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The ROI of Coaching

posted 9 May 2011, 20:51 by Neal Lynch   [ updated 11 May 2011, 20:28 ]
Firstly, for those fortunate enough to not know what ROI stands for let me tell you. ROI means Return on Investment and in our case, as coaches, it is something we are asked to demonstrate to potential clients before they will invest in a program. After coaching for a number of years all experienced coaches have numerous examples they can cite that demonstrates the remarkable benefits of great coaching in a one-on-one situation. Coaches such as Margie Warrell, Marshall Goldsmith and the powerful and charismatic Tony Robins all have demonstrated remarkable abilities in helping people reach their potential in a meaningful way. 

The stories coaches tell are powerful and compelling and are the reason why coaching has become an important method of developing individuals’ excellence in leadership, communication, emotional management, interpersonal relationships and personal well-being. 

However, when dealing with organisations our responses to the question "If we participate in a coaching program with Paragon what will be the Return on Investment be?" have to be specific, measurable, attainable, realistic and timely. They also generally have to be associated with a bottom-line dollar amount. It's at those times that it pays to be fully conversant with much of the research around coaching in the corporate environment that has been performed over the last 10 years.

The research we have dissected has been performed by 
  • AIG Retirement Services, 
  • Flinders University School, 
  • Harvard Business Review, 
  • Merril C. Anderson
  • Australian Human Resources Institute,
  • Frank Bresser Consulting.
The good news about the research is that all tells a similar tale; when performed well, with clear objectives and measures for success there are returns on investment that completely dwarf the level of cost of coaching. Areas of significant improvement included 
  • company loyalty and increased retention levels (even through times of pay cuts and stress), 
  • much higher engagement levels, 
  • increasing trust at all levels, 
  • belief in the investment in the human capital, 
  • addressing derailing behaviours, and
  • simply giving the client a place to express themselves confidentially and without judgement.
AIG calculated that their coaching program had a conservative return on investment of 17:1 whilst other organisations have mentioned figures of 7-500:1.

With these figures it is understandable that corporates are increasingly becoming more aware of the benefits of internal coaching programs.