What Value Coaching?

Posted by Ricki Sharpe on June 18, 2007
Filed Under Coaching

Despite a willingness to invest significantly in coaching, two in three companies do not measure the financial return on their investment in coaching, according to a study by UK Consultancy Chiumento and HR magazine Personnel Today.

The survey found that a further 20% don’t know whether coaching gets measured. This leaves just 13% formally measuring the benefits of one-to-one, role-specific training.

Mike Amos, head of coaching at Chiumento, said: “Failing to find ways to measure coaching’s return on investment means you fail to take it seriously as an important investment in people.”

Measuring the financial benefits of coaching was widely felt to be difficult, with 44% saying it was impossible.

The average outlay on coaching among the surveyed firms was $195,000 AUD per year, although 45% of all respondents had no idea how much their organisation spent.

It’s similar in the US. In late 2005, the Harvard Business Review calculated that American companies were spending more than $1 billion annually on coaching, yet warned that coaching remained a largely unregulated industry and one whose effectiveness was difficult to determine.

Anthony Grant, director of the coaching psychology unit at the University of Sydney’s School of Psychology, believes that “putting a dollar figure on coaching is probably not appropriate if you’re looking at things like cultural fit and cultural change, engagement, well-being and changes in leadership style. Coaching will just be part of many things that add up to make a difference.”

Where you can calculate return, he says, is in rolling out coaching for a strong skills-based process or project orientated initiative. “If you had a group of people being coached for a specific project and you had a control group, then there’s a good chance you could calculate the return on investment of the coach’s impact. Where coaching is targeted in a very specific way on very specific outcomes, there is a higher degree of certainty in drawing causal outcomes.”

It’s not all bad news. Chiumento advises taking a few simple steps to demonstrate the value of coaching in your organisation.

Ensure that you discuss and agree on the outcomes you want from coaching with the coach, coachee, and sponsor.
Make sure the outcomes are specific enough to avoid misunderstanding and are relevant to the individual’s development and the business.
Record these outcomes as part of a coaching contract so that you have a basis for determining what has been achieved.
Try to develop some measures so that you know it when you see it.
While protecting confidentiality, get feedback at regular intervals on progress.
A mid-way review with the coach and coachee can be a useful way of focusing attention on what is different.
Create a coaching budget and track the costs and hours against it. Manage your coaches and be clear about those that deliver and those that don’t.
Make coaching a part of an integrated approach to developing your people ? Link it to other initiatives such as succession planning and performance management.