THE ROI OF BUSINESS COACHING REVISITED
An ROI Model for Executive Coaching - Mary Beth O'Neill
by Bronwyn Bowery-Ireland
I was recently party to a conversation between two coaches about measuring the value they each offered their coaching clients. One coach argued that the greatest measure of effectiveness was how the client felt. The second coach thought this evaluation criterion was too short-term and emotive. Instead, that coach wanted to see the results the coaching had achieved six months after the end of the coaching partnership—what behaviors had changed? How had the client's life and work changed? The conversation was becoming more and more intense, with each coach ultimately conceding that they measure coaching effectiveness using different values.
I saw something else entirely, so I posed this question to them: "Do you value feedback from your client?" Of course, they both immediately answered, "Yes." My next step was to ask, "Does it matter what tool you use to get feedback?" The two coaches looked at each other and realized that they actually were aligned in one way—they both valued the feedback their clients gave them. The tool they used to obtain that feedback was a personal preference, just as choosing a coach in the first place is. The synchronicity was in the value of the feedback, not in the tool being used.
This is not the first time I have heard this type of conversation. Some coaches like an in-depth evaluation available for purchase, while others prefer to measure their coaching results using a tool they have personally designed. In my last column, I described Mel Leedham's model, and asked WABC members to email information regarding tools they are using to measure the ROI of their coaching. One member, Jim Clarkson, owner of Clear Focus Solutions, LLC, is currently using a tool designed by Mary Beth O'Neill (2005), which will be discussed in this column.
O'Neill begins by identifying three key factors that must be defined when setting up the coaching contract or agreement. These three factors are:
- Business results that leaders must achieve;
- Leadership behaviors that leaders must exhibit; and
- Team communication and staff dynamics required to achieve desired results.
These three key factors provide the foundation for the coaching process and assist in creating links to measuring its ROI. Initially, the client identifies areas in which change is desired. Each area is then categorized under one of the three key factors. This classification process is vital—it is very important to clearly recognize to which factor a change belongs.
The next step in the model is to identify clear, measurable goals (including time, cost, quality and quantity) for each factor. This allows the client to recognize when the goal has been achieved. Identifying the behaviors required for goal achievement provides a picture of what success will look like, allowing the client to get very specific about necessary day-to-day action steps. Examining the goal in practical terms of actions and tasks required is another way to ensure that the goal is appropriate. At this point, the coach can support the client in seeing the intertwining behaviors required by each factor and clarifying the picture even more.
The next stage for the client is to put new behaviors into practice. This can be one of the most challenging aspects of the process, since it requires clients to honestly confront their old behavior patterns. If those old behaviors are not aligned with accomplishment of the goals described under the three key factors, this difficult issue must be addressed, and clients must change how they work.
So far, O'Neill's experience has been that some clients see this model as a great tool. However, they also want to include variables in the model that are outside the scope of coaching, but which influence the success of the key factors. So she has created a list of four variables which ask the client questions to measure the ROI:
- What variables (internal to the organization) improve the chance for success, including the strengths and assets of the team/organization?
- What internal organizational variables detract from the likelihood of success?
- What variables (external to the organization) will improve the chance for success?
- What external variables may jeopardize success?
Once all of these steps are taken the ROI will begin to become apparent. Increased clarity will result from frequent monitoring of the goals and the key factors. Over a period of time, the results of the coaching based on goal achievement will become evident. The measurable information obtained at the beginning of the coaching partnership will provide clear measures of the changes occurring in the organization, and also of the Benefit/Cost Ratio of the coaching.
O'Neill uses the following formula to calculate the Benefit/Cost Ratio. In this formula, the '% impact of executive coaching' is the percentage of bottom-line improvement in the key factors that is attributable to the executive coaching itself, as opposed to other variables (e.g., individual leadership ability, market changes, etc.).
business results x % impact of executive coaching
costs of executive coaching
In order to use this formula, the client must be able to put a price tag on the business results that stemmed from the achievement of measurable goals during the coaching partnership.
One of the key elements that works well with O'Neill's ROI model is the ownership the client takes of the process. When the client determines the measurable goals and relates them to business results, and thus ROI, the client can see the benefits of the coaching and the organization can see the measurable outcomes achieved. The result is a win-win for all—clients and coaches.
In my next column, I will present another ROI model. Please continue to share the models you use, or ask any questions about the ROI of business coaching that you would like to have addressed. You can forward your models or questions to firstname.lastname@example.org.
O'Neill, Mary Beth. 2005. "An ROI Method for Executive Coaching: Have the Client Convince the Coach of the Return on Investment." International Journal of Coaching in Organizations, Vol. 3, Issue 1, pp. 39-52.
Bronwyn Bowery-Ireland is the CEO of International Coach Academy, an international coach training school. She has been an executive coach for over 10 years. Read more about Bronwyn in the WABC Coach Directory. Bronwyn can be reached by email at email@example.com.