Fortune 1000 companies, by
Manchester, Inc. concludes that a company's
investment in providing coaching to its executives
realized an average return on investment (ROI) of
almost six times the cost of the
coaching.
Corporate
benefits received:
- delivered
an average ROI of 5.7 times the initial investment
(a return of more than $100,000)
-executive
productivity improvements (reported by 53% of
executives)
-organizational
strength (48%)
-quality
(48%)
-customer service
(39%)
-retaining
executives who received coaching
(32%)
Personal
benefits to the coached
executive:
-direct
report and supervisor relationship improvements
(greater than 70%)
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