THE ROI OF BUSINESS COACHING REVISITED
ROI or VOI?
by Bronwyn Bowery-Ireland
In the last several issues of Business Coaching Worldwide, I have shared some models that are currently used to measure the ROI of business and executive coaching. At this stage, rather than present another model, I would like to create a little debate and discussion around ROI in general and how coaches are using ROI models.
I often hear coaches say, "Why should we use an ROI model to measure coaching at all?" This is a pretty good question. ROI was a '60s response to the need to measure the effectiveness of training and its impact on corporations' bottom lines.
But coaching is very different from training. Coaching is client-centered, client-directed, and client-focused. There is no formal training plan set in place. Trainers, on the other hand, teach new skills and determine the particular training methodology to be used. ROI justifies the training by showing a direct link between the training and resulting improvements in employee productivityand thus the bottom line.
Another substantial difference between coaching and training is that many areas addressed through coaching are just not tangible and, therefore, not measurable. How do we measure an increase in hope, well-being, or outlook? Jack Phillips actually dedicates a whole chapter to this subject in his 2004 book on measuring the effects of training. He states, "Intangible measures are the benefits linked directly to the leadership development program, which cannot or should not be converted to monetary values."
So why have we taken on ROIa training modelto measure the benefits of coaching? Is it because coaching is viewed as a development program? And what are the shortfalls of ROI models? In my columns, I have been asking for WABC member feedback, and Barry Goldberg wrote a fantastic email outlining his experience of ROI. I want to share it with you.
Barry stated, "... my impression of each of the ROI models I have examined ... all depend at some point on a subjective evaluation, or a highly suspect method of calculating value that can easily either discount the impact of the work or attribute value driven by exogenous data factors to coaching. Either way, the rigor of a calculated model breaks down when it depends on humans to report key elements in a subjective manner.
"My own answer came on a trip to London a couple of years ago. I had breakfast with a coach there who was working diligently on an ROI model. His attempt to codify every step of the way was admirable; however, as attractive as it was to the part of me that really wants to see a dependable ROI model, I could not imagine applying the measurement process in the real world of business. It was too cumbersome and required way too much overhead, not to mention adding cost. But because the idea of a truly rigorous model was so attractive, I spent my morning on the train considering how to get involved and wondering if there was a workable solution.
"My lunch date was with another coach, equally high-profile and equally opinionated. When I asked him how he dealt with the ROI question, he sort of chuckled and simply said, 'I start packing my bag to leave. If they are asking those questions, I am in the wrong place. Work like this is just what you do. It is like plumbing and electricity. People may want to bargain for price and terms, but no one asks you to prove that they need it.'
"As for me, having that question asked, with the expectation that there is some spreadsheet calculation forthcoming, has become an indication that I am not talking to the right person."
Over the last few months, I have been thinking a great deal about whether there is a better way to measure the effects of our coachingor if we even need that measurement. As coaches, we recognize the importance of knowing the difference coaching can make, and we want to articulate its value to our next potential client.
And here is where I suddenly stopped. Of course! It is about measuring the value of coachingthe value to the client. And it is not about measuring the value in a monetary sense, but rather in a values-based sense. This shift occurred for me when I looked at ROI models that involve the client's taking responsibility for measuring the value of the coaching. I started to think about the word 'value' and think of it in terms of the question, "What does a client value?" The answer, of course, is that clients value those things that resonate with their beliefs and principleswith who they are at their very core. Measuring VOI is about measuring the effectiveness of the coaching based on the client's own set of values, and possibly incorporating reference to a company's values as well.
So I have designed a VOIa Value of Investment tool. The new tool measures the client's and the corporation's values. It develops a coaching plan, designed by the client, around the client's values. Much has been written about the development of values in a corporation, and the idea that if all employees' values are aligned with those of the corporation, this alignment can become the corporation's greatest competitive advantage.
I have a little more work to do on this tool and then it will be available for testing. If you would like to be part of that trial team, please contact me at firstname.lastname@example.org. If you have any other comments or ROI models you'd like to share, I would love to hear from you!
Goldberg, Barry. http://www.entelechypartners.com
Phillips, Jack J. and Lynn Schmidt. 2004. The Leadership Scorecard: ROI for Leaders. Burlington, Massachusetts: Elsevier Betterworth-Heinemann USA.
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.