10 Steps for Proving the “Value” of Coaching

There are 53,300 professional coaches worldwide who generate $2.356 billion in revenue globally (ICF 2016) and that number is growing rapidly. As the profession continues to grow, the issue of effectiveness and return on investment is likely to become more important for coaches. In fact, when it comes to measuring the success of coaching, no metric is more important to top executives than the ROI. Investing in people is not the same as investing in a piece of equipment or any other tangible capital. For one thing, measuring the return on an investment in a person is a bit more difficult than, say, measuring the increase in the number of product per hour produced by the new machine that has just been installed on the factory. The challenge for coaching professionals is to show the connection to business impact and to measure the return on investment of the coaching solution.

ICF supported studies have indicated that almost all organizations stated that they “know” coaching has been effective, but the evidence to support this is mostly anecdotal. Measuring the success of coaching was considered to be a challenge, and the methods used varied among the organizations. Very few organizations reported having a formal quantitative process in place to measure the impact of coaching. However, most organizations collect some feedback on coaching engagements but these tend to be informal and the information received is not always centrally collated. For the most part coaching is measured at Performance level “Changes in behavior” using 360 feedback programs and employee engagement/ satisfaction surveys that could be linked back to those who had received coaching. But, most of these tools were readily available in the organization and were not designed specifically to measure the impact of coaching. Coaching professional are not being able to show the Value of coaching programs and justify coaching spending to their executives.

These top executive expectations are a challenge for coaching professionals and talent development professionals. The good news is that they can now meet these challenges with limited resources. One of the myths about ROI is that it is expensive and too complex. The reality is that it is a logical process with simple and easy steps with cost saving opportunities along the way. Most organizations have the available resources to make it work. ROI Institute has developed a 10 Easy steps for evaluating and measuring the Value of Coaching initiatives “ROI Methodology”. The ROI Methodology is the most widely used process to account for noncapital investments, but, more importantly, it is an approach to accountability through which program owners gather data that can be used to improve their processes as well. The 10 steps are as follow:

Step 1: Develop/Revise Coaching Objectives: Coaching objectives are developed based on needs. The needs assessment begins with a review of the opportunity to be realized if the proposed coaching is implemented. Is there an opportunity for a positive payoff? Is this a problem worth solving or an opportunity worth exploring? Next, the business needs are identified. What specific business measures will be influenced with this coaching? The business needs are met by changing individual performance. What should the participants do or stop doing to change the business measure? Performance needs are met by implementing new knowledge/skills presented to the coachees. What specific knowledge, skills, or information do participants need for the new performance? Finally, preference needs focus on how the stakeholders, including the coachees, should perceive the coaching in terms of value and need. The coaching is developed to achieve the objectives at each level. The coaching can be evaluated at each level, based on the objectives.

Step 2: Plan for Coaching Evaluation Planning begins as soon as it is decided that an impact/ROI study should be conducted and typically involves key stakeholders. All important decisions for the study are made early through evaluation planning.

Step 3: Collect Data during Coaching Implementation Two types of data are collected during a coaching program’s implementation “Reaction data” and “Learning data”, using common instruments including end of course questionnaires, completion of exercises, demonstrations, and a variety of other techniques.

Step 4: Collect Data after Coaching Implementation Two types of data are collected after coaching program’s implementation “Application data” and “Impact data”. These data are collected when application of the newly acquired knowledge, skills, attitudes and awareness become routine and enough time has passed to observe impact on key measures,

Step 5: Isolate the Coaching Effects While we believe coaching can have a considerable influence on business results, other factors obviously have an impact. For example, sales volume is subject to many complex factors, only one of which is coaching, (The level of sales is also impacted by: economic conditions, product developments, competition, pricing, customer demand, currency fluctuations, etc.) Other factors are always present and without isolation, there is only evidence, not proof of coaching value. When addressed credibly, this step links the coaching process directly to business impact. Isolating the effects of a coaching program on business impact data is one of the most challenging, yet necessary, steps in the ROI Methodology and there are many credible and proven techniques for the isolation.

Step 6: Convert data to monetary value This step develops a monetary benefit for one or more impact measures linked to the coaching. There are variety of techniques available to convert a measure to monetary value. The success in converting data to monetary value is knowing what values are currently available. If value are not available, it is possible to develop them, the use of standard values is by far the most credible approach.

Step 7: Identify Intangible Benefits Intangible benefits are those benefits that we choose not to convert to monetary value. They are measures that cannot be converted to money credibly with minimal resources. Intangible benefits are important and sometimes just as important as the actual ROI Calculation. Typical intangible benefits are job satisfaction, organizational commitment, teamwork, Better work/life balance, Reduced conflict, Better teamwork, More productive meetings, Improved employee morale and customer satisfaction.

Step 8: Tabulate the Coaching Costs The total costs of coaching program are needed for the ROI calculation. The costs must be fully loaded, i.e., must include all direct and indirect costs.

Step 9: Calculating the ROI Return on Investment (ROI) is a financial metric, representing the ultimate measure of coaching success. ROI is calculated using the coaching benefits and costs. The return on investment calculation considers the net benefits divided by coaching costs. The net benefits are the coaching benefits minus the costs. In formula form, the ROI becomes: ROI = (Benefits Achieved - Coaching Costs)/Coaching Costs X 100 

Step 10: Report Data to Key Stakeholders Reporting the results of the study is an important final step in the ROI Methodology. Properly identifying the audience and providing appropriate information is essential. By default, four audiences are always essential:

1. The coachees directly involved in the coaching who provide data to the evaluators
2. The immediate managers of the coachees who need evidence of the success of the coaching
3. The sponsors of the coaching program who need to understand the coaching program’s value to the organization
4. The staff team members who need to understand how the study was developed

In the future, more and more Coaching professionals will be asked for the ROI on coaching expenditures. While challenging to calculate, it will be critical that monetary values be assigned to results in order to measure this investment in an organization's most important capital “its people”

If you want learn more about measuring the Value and ROI of coaching, please contact us on ROI Institute