How many times are you asked by potential new clients to demonstrate the return on investment (ROI) from your coaching? But is this old school thinking and is it time to consider the wider systemic impact?
Typically ROI is measured as the monetary value of the benefits of coaching minus the cost of coaching converted into a percentage. This produces great monetary measures with mean ROI of 7 times the initial investment, and even up to 49 times, as reported by Matt Symonds in a 2011 Forbes article.
There are many more articles on best practice coaching ROI and it is frequently positioned that you must measure and demonstrate the ROI. Anything phrased as a ‘must’ tends to waken the rebel in me, and I think, “I know coaching works, why should I need to prove it as a monetary measure?” But once my inner child has receded, I think it is rational to demonstrate the impact of coaching.
However there is significant criticism of this monetary ROI as a measure of the impact of coaching. The 2014 Sherpa Coaching Survey found that the number of consultants who use ROI to measure coaching’s value dropped from 33% to 22% this year and only 11% of executive coaches attempted an ROI measurement.
In 2012 Anthony Grant published a paper “ROI is a poor measure of coaching success…”, in Coaching: An International Journal of Theory Research and Practice. From the title of the paper you can guess the stance he took on the subject. Anthony states that there is not a direct link between coaching interventions and the financial results. There are too many variables and the links are subjective at best. The causal chain is often too long and too weak to make fantastic claims of 700% ROI.
Also, if we consider only monetary returns then this forces the focus on short-term financial gains rather than long-term sustainable benefits to the individual, organisation and society. From a systems thinking perspective the sub-optimisation focus on financial returns is at best a narrow view and at worst is dangerous leading to inappropriate short-term behaviour. Anthony Grant says, “We need to recognise that overly focusing on the potential monetary gains to be made from coaching gives an extremely limited view of the potential benefits of coaching.”
The Sherpa 2014 coaching survey found the following popular measures of the impact of coaching:
- 360 degree feedback assessment before and after, used by 28% of respondents.
- Employee wellbeing and engagement measures, used by 21%.
- Performance reviews, used by 20%.
- Impact on Business (the Sherpa method): 13%.
- ROI, return on investment: 11%.
- Effectiveness of learning (level 2 of the Kirkpatrick model): 7%
Outside of the Sherpa survey, there are other measures of the impact of coaching, such as qualitative feedback from coachees and the simplest evaluation being goal attainment (to what extent were objectives achieved?) All of these measures provide a better holistic representation of the impact of coaching with ROI being a narrow out-dated measure.
How do you assess the impact of your coaching?