The ROI of Leadership Coaching
The International Coaching Federation (ICF), in partnership with PwC, estimated the global revenue from coaching to be over $4.56 billion. Clearly, it’s a vibrant and growing investment for leaders across vertical industries, with 99% of coached leaders expressing satisfaction with their coaching experience. This being said, today’s world requires data to back up investments, even when the value is evident. Here are some considerations when seeking leadership coaching’s return on investment (ROI).
The Financial Return of Leadership Coaching
With the majority of research showing qualitative data, quantitative is harder to come by. The increase in leadership coaching’s popularity has sparked many new studies. According to the ICF Global Coaching Study, 86% of companies that could calculate their ROI said that they at least made back their initial investment. 19% indicated an ROI of 50x the investment. 28% saw an ROI of 10-49x the investment. Here is how to calculate your leadership coaching ROI:
- Select an area to study such as increased revenue, increased productivity, higher customer satisfaction, increased retention, etc.
- Estimate the internal impact through a handful of simple equations. Say your executive has seen an average of 10% reduction in turnover in the past two years as a result of coaching. If the average cost of recruiting, interviewing, and onboarding is $10,000 per job you will save $2,000,000.
- 1,000 employees * 10% reduced turnover = 100 retained employees
- 100 retained employees * $10,000 saved on onboarding = $1,000,000 saved annually
- $1,000,000 annually * 2 years = $2,000,000
- After this, adjust for impact. Savings can be attributed to coaching, as well as the manager’s experience and willingness to adapt. In our example, we will contribute 50% of the savings to coaching, leaving us with $1,000,000 in savings.
- Now calculate the ROI. $1,000,000 in savings – Cost of coaching = your ROI
Looking beyond the quantitative, leadership coaching has many other benefits that affect your bottom line. For example, leadership coaching can improve job satisfaction, company commitment and relationships with peers, executives and stakeholders. Of course, the ROI of leadership coaching will depend on the coachee’s willingness to adapt, desire to put in the work and implement a new style of leadership. Yet, when the coachee is engaged and active, coaching can be a powerful tool that will impact your business’s results and lead to increased revenue, productivity and customer satisfaction.
Beyond Monetary Gains
Leadership Coaching plays a pivotal role in nurturing human capital within all organizations. The ICF found that 80% of coachees reported increased self-confidence and 70% reported improved work performance, relationships and communications. Overall, coaching boosts personal growth and self-awareness among leaders. This all contributes to the company culture. At A.J. O’Connor, our programs promote a holistic approach, empowering teams to grow and apply coaching skills, creating productive work relationships and dynamic teams. By integrating new behaviors and implementing them, long-term change is possible. For more on the importance of a positive company culture, read Creating Psychological Safety in the Workplace.
Unconventional Returns
While financial and human capital metrics provide valuable insights, the true base of leadership coaching lies in how it transforms the overall individual and the workplace. Coaching should go beyond traditional ROI measurements, influencing self-confidence, leadership style, interpersonal relationships and company culture. A case study by the International Journal of Evidence Based Coaching and Mentoring found women leaders benefited from the undeniable impact on self-awareness, self-leadership, and conflict-resolution skills.
The intangible benefits from coaching extend beyond monetary ROI, with 75% of respondents acknowledging that the value derived from executive and leadership coaching far exceeds the investment of time and money. As companies navigate an increasingly complex business environment, leadership coaching can provide unmatched support. Through implementing coaching, leaders can be empowered to realize their full potential and drive sustainable growth.
Leadership coaching stands as a multifaceted investment, offering real-time financial returns, nurturing human capital, benefits company culture and unlocking opportunities to achieve sustainable growth. If leaders are expected to quickly adapt, thinking both tactically and strategically while leading with confidence and compassion, leadership coaching is one of the most impactful solutions. If you are interested in Leadership Coaching, AJO wants to help you by providing insights and guidance to empower individuals to perform at their best and work together to optimize their cross-organizational collaboration, productivity, and engagement.
Learn more about AJO coaching programs here and start your Leadership Coaching path today.
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Founded on core family values and a commitment to building strong, long-lasting partnerships, AJO approaches its work with confidence and expertise that only comes with over 40 years in the business. Working with companies of all sizes, needs and budgets, AJO develops high-performing teams and global leaders for organizational success.
