THE ROI OF LEADERSHIP COACHING
The average large company with 10,000+ employees budgets nearly $20M annually on learning and development, with employees spending more than one week per year in training. This level of investment contrasts starkly with some of the biggest people challenges organizations face today and the losses they incur as a result. Based on data from McKinsey, Gallup, and the Center for American Progress, for a company this size, the hidden annual costs of skill gaps, disengagement, and turnover are estimated conservatively at -$135M.
This is the cost of status quo.
Unfortunately, it’s unrealistic to think that any organization can backfill a hole this big by staying the course on traditional learning and development solutions—for example, instructor-facilitated leadership training seminars—for which we might conservatively anticipate a 0x to 2x ROI. The problems with these solutions are well documented. Lack of personalization and fidelity to the work being performed contribute to an overall picture of low impact, as underscored by:
Research on the forgetting curve, suggesting that newly learned concepts dissipate aggressively, with as little as 25% retention after 1 week, while…
Estimates of the percentage of training that “transfers” reveal a similar decline over time, with as few as 34% of trainees reporting sustained behavior change one year later, and…
Zooming in where the investment is greatest—on leaders and managers—exposes real gaps in our historical failure to prepare people to play these crucial roles by any measure of success, with the estimated fall-out rate for managers ranging from bad (6 in 10) to unforgivable (8 in 10).
The organizations and providers who are charting a path to higher ground are assigning equal priority to both making the solutions better and proving their impact and value to the business. For the last several decades, coaching has been mostly—solution to the former and—problem to the latter.
At a population level, we now have vast and convincing evidence that coaching works. It supports a variety of learning, change, and performance objectives, both for the individuals being coached and their extended teams and organizations (see Theeboom et al., 2014; Jones et al., 2015). And yet at the same time, coaching has long lived in the “shadows” inside most organizations, plagued by lack of transparency, inconsistent objectives, and lack of measurable outcomes. As a result, coaching can be perceived as less valuable than it truly is, and it’s also more vulnerable to criticisms as a “soft” service rather than a scientifically grounded intervention.
As HR investments become more data-driven, coaching has been pushed to rectify this ROI evidence gap. At Vantage, we invested early on in creating a model that can effectively measure behavior change in employees, dramatically rethinking the ROI of coaching from the ground up.
THE VANTAGE APPROACH TO THE ROI OF COACHING: AN EVIDENCE-BASED METHODOLOGY
One of our goals in building The Vantage Group is to provide our clients with a validated, quantitative measure of the impact of our service. This work started with an investment in assessment tools, including our Leadership Model, which illuminates those behavioral capabilities and mindsets that are both amenable to improvement through coaching and closely linked to the performance of individuals and organizations. These measures have been informed by decades of research at top Universities and institutions such as Target Training International that have invested in quantifying behavior change.
REPEATABLE ASSESSMENTS FOR MEASURING & TRACKING CHANGE & GROWTH
With Vantage coaching, every user completes an assessment at the beginning of their coaching, and then repeats that assessment at intervals over the course of the coaching relationship. Our assessment looks at behaviors, driving forces, competencies, acumen, and emotional intelligence. These individual outcomes are powerful in and of themselves, but we also use them as inputs into our ROI measurements, which translates individual outcomes into business-level impact.
ROI ON VANTAGE COACHING
Our model conservatively predicts a 3.5x to 5x ROI on an investment in Vantage coaching for a given employee population. This includes performance, retention, and wellness impact.
One of the most important determinants of the ROI that an employer can expect to see on Vantage coaching is the profile of the individuals who receive coaching. Our experience has shown that core managers — managers who sit one to three levels below the C-suite, and who manage a team — yield the greatest ROI on coaching. Individual contributors and executives both yield a positive ROI, but at a lower return than that we see for core managers. We’ve also seen that high performers yield a higher ROI for coaching than standard performers. Taken together, this suggests a useful rule of thumb. Prioritize coaching on priority people and roles — those with disproportionate influence and contributions.
Whether you are a seasoned leader or transitioning to a new role, you want insights and targeted support that quickly expands your capabilities. For more than 20 years, The Vantage Group has been providing a demonstrated return on coaching investment by pushing beyond the typical standards offered by most coaches. This has resulted in measurable, systemic change that can profoundly transform a leader’s perspective, performance, and bottom-line results.
We’ve coached executives, high potentials, and leadership teams from Fortune 500 companies to small businesses. We can help you or your leaders:
- Improve leadership skills and performance to increase impact and influence
- Successfully transition to a new company or role
- Enhance the productivity and interactions of a team
- Increase self-awareness and emotional intelligence
- Foster a greater commitment to accountability in order to help achieve results more quickly and communicate more effectively
- Address behaviors that stand in the way of advancement
VANTAGE PROVIDES COACHING THAT CAN GIVE YOU THE COMPETITIVE EDGE YOU REQUIRE
When you help leaders unlock their own potential, they’re able to drive greater retention, engagement and performance not only from themselves but also from their teams. This has been experimentally proven in studies that untangle the correlation between a leader’s psychological resources and their team members’ risk of turnover. And it becomes critical for employers looking to target coaching for the audience with the greatest ROI. And finally, a leader has to be able to manage their own stress, and to model that for their team. Lowered stress levels help the company save on poor health outcomes.
Coaching is a partnership between the leader and the coach. Coaching helps leaders to be better equipped to deal with leadership issues such as leading change, recruiting and retaining key people, navigating organization politics, and working effectively with executive teams and boards of directors. It gives individuals specific tools and strategies that can be applied to their leadership development. Ultimately, coaching helps the leader to perform at their optimum level… no matter what challenges come along. And this translates into an ROI that helps your organization reach its goals.