In our previous blog, we discussed the implementation of coaching techniques to create the needed transformation in your business. But shouldn’t the value of change in businesses be measured in ROI?
So, the obvious question for business leaders to ask is. “What is the ROI of coaching?”
All too often, the idea of coaching is rejected because the benefits are considered soft or intangible. “It’s great that my employees are happier at work,” execs say, “but how does that impact my bottom line?”
The answer is that to appreciate the ROI of coaching, we need to consider how change comes about. Like any other kind of investment, the time spent coaching staff is just one link in a chain of events.
When a company decides to buy a new piece of equipment to increase productivity, they first spend time researching various options and running the numbers to ensure it will deliver what they want. They then make a financial commitment and integrate the machinery into their operations. Change in results and ROI are the net result of this process.
It’s the same for coaching, with one small yet significant difference. When execs are looking at which piece of machinery to invest in, they are guided by tangible data. This provides comfort as the ROI can be accurately estimated in numbers. But can the same be said for coaching?
Fortunately, there is plenty of data that proves the ROI of coaching. An ICF Global Coaching Study showed that 19% of companies calculate ROI of coaching to be 50x their investment, with a further 28% registering ROI of between 10-49x investment.
The data is there. And it makes sense. But we must view it through the prism of time. In the same way that it can take months for the ROI on buying a major piece of equipment to kick in, we must accept a time lag for the true results of coaching to show.
Again, comparing the two different types of investment, it can feel easier to trust the data on the machinery. If productivity is improving at the rate you expected when you bought the machine, you have faith that the anticipated ROI will follow.
And once again, it raises the question of how this uplift is measured when it comes to coaching. The answer, of course, is to trust in the data.
In 2001, a Fortune 500 company carried out research into the ROI of coaching and found it produced a 529% return on investment. The International Coach Federation calculated ROI is on average 6x the cost of investment.
And 75% of businesses report that the value of leadership coaching is “considerably greater” than the investment of time, money and resources that go into it.
Which brings us back to that chain of events. ROI of coaching is the output of a 3-step process to deliver change:
- Engagement: Employees must be engaged in the company and their own professional development. For this to be achieved, any training must be relevant to their daily tasks, focus on their unique areas for development and have some immediate positive impact.
This could be increased self-confidence, a new skill, improved communication skills or a whole raft of other positives that make the individual more fulfilled in their role. Of course, these are changes that can’t yet be measured at C-level. - Modern-day leadership values development over delegation. This makes coaching one of the most important tools for those in management positions. Regardless of their desire to improve, 80% of individuals will fail if left to their own devices.
So, having equipped leadership to help identify areas for improvement and find ways to implement those changes is fundamental to driving change and increasing productivity. And this requires investing in coaching techniques. - Behavioural change: Engaged employees and top-quality coaches combine to create an environment that inspires change and innovation. Indeed, studies have shown that while training increases productivity by on average 22%, when it is implemented alongside coaching, productivity is enhanced by 88%. And this can only lead to increased ROI as a direct result of coaching.
The benefits of these behavioural changes go beyond productivity though. Staff retention is a global challenge, with 87% of organisations saying that getting a grip on the issue is “critical”. And when you consider that the average cost of replacing an employee is 33% of their annual salary, it’s easy to see why.
At Richmond, we create and deliver bespoke training packages with a focus on upskilling and implementing coaching in your team. Our coaching and support gives them the skills and confidence to have a positive impact on their engagement, driving up positivity, productivity and ROI.
To talk to us about coaching and its ROI for your organisation, get in touch.