As an organisation that provides business and executive coaching for many corporate and professional services organisations, the case for coaching is one that we have to constantly revisit. Within the current constraints of financial stringency, organisations want to measure results and the return on their investment if they are going to commit significant amounts of money coaching their managers/leaders.

In DDI’s research on Global Leadership Forecast 2011, it was identified that organisations with the highest quality leaders were 13 times more likely to outperform their competition in key bottom-line metrics such as financial performance, quality of products and services, employee engagement and customer satisfaction. Leadership quality was also responsible for higher retention of employees and more committed and passionate leaders.

However, during 2011, more than 27% of UK organisations decreased their leadership development budgets by more than 10%, compared to only 13% of the global sample of companies. This is worrying, as according to the thousands of leaders that DDI surveyed, the leading determinant of leadership quality within an organisation was due to the effectiveness of their leadership development programmes. This conservative control of budgets may be due to the slow recovery of the UK economy from recession, compared to other global economies, but is worrying for the future success of UK businesses.

In our research, the greater development programmes focus on the classroom, (this being the most cost-effective methodology) the least effective, whilst coaching, especially by an external professional coach is the most effective.  The one-to-one coaching route is obviously more expensive, as it allows for extended learning over a longer period of time and reflection processes enabling integration and sustainability. Thus results achieved via one to one coaching, outdoes any results achieved through classroom, mentoring, web-based or e-learning.

For an organisation wishing to measure the relative benefits of development programmes in the classroom or one to one coaching, the following areas provide some excellent areas for assessment.

1.   Personal benefits –

These are performance benefits for the executives personally, in their roles; things that they were doing or approaching differently to better effect, as a perceived benefit from coaching.  Top ranking benefits cited by more than 50% of executives included –

• Increased interpersonal skills including negotiation and collaboration skills, awareness of others’ perspectives, relationship skills, stakeholder management / influence and driving change in the organisation
• Improved self-management including awareness of self and impact upon others, personal organisation and time management, prioritisation and focus, confidence / congruence and strategic thinking leading to faster and more accurate decision making
• Better leadership behavioural style including improved performance in other areas stated above, resulting in improved performance in resolving potential and actual conflict situations, improved vision and shared object setting

2.   Organisational benefits –

These are positive impacts upon the executives’ surrounding organisation (whether the surrounding organisation be a team, department or in the overall company).  The executives’ personal improvements had generated benefits or increased effectiveness in their organisations. Top ranking benefits cited by more than 25% of executives included –

• Increased  team effectiveness including team performance, improved team morale and cross collaboration
• Improved stakeholder management including better relationships with the board, line managers, peers and direct reports resulting in increased employee engagement and performance
• Better work and organisational strategies including better business  decisions and strategic choices
• Improved operations including better resource management and allocation and better working climate

3.   Business / financial benefits –

These benefits were less easy to assess than the previous two areas, because of the funnel effect of personal improvements derived from the coaching, becoming intertwined with other variables and in a number of cases business data was not available.  However, in cases where business data was available, the study highlighted that the average financial ROI, was between 250 times and 315 times the investment in the coaching programme. The most marked business performance benefits cited were –

• Increased organisational productivity / performance (cited in 27% of executives’ cases)  
• Staff Retention cost savings (cited in 20% of executives’ cases)
• Increased cost efficiency including process cost efficiency, efficiency in the speed of change of projects and revue up / cost down – more for less   (cited in an average of 16% of executives’ cases)
• Direct cost savings including revenue targets gained or saved and mitigation / changes of investment (cited in an average of 14% of executives’ cases)
• Direct impact on increased revenue / sales (cited in an average of 5% of executives’ cases)

The results of all good coaching programmes show distinct linkages between the coached ‘improved executive’, the improved leverage of the team and organisation and overall financial performance improvement.

If an organisation wishes to increase the quality of its leadership, is it not intelligent to use the most effective methodology to do it by?

Penny Sophocleous